Medicaid Spend-Down Plan

Purpose

This document provides a structured approach to reducing countable assets to meet Medicaid eligibility requirements while maximizing the benefit derived from those assets. A spend-down plan should be developed with the assistance of a qualified elder law attorney to ensure compliance with Medicaid rules and avoid disqualifying transfers.

CLIENT INFORMATION

Applicant Name: _______________________________________________

Spouse Name (if applicable): _______________________________________________

Date of Plan: _______________

State of Residence: _______________

Attorney/Planner: _______________________________________________

SECTION 1: ELIGIBILITY REQUIREMENTS

1.1 Current Asset Limits (2025 - Verify for Your State)

1.2 Current Income Limits (2025 - Verify for Your State)

1.3 Key Dates

Lookback Period Start Date (60 months ago): _______________

Target Medicaid Application Date: _______________

Snapshot Date (for spousal resource assessment): _______________

SECTION 2: CURRENT FINANCIAL POSITION

2.1 Current Countable Assets

2.2 Exempt Assets

2.3 Excess Assets Calculation

Total Countable Assets: $_______________

Less: Applicable Asset Limit: ($_______________)

EXCESS ASSETS TO SPEND DOWN: $_______________

SECTION 3: PERMISSIBLE SPEND-DOWN STRATEGIES

3.1 Convert Countable Assets to Exempt Assets

Strategy 1: Prepay Funeral and Burial Expenses

☐ Purchase irrevocable prepaid funeral contract
- Maximum allowable: $_____________ (state-specific)
- Planned expenditure: $_____________
- Funeral home: _____________________________________________
- Date to complete: _____________

☐ Purchase burial plot(s) for applicant and immediate family
- Planned expenditure: $_____________
- Cemetery: _____________________________________________
- Date to complete: _____________

☐ Purchase headstone/grave marker
- Planned expenditure: $_____________
- Date to complete: _____________

Strategy 2: Pay Down Debt on Exempt Assets

☐ Pay off or reduce mortgage on primary residence
- Current mortgage balance: $_____________
- Planned payment: $_____________
- Remaining balance: $_____________

☐ Pay off vehicle loan
- Current loan balance: $_____________
- Planned payment: $_____________

Strategy 3: Home Improvements and Repairs

☐ Necessary home repairs/improvements
- Description: _____________________________________________
- Estimated cost: $_____________
- Date to complete: _____________

Note: Improvements should maintain or increase home value and be for the benefit of a community spouse or to facilitate return home.

Strategy 4: Purchase Exempt Personal Property

☐ Replace necessary household items
- Description: _____________________________________________
- Estimated cost: $_____________

☐ Purchase medical equipment/modifications
- Description: _____________________________________________
- Estimated cost: $_____________

3.2 Pay Debts and Obligations

Strategy 5: Pay Outstanding Debts

Strategy 6: Prepay Legitimate Expenses

☐ Prepay property taxes (if permitted)
- Amount: $_____________
- Period covered: _____________

☐ Prepay homeowner's insurance
- Amount: $_____________
- Period covered: _____________

☐ Prepay health insurance premiums
- Amount: $_____________
- Period covered: _____________

3.3 Purchase Medicaid-Compliant Annuity (Spousal Cases)

☐ Consider Medicaid-compliant annuity for community spouse
- Must be irrevocable, non-assignable, actuarially sound
- Must name state Medicaid agency as beneficiary
- Amount to annuitize: $_____________
- Monthly payment to spouse: $_____________
- Term: _____________ months
- Insurance company: _____________________________________________

Requirements for Medicaid-Compliant Annuity:
- ☐ Irrevocable
- ☐ Non-assignable and non-transferable
- ☐ Actuarially sound (term within life expectancy)
- ☐ Provides equal monthly payments (no balloon)
- ☐ State Medicaid agency named as primary or secondary beneficiary
- ☐ No deferral period

3.4 Caregiver Agreement

☐ Enter into Personal Care Agreement with family caregiver
- Caregiver name: _____________________________________________
- Relationship: _____________________________________________
- Services to be provided: _____________________________________________
- Hourly rate: $_______________ (must be reasonable/market rate)
- Hours per week: _______________
- Total compensation: $_____________

Requirements for Valid Caregiver Agreement:
- ☐ Written agreement executed BEFORE services begin
- ☐ Fair market value compensation
- ☐ Caregiver is not spouse
- ☐ Services clearly defined
- ☐ Detailed records of services maintained
- ☐ Tax implications addressed (income to caregiver)

3.5 Pay for Care Costs

☐ Private pay for nursing home/facility care
- Facility: _____________________________________________
- Monthly cost: $_____________
- Months of private pay: _____________
- Total: $_____________

☐ Pay for home care services
- Agency: _____________________________________________
- Monthly cost: $_____________
- Period: _____________
- Total: $_____________

☐ Pay for assisted living
- Facility: _____________________________________________
- Monthly cost: $_____________
- Period: _____________
- Total: $_____________

3.6 Legal and Professional Fees

☐ Prepay legal fees for Medicaid planning
- Amount: $_____________

☐ Prepay accounting/tax preparation fees
- Amount: $_____________

☐ Pay for financial planning services
- Amount: $_____________

☐ Guardianship/conservatorship legal fees
- Amount: $_____________

SECTION 4: STRATEGIES REQUIRING ADDITIONAL ANALYSIS

4.1 Spousal Strategies (Married Couples Only)

☐ Spousal Refusal (available in some states)
- State permits: ☐ Yes ☐ No ☐ Research needed
- Legal counsel consulted: ☐ Yes ☐ No
- Risk assessment completed: ☐ Yes ☐ No

☐ Income-First Rule (some states)
- State uses income-first: ☐ Yes ☐ No
- Impact on CSRA: $_____________

☐ Court Order for Additional CSRA (if needed)
- Community spouse needs additional resources: ☐ Yes ☐ No
- Estimated court-ordered increase: $_____________

4.2 Promissory Note Strategy

☐ Loan assets to family member with Medicaid-compliant promissory note
- Must be actuarially sound
- Must provide for equal payments
- Cannot be cancelled upon death
- Amount: $_____________
- Term: _____________ months
- Monthly payment: $_____________

Promissory Note Requirements:
- ☐ Commercially reasonable terms
- ☐ Actuarially sound repayment period
- ☐ Equal monthly payments
- ☐ No cancellation upon death
- ☐ Payments are income to applicant

4.3 Half-a-Loaf Strategy (Where Permitted)

Note: This is an advanced strategy with significant risks. It involves making a gift of approximately half the excess assets and using the remainder to private pay during the resulting penalty period. Consult an elder law attorney.

• ☐ Determine if appropriate for client situation
• ☐ Calculate optimal gift amount
• ☐ Calculate resulting penalty period
• ☐ Verify sufficient remaining assets to cover penalty period
• ☐ Document strategy and client informed consent

SECTION 5: STRATEGIES TO AVOID

5.1 Disqualifying Transfers

The following transfers during the 60-month lookback period will result in penalty periods:

• ☐ Gifts to family members (unless exempt)
• ☐ Transfers to trusts (unless exempt)
• ☐ Sales for less than fair market value
• ☐ Adding names to accounts or deeds without fair value exchange
• ☐ Paying for improvements to property owned by others
• ☐ Forgiving loans

5.2 Exceptions to Transfer Penalties

The following transfers do NOT result in penalties:

• ☐ Transfers to spouse
• ☐ Transfers to blind or disabled child
• ☐ Transfers of home to child who provided care in home for 2+ years, delaying nursing home placement
• ☐ Transfers of home to sibling with equity interest who resided there 1+ year
• ☐ Transfers where penalty would cause undue hardship (rare exception)
• ☐ Transfers of exempt assets (personal effects, one car, etc.)

SECTION 6: SPEND-DOWN IMPLEMENTATION SCHEDULE

6.1 Action Items

6.2 Projected Asset Position After Spend-Down

SECTION 7: DOCUMENTATION REQUIREMENTS

7.1 Documents to Obtain/Prepare

☐ Receipts for all spend-down purchases
☐ Contracts (funeral, annuity, care agreements)
☐ Invoices and proof of payment for debts
☐ Appraisals (if needed for transfers at fair value)
☐ Bank statements showing fund transfers
☐ Updated asset inventory after spend-down

7.2 Documentation Retention

All spend-down documentation should be retained for at least 7 years or the duration of Medicaid eligibility, whichever is longer.

SECTION 8: INCOME PLANNING

8.1 Income Qualification

If applicant's income exceeds the state's income cap:

☐ Establish Qualified Income Trust (QIT/Miller Trust)
- Trust attorney: _____________________________________________
- Estimated date to establish: _____________

☐ Verify income is properly allocated:
- Personal needs allowance: $_____________/month
- Community spouse income allocation: $_____________/month
- Uncovered medical expenses: $_____________/month
- Amount applied to cost of care: $_____________/month

SECTION 9: TIMELINE AND MILESTONES

SECTION 10: PROFESSIONAL TEAM

SECTION 11: CLIENT ACKNOWLEDGMENTS

11.1 Understanding of Plan

I acknowledge that I have reviewed this Medicaid Spend-Down Plan and understand:

☐ The spend-down strategies described are designed to legally reduce countable assets to meet Medicaid eligibility requirements.

☐ All transactions must be properly documented and may be reviewed by the Medicaid agency.

☐ Gifts or transfers for less than fair market value during the lookback period may result in penalty periods.

☐ Medicaid rules are complex and vary by state; this plan has been developed with state-specific rules in mind.

☐ Changes in law or personal circumstances may require modification of this plan.

☐ I should consult with my elder law attorney before making significant changes to this plan.

11.2 Signatures

Applicant/Authorized Representative:

Signature: _________________________________

Printed Name: _________________________________

Date: _________________

Spouse (if applicable):

Signature: _________________________________

Printed Name: _________________________________

Date: _________________

Attorney:

Signature: _________________________________

Printed Name: _________________________________

Date: _________________

SECTION 12: NOTES AND SPECIAL CONSIDERATIONS

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This Spend-Down Plan is a planning document and does not constitute legal advice. Medicaid rules are complex, vary by state, and are subject to change. Always consult with a qualified elder law attorney before implementing spend-down strategies. Improper spend-down can result in penalties and delays in Medicaid eligibility.