Medicaid is a government-funded health insurance plan for low-income individuals. Unfortunately, many people on the margin of income qualification cannot be covered until their assets have been drained sufficiently. However, there are workarounds for this stipulation. You can "spend down" on exempt assets—for instance, pre-paid funerals, term life insurance policies, etc.—so that you no longer possess the assets and can qualify for assistance. The information below should help you better understand the process.

What Is "Spending Down" Assets for Medicaid Qualification?

Why Must You Spend Your Assets?

To help people can meet the low income/asset threshold for Medicaid assistance, the government allows people who are close to the margin to spend the assets that are disqualifying them from assistance. By purchasing items that fall into the exempt category with non-exempt funds, they get to benefit from the assets while draining them down. This may seem like "breaking the rules," but it is a compassionate policy that helps people get the aid they need.

What Qualifies for an Asset Spend-Down?

You can reduce your assets by spending them down on approved items such as previously accrued debt—including mortgage amounts, vehicle loans, and credit card balances—and on medical-related upgrades to your home, such as a chair lift or wheelchair ramps. You can also spend it on irrevocable, pre-paid funeral and burial or cremation services. After you make such payments for exempt assets, the money will not be counted as part of your assets with regard to Medicaid income qualification.

How Does a Pre-Paid Funeral Work?

A prepaid funeral contract is a binding contract between you and the funeral home—if you are allowed to break the agreement, it doesn't count toward your spend-down—for post-death costs. These include funeral and burial/cremation expenses, clergy expenses, and the cost of the death certificate. Not only does this type of spend-down help you qualify for health care assistance, but it also removes the burden of funeral expenses from your loved ones.

To make pre-arrangements for a funeral, contact Porto Funeral Homes in New Haven County. They've served the region since 1931 and offer both burial and cremation services. Visit their website to learn more about the benefits of planning ahead, or call (203) 467-3000 to schedule a consultation in East Haven. You can also reach their West Haven location by calling (203) 934-5000.