There is a great deal of confusion regarding the spend-down of assets for Medicaid qualification.

For a single person, who can only keep $2,000 in countable assets in Kansas or $5,000 in Missouri, that individual may find himself or herself wondering what the money can be spent on without causing any Medicaid disqualification.

Similarly, for a married couple, the rules are even more complex. The community spouse, (i.e., the at-home spouse) may generally keep roughly one-half of the couple’s assets up to a maximum of $148,620. Depending upon their resources, the couple may have a substantial amount of money which needs to be spent before the nursing home spouse qualifies for Medicaid.

The spend-down of assets for Medicaid qualification can often cause a great deal of confusion. Because there is so much misinformation about how the money can be spent, we thought it would be useful to put together a checklist to help people better understand the law—and how the money can legally be spent.

For someone who is pursuing Medicaid eligibility, the following are appropriate and legal spend-down items:

    Pre-paid funeral plans The Medicaid rules regarding funerals are very specific. Depending on the state you will be filing in, there could be limits on the amount that can be spent on services. You should only deal with a funeral home knowledgeable in this type of planning and get advice from an elder law attorney.

    Upgrade the car The couple is entitled to one car. It is perfectly acceptable for the community spouse to purchase a new car and have the entire purchase price come out of the spend-down.

    Payment of nursing home expenses Nursing home expenses and other health care costs can be made as part of a spend-down.

    A new home Since the home is an exempt asset, in some instances, the purchase of a new home makes sense from a Medicaid planning standpoint.

    Home Improvements Home improvements are often an excellent use of funds in a Medicaid spend-down. For instance, the community spouse might fix the roof, get a new air conditioning system, new carpeting, etc. The intention here is to take care of the big-ticket items while they will help with Medicaid qualification. For example, if the furnace goes out after Medicaid has begun, then the money to replace it will be coming out of the community spouse’s protected savings.

    House goods or personal effects Once again, the intention is to have the community spouse get the types of things which are needed to keep the household running without major expenditures down the road. This includes buying that big screen television, new furniture, etc.

    Debt repayment Payments on credit cards, medical bills, mortgages, loans, etc.

    Vacation This can be a good idea for the community spouse in a situation where there has been a long struggle to keep a loved one at home. The community spouse may be exhausted, and a well-deserved vacation could be rejuvenating. The entire cost of that vacation can come out of the nursing home spouse’s spend-down.

    Personalizing the nursing home room Decorating, TV, laptop, whatever the nursing home will allow.undefined These are not the only appropriate items for a spend-down. There are other expenses which would also qualify. The main rule to keep in mind is that whatever goods or services are purchased must be done at fair market value. In other words, giving the money away or paying outrageous amounts for more than the real value of the services can cause Medicaid disqualification.

Anything that benefits the community spouse will also benefit the nursing home spouse

Also, don’t let anyone tell you that anything spent must be done solely for the benefit of the nursing home spouse. On the contrary, virtually anything that benefits the community spouse will also benefit the nursing home spouse.

Finally, keep in mind that some of these spend-down strategies will not work as well for a single person qualifying for Medicaid. However, there are other strategies that can work equally well, whether you are dealing with a single person or a married couple. It is imperative to contact an experienced elder law attorney to develop a plan that is personalized to your family.