Want to know about Medicaid Spend Down Arizona, and How does it work?
Arizona Medicaid, called Arizona Long Term Care System or ALTCS, requires that your income and assets are within the limit set by ALTCS.
In Arizona, the maximum income for the applicant is $2,523 per month, and for assets, it’s $2,000 for single applicants; if the applicant is married and both are applying for ALTCS, it is $3,000.
For married applicants with only one spouse applying for ALTCS and the other is a non-applicant, the limit for the applicant in terms of assets is $2,000, and for the non-applicant, there is this special limit called Community Spouse Resource Allowance or CSRA, mandated by the Federal Spousal Impoverishment Rule, which is currently $137,400.
We’ll explain more about the specifics of the spend-down as we move on through this article. But first, let’s look into what a Medicaid Spend Down means.
What is Medicaid Spend Down Arizona?
Medicaid Spend Down Arizona reduces the excess assets or converts countable ones of an applicant to non-countable ones to allow them to be eligible for Medicaid or ALTCS.
As stated in the preceding paragraph, the limit for assets for the applicant is $2,000. So that means anything above that limit will cause the claim to be denied.
Let us say the applicant has assets worth $2,500, just $500 over the asset limit. Bet yet lets say that you already filed your ALTCS claim and discover that even though you thought you were below the $500 limit your not. What can you do last minute with this small amount of assets?
Simple go in a shopping spree, buy needed items, new clothing, a new TV, and new furnishings or just gift $500 to a loved one just before you send in the signed application and the requested items made by the ALTCS financial caseworker. By doing so, you are now eligible.
What is a 50% State?
In states which use the 50% rule when calculating the Community Spouse Resource Allowance, the non-applicant spouse gets to keep up to the Minimum Community Spouse Resource Allowance (CSRA) which is currently set at $27,480 in Arizona.
And up to the Maximum Community Spouse Resource Allowance (CSRA) of $137,400.
In order to keep the entire $137,400, the total household net worth would have to be double that, or $274,800 or 50% of the total assets. That is why it is called a 50% states.
Let us say the couple’s total assets are worth $200,000. 50% or half of the amount is $100,000 which is the presumed asset for each of the spouses (the applicant and the non-applicant). Currently as stated at the beginning of the article, the applicant has a limit of $2,000 for assets.
So, this means that the non-applicant spouse could keep $100,000 which is below the CSRA limit and the applicant spouse would need to spend down $98,000 to qualify for ALTCS.
It is a difference when the non-applicant spouse’s asset exceeds the maximum limit for CSRD, which is $137,400. Let’s say that the countable household assets are $400,000.
In the chart above, the total spend-down is $260,000 for both spouses. Many will just spend the $260,000 on care and wait to apply. There is a better way.
First, let’s answer this question, What assets may I keep and still be eligible for ALTCS?
There are certain assets that Medicaid considers non-countable. These are:
- The home with up to $636,000 in equity,
- One automobile,
- Pre-paid burial and funeral expenses,
- life insurance policies with a combined value of $1,500,
- Personal items such as clothing, jewelry, mobile phones, and household furnishings or appliances.
- $2000 Individual Resource Allowance and up to $137,400 CSRA
Read Guide to ALTCS.
What can I buy to spend down?
We have discussed in the preceding paragraphs that applicants must have their income and assets within limits set by Arizona Medicaid. But, there are instances that they exceed. That is when a spend down is necessary to get back within limits and to be able to meet the requirements. Well, there is an underlying question after that. Where should I spend these excesses? Here are the options an applicant may spend their extra assets on:
- Buy a new car
This doesn’t mean you buy an additional car. You replace an old car with a new one. If you do not drive anymore, but your family or friends drive you places. Then buy a car and have them use your car to take you places.
- Buy a new home
Same as with buying a car, you don’t buy another house or maybe you do. You can pay off the mortgage of your home.
- Upgrade your home
This one is pretty straightforward; make some renovation. Add some additional home furnishings. Repair the roofing, replace busted bulbs, unclog pipes, etc.
- Prepaid funeral/burial plot
They say when you get your life insurance and funeral/burial plot, you seem to be preparing for your certain death. But, in this case, it is better to be practical and prepare for the future.
A Funeral Trust is an agreement entered with a funeral service provider on prepaying for funeral expenses in advance. This has two types, revocable and irrevocable. Revocable type can be canceled and get back a portion of the amount paid. Irreversible type cannot be canceled but can be transferred to a different funeral home. Only an irrevocable prepaid funeral contract is acceptable for spending down as long as it is less than $15,000 with a Goods and Services agreement.
A burial plot is normally not included in a prepaid funeral and may be purchased separately. And it usually includes opening and closing of gravesite only. Cremation urn, casket, outer burial container, or headstone/marker are not included.
You can also pay for the funeral for immediate family members too.
- Medical Care and Equipment
One of the best ways to spend down is by buying medical care and equipment as it will not only benefit the applicant’s health and welfare; but will also ensure his or her eligibility with ALTCS.
- Clothing, Toiletries, and other personal properties.
You probably have old appliances that you wanted so long to replace but thought it was expensive to buy a new one. Some of the allowed electronic devices are TVs, multimedia players, laptops, iPads, and cellphones for the hearing impaired.
- Medicaid Compliant Annuities
Another way of spending down assets is by buying Medicaid-compliant annuities. An annuity is a sum of money paid annually to an individual after a series or a lump sum of payments to an insurance company. When an applicant exceeds the asset limit, he or she can buy a Medicaid compliant annuity to reduce the assets and at the same time providing long-term income for them.
There are two types of annuities which are Immediate and Deferred annuities. Immediate Annuity is Medicaid compliant and it provides immediate income for an individual. In this way, an applicant’s asset is converted into income. Deferred however is not Medicaid compliant and instead of paying the applicant immediately, the fund stays with the insurance company as an investment and will be paid off after a certain period of maturity.
Other types of annuities are Fixed and Variable annuities. Fixed annuities pay a fixed amount each month, while variable pays different amounts depending on the profit gained by the investments and is mostly not Medicaid compliant.
See Medicaid Compliant Annuity on this website for more information.
Now you get an idea about Medicaid Spend Down Arizona. A word of caution, spend-down using various strategies can be very effective. Done right, done wrong can be a disaster. Here is where the Certified Medicaid Planner™ (CMP™) comes in. A CMP™ is a trained professional like a lawyer, financial advisor, and certified public accountant. They are certified by the CMP™ Governing Board to assist and impart their knowledge to people who need long-term care services now or are planning for future needs.
Not only does a CMP™ make the ALTCS application process easier; but with the guidance of a CMP™ professional, the chance of getting approved by ALTCS will go up significantly.
At Care Funding Solutions®, 100% of our full-time staff are Certified Medicaid Planners.
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Steve Dabbs is a Certified Medicaid Planner who helps people to qualify for ALTCS. Applying for ALTCS is a quite complicated process but Steve Dabbs can save your Money and Time through his Valuable Consultation. He is also a national mentor, trainer, and consultant in VA benefits and Medicaid planning, actively advising financial planners and attorneys throughout the United States.