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What are Countable Assets & How Do I Spend Them Down?

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February 11, 2022 Medicaid Planning

An aging adult applying for Medicaid may realize they have many assets but they don’t know which assets Medicaid will count and which will be uncountable. Countable assets become important as a long-term care Medicaid applicant attempts to spend down these assets to receive benefits. However, spending these assets down without a strategy can cause a long penalty period.

Medicaid Spend Down

Why would you need to spend-down your countable assets? For one, if you are applying for Medicaid benefits for Long-term care you will need to be within certain asset limits in order to qualify. If an applicant exceeds these limits, they will need to spend down their assets until they are within the limits.

How an applicant spends these assets needs to be handled carefully, however. If someone gives away assets for less than their fair market value, they can be greatly penalized.

Find out which strategy works best for you by using our free planning wizard which will outline your planning options within minutes! 

What are Countable Assets?

Countable assets, or non-exempt assets, are any items that Medicaid will look at and count as something an applicant can sell or use to help fund their long term care. These types of assets are easily converted into cash and may also be referred to as liquid assets.

Examples of Countable Assets

There are many assets that are countable for Medicaid, but popular ones include:

  • Stocks, Bonds, Mutual Funds, or Investments
  • Money in bank accounts (checking, savings, money market, etc)
  • Additional Homes or Land, Rental Homes
  • Additional Vehicles including Recreational Vehicles
  • Farm Equipment (dependent on state)
  • 401k or IRA’s (dependent on state)
  • Life insurance policies exceeding $1,500 (dependent on state)

What are Non-Countable (exempt) Assets?

Non-countable assets, or exempt assets, are assets Medicaid will let you keep and not count towards your total asset limit for eligibility. The assets you are allowed to keep will be dependent on your specific situation as well. For example, you will be able to retain more assets if you have a spouse that will continue to reside in the community.

Examples of Non-Countable Assets

  • Primary home
  • One vehicle
  • Personal property and household items
  • Irrevocable Funeral trust of $15,000 (dependent on state)
  • Life insurance policies below $1,500 (dependent on state)
  • Retirement accounts (dependent on state)

How Much Do You Need to Spend Down?

The amount you will need to spend down will depend on how many total countable assets you have. In many states, the asset limit for a Medicaid applicant will be $2,000. If you have $85,000 in countable assets, you will have to spend down $83,000 (85000-2000).

How Can I Spend Down Countable Assets Without Being Penalized?

There are many ways to spend down your countable assets without being penalized. A few of the more popular ways include:

  • Update or repair your home (primary residence is exempt)
  • Purchasing a nicer or new vehicle (one vehicle is exempt)
  • Purchase an irrevocable Funeral Expense Trust
  • Pay off any debts
  • Purchase a Medicaid Compliant Annuity converting assets to income.

There are other Medicaid spend-down ideas you can use and we recommend discussing all these options and strategies with a Medicaid planner to ensure you comply with all regulations.

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