Home Finances All About Spend Downs, Part 3

All About Spend Downs, Part 3

Spend downs with Jim Koewler

How do you take care of your spouse if you need long term care now? What can you do with your money if your spouse is still at home? Elder law attorney Jim Koewler joins Suzanne Newman to answer these questions, by spending down your money to access Medicaid and VA benefits.

In the previous two segments, Jim talked about financial eligibility for married couples for VA pension benefits and Medicaid, and some of the ways to make eligibility to “spend down” when you’re single or married. Part 3 focuses on some specific things you can do when you’re married, you need long term care now, and your spouse is relatively healthy by comparison.

What can you do to spend down? Depending on whether it’s VA benefits or Medicaid, your assets also include real estate, rental property, stocks, and bonds. IRAs are extremely complicated and in flux. As far as initial eligibility goes, you can keep your house. With Medicaid, one vehicle is exempt, even a mobile home, even if you can’t drive. Household goods like a fridge don’t count, but if your decorations include a Picasso or bars of gold, those would count. Cash-value annuities and cash-value life insurance policies count toward your assets — If you can sell it to pay for your care, it counts. Listen to hear specific details.

If a spouse is still living at home, first make quality-of-life purchases (extra dentures, lift chair, extra eyeglasses) and pre-pay funerals for you and your spouse. Then, if the house needs a new roof or the spouse wants a new living room, or bathroom remodel, as long as the purchase is for equivalent levels of value, it’s allowed. An aging-in-place remodel is appropriate even if you’re not living in the house, as it can help the spouse stay in the house longer.

Depending on your state of residence, you may be able to sell assets for cash and purchase an annuity that pays to the healthy spouse. Specifically you would want a Medicaid-compliant annuity with equal monthly payments for a fixed term. This would count as spousal income, and such income isn’t considered part of the assets needed to pay down.