A Medicaid 'spend-down' primer

03/30/2018   In Benefits of Prepaying

About Medicaid

We all want the best care possible as we grow older and realize we may need help taking care of ourselves. For most seniors, that means finding a long-term care solution, whether transitioning to an assisted living facility or receiving visits from an in-home care provider. However, long-term care is expensive. Far too many seniors find that such services are unaffordable, yet their income is too high to quality for public assistance through Medicaid. Fortunately, this situation can be partially solved through prearranging and prepurchasing an irrevocable funeral contract like those offered by our Partner and Premier providers. The money spent to prepurchase a funeral may help you “spend down” countable assets and become eligible for Medicaid assistance with long-term care expenses.

Medicaid is a jointly funded state and federal insurance program that provides health care coverage to low-income and needy people, including children, seniors, and people with disabilities. This program is the largest public payer of long-term care expenses. Generally speaking, Medicaid covers expenses for assisted living facility services for all eligible people over the age of 21. It also covers community- and home-based services for those who require the services of an assisted living facility if they do not remain at home.


Eligibility for Medicaid depends on your income and assets, among other things. You can find details and state-based information here. Assets considered “countable” in determining Medicaid eligibility include: cash, checking and savings accounts, retirement funds, trusts, property other than a primary residence, valuable possessions (art, jewelry, collectibles). Exempt assets include your principle residence, certain personal property (furniture, appliances), life insurance with a cash value up to $1,500, one automobile, one wedding ring, irrevocable burial funds and, most importantly for our purposes, an irrevocable funeral contract.

Spend-down and irrevocable funeral contracts

A Medicaid “spend-down” is a financial strategy some seniors use when their assets are too high to qualify for Medicaid yet not high enough to pay for long-term care. By “spending down” countable assets, some seniors become eligible. Purchasing an irrevocable funeral contract, like those available through eFuneral’s Partner and Premier providers, is a great way to reduce your assets in an effort to qualify for Medicaid while gaining something of great value. If your assets exceed the countable limit for your state, you can use an irrevocable funeral contract to reduce your countable assets by up to $15,000, or $30,000 for a married couple, according to the American Council on Aging. Prearranging and prepurchasing your funeral not only help you leave clarity and calm for your loved ones when you’re gone, but also help you qualify for long-term care assistance to live your golden years as you see fit.

Disclaimer: This blog entry does not constitute legal advice. Check your state’s laws and consult with your personal financial advisor before taking any actions concerning your Medicaid eligibility.