Allowable ways to Reduce…

Allowable ways to Reduce Assets for Medical Assistance Purposes

We’ve previously discussed the income and asset limits required in order to qualify for Medical Assistance. The asset limit for an individual is $3,000.00 and $6,000.00 for a couple. Thus, many individuals and couples are tasked with reducing excess assets in order to qualify for Medical Assistance.

Assets can be reduced in four ways:

  1. Purchasing goods or services for the Medical Assistance applicant or their spouse;
  2. Making permissible transfers of assets;
  3. Making permissible transfers of income producing assets; or
  4. Making a gift or transfer of assets, subject to the Medical Assistance transfer penalty rules.

Purchasing Goods or Services for the Medical Assistance Applicant or their Spouse

The following is a list of allowable expenses for goods and services:

  • Prepaying expenses such as insurance coverage, real estate taxes, income taxes and professional fees
  • Loan Reduction
  • Payment of care costs
  • Homestead purchase
  • Automobile purchase
  • Purchasing household goods and personal effects
  • Prepaid funeral planning
  • House repairs
  • Travel expenses
  • Debt reduction or elimination
  • Subscriptions and memberships
  • Clothing

Making Permissible Transfers of Assets

The following is a list of some of the permissible transfers:

  • Transfers to community spouse
  • Transfers to disabled child
  • Transfer of homestead to a minor child
  • Transfer of homestead under the two-year caregiver rule
  • Transfer of homestead to a sibling co-owner
  • Transfers into a Special Needs Trust
  • Transfer for the expected fair value

Making Permissible Transfers of Income Producing Assets

In the case of married couples, if the community spouse’s gross income does not meet the minimum monthly income allowance, as determined by Medical Assistance calculations, additional income-producing assets of the Medical Assistance applicant may be transferred to the community spouse without penalty.

Making a Gift or Transfer of Assets

The transfer of assets or income for less than the fair marker value may result in a period of ineligibility for the applicant if the applicant or their spouse:

  • Did not receive adequate compensation for the transfer or gift
  • Transferred interest in real estate to another person
  • Refused to accept an inheritance
  • Placed assets into joint ownership with another person
  • Waived pension income
  • Transferred assets into a trust
  • Assigned the right to an income stream to another person
  • Refused to take legal action to obtain court-ordered payments such as child support and alimony

If you're interested in learning more about Medical Assistance and how to protect your assets, check out one of our upcoming free educational seminars.

Medical Assistance is a very complex and ever-changing program. There are many rules, exceptions, and implications that are not discussed here that factor into eligibility and allowable transfers. Protecting your assets through proper asset reduction strategies is possible. It requires diligent and careful planning, and the earlier you start the more you can protect. Our attorneys are here to discuss your estate planning and long-term care needs. Contact our office or book an appointment online to schedule an initial consultation.

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