A Medicaid professional consultant helping an elderly woman to protect her assets and money from the nursing home spend down.

Medicaid Countable Assets

Transferring assets to reduce your Medicaid's countable assets

Spending Assets and Ongoing Business Concerns

Ongoing business concerns are exempt from Medicaid's countable asset rules. Business concerns generate a source of income for the applicant and are thus deemed as not countable assets (i.e. excluded as assets for Medicaid spend down). In addition, the value of real property that is either listed for sale or rented is not a countable asset. In the majority of states, the amount of gross income generated will have to exceed a percentage of the value of the property. Any income from rental property is also counted as gross income. Basically, this means that there are no deductions available for rental expenses. Even though no deductions are allowed, some of the state's Medicaid rules will only take a percentage of the rental income.

What is considered countable assets by Medicaid rules?

When trying to figure out what is considered a countable asset and what is not, things can get very confusing. To make things even more difficult, each state's Medicaid rules have their own set of rules regarding assets. When attempting to protect assets, the assets must be properly transferred or re-positioned. This will allow countable assets to become Medicaid excluded assets.

When the Medicaid spend down amount has finally been determined, the best way to become eligible for Medicaid is to re-position or transfer assets; thus, making the assets as not countable. This is where it can be beneficial to take advantage of assets that are excluded. For example, if an individual owns an older car, they could spend down assets by purchasing a new car. This vehicle is excluded from the list of assets and is not regarded as a countable asset according to Medicaid rulings, so this is one way to spend down. In addition, if the individual does not have funeral arrangements already made, this can be a great way to plan ahead and reduce assets. Funeral arrangement planning expenses are not countable assets.

Medicaid's Personal Service Contract to pay children to spend down countable assets (i.e. cash)

Some states will allow the establishment of a contract between a patient and their children. This is known as a Personal Service Contract. It basically allows the individual to spend their money by paying their children for service. One way to do this is to have a contract that pays the children to visit the individual at a nursing home. This is one way to exclude some assets that may need to be paid to the nursing home facility.

Individuals must remember that all transfers must be for fair value. This included fair value for services that would be received from a child. The amount that would be paid to the children would have to equal what it would cost to pay a third-party for the same type of service.

There are many ways that Medicaid's countable assets (i.e. countable assets as deemed by Medicaid rulings) can be spent down without actually losing any money. The example of purchasing a new car is one of the most commonly used methods to spend down some assets. No matter what approach is taken, it is important to try to preserve as many assets as possible, even if this means transferring or re-positioning them.