Currently on Medicaid. I just received a lump sum from a moderate settlement. I understand a quick spend-down would save me from interruption of my eligibility for Medicaid. I have a long-standing personal debt to a family member (from 10 years ago). Would a repayment of this debt to my family member be accepted by Medicaid as a valid form of spend-down? If so, what documentation would I need to show? Thanks!
Allowable Medicaid Spend Down Items (Effective Jan. 2022)Accrued DebtOne can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances.Medical DevicesOne can purchase medical devices that are not covered by insurance, like dentures, eyeglasses, and hearing aids.Home ModificationsOne can make home reparations and modifications to improve access and safety, as well as build on to their existing home, such as adding a first floor bedroom or bathroom.Vehicle RepairsVehicle repairs, such as replacing the battery, getting an engine tune-up, or replacing old tires are also a way to spend down assets, as is selling an existing car at fair market value and purchasing a new one.Life Care AgreementsOne can create a formal life care agreement, often called a personal care agreement. This type of agreement is generally between an elderly care recipient and a relative or close family friend. It allows the care recipient to spend down their excess assets while receiving needed care. It is vital this type of contract be drafted properly and that pay is reasonable for the area in which one lives. If it isn’t, one could be in violation of Medicaid’s look-back period.AnnuitiesOne can purchase an annuity, which in simple terms, is a lump sum of cash converted into a monthly income stream for the Medicaid applicant or their spouse. The payments can be for a set period shorter than one’s life expectancy or equal to the beneficiary’s life expectancy.Irrevocable Funeral TrustsOne can purchase an irrevocable funeral trust, which can only be used for funeral and burial expenses. In general, up to $15,000 per spouse can be placed in a funeral trust. However, this amount varies by state.
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Also, just your receipt of the settlement payout could trigger your responsibility (duty to inform) to immediately inform your state Medicaid office within X days of this payment or you may be penalized in some way. That is, I would not wait on this much less -- as AlvaDeer stated -- rely on advice from this forum. You need real legal advice here from an attorney or guidance from your state Medicaid officials.
I agree with GardenArtist, that, even if this IS allowed, you would need to have good valid dated documentation.
There are often ways that surprise payments and inheritances can be protected by directing them into something, but far be it from me of being aware of any of this; I myself with check with an attorney in the event this is any substantial amount. Well worth the 350.00 hour fee for an hour of good advice.