Medicaid Buy Down: Learn How To Legally Protect Your Assets From Confiscation

By Tracy Renee Lee

August 5, 2021

If you or an aging parent is entering long-term care, you are allowed to buy down your liquid resources

Last week, I had a client whose mother had passed away in a nursing home, without insurance to help cover the expenses of her burial needs. His mother had only been in the nursing home for a few months. Upon discussion, my client thought his mother might have funds in her bank account. In exploration for funding, he asked for our assistance and so, we sent an inquiry to the bank on his behalf.

Prior to entering the nursing home, his mother had had substantial funding in her account. Regrettably, she nor her son consulted an end-of-life financial counselor or funeral practitioner prior to her entrance into the nursing facility. If either had, her funeral expenses would have been covered and he would not have had to go to his bank and refinance both of his vehicles, in order to afford to bury her.

During the 1970's, I was a schoolgirl. I lived at home with my parents and my siblings, my father was self-employed. As a self-employed general contractor in the 1970’s, my father lamented over the difficulties of a weak economy that were imposed upon him. Our country suffered tremendously during those days with outrageous interest rates, ridiculous gas shortages and the tragic Vietnam War Fallout.

Through it all, my father was strong and fearless. He kept food on the table and money in the pockets of his employees by adhering to the following adages. To this day, my favorite two pearls of wisdom from my dad are, “Knowledge is Power” (Francis Bacon, 1597) and “Fortune Favors the Prepared Mind.” (Luis Pasteur, 1854) Now that I am self-employed and must put food on the table and money in the pockets of my employees, both of these statements, do ring true in my heart on a daily basis.

Unfortunately, my client last week did not grow up with a self-employed father from the 1970’s economic nightmare. He was, therefore, unprepared for the expenses that he faced, upon the death of his mother.

Knowledge is Power is a true statement. Knowledge always gives power in any situation or subject, in which, one finds oneself. The knowledge to invest, shelter, earn rather than borrow and leverage one’s assets, is power indeed. In the situation that my client was in, knowledge of end-of-life expenses and how to prepare for them would most certainly have helped him, be more financially, protected. Fortune Favors the Prepared Mind, this would have preserved his payment-free status and allowed him greater comfort, in our country’s current inflationary, economic woes.

In order to better protect your assets, might I suggest that you seek out an end-of-life financial counselor? Seeking such advice, may save your family home, family heirlooms, family fortunes and any inheritance. None of us wants to see our parents, nor ourselves, in a nursing home; however, the reality of such an occurrence, is not that, farfetched.

Statistically, we would all be better off understanding long-term care, its expenses and its funding resources. Primarily, we should understand that at-need long-term care is neither affordable, nor free. One should prepare for such expenses at an early age by investments or insurance. Medicaid may seem as though it is free, however, those expenses are the debt of the receiver, as such, the receiver’s assets, both liquids and physical tangibles, they are subject to seizures, by the government.

Fortunately, the government has built in, an allowance for certain expenses and protections of certain assets. One must, however, protect and shelter those assets, prior to entering or qualifying for Medicaid. For most assets, Medicaid has a five-year look-back period. With this in mind, you can understand why one must prepare, rather than procrastinate, organize and shelter, their finances.

One of Medicaid’s allowances for those who find that they have extended their planning to the last moment, is the Medicaid Buy-Down Program. If you or an aging parent, is entering long-term care, you are allowed to Buy Down your liquid resources. In other words, you are allowed to shelter a respectable amount of your funds into certain expenses. Funds may be spent to repair a home, a vehicle or other necessities, in life.

One of those necessities, which became of utmost importance to my client last week, was the expense of his mother’s funeral. If he had just participated in the Buy-Down Allowance three weeks prior, his mother’s funeral would have been prepaid with her own funds. With significant funds in her bank account, she could have visited the funeral home and had pre-funded her funeral expenses. At that point, those funds would have been secured and would have rested there, until the time of her death. If my client and his mother had participated in this program, he would have had the resources necessary, to bury her without, having to borrow the funds, at the time of her death.

My client’s situation was expensive, unfortunate and completely avoidable. All he needed to do was follow my father’s admonitions; educate yourself, prepare for, the expected and for, the unexpected. Each state has different qualifications and disqualifications, for long-term care expenses, commonly known as, Medicaid. My father’s advice would be to research your options, before you find yourself in a bind. Medicaid posts its rules, regulations and restrictions on-line, for each state. I suggest you look them up and consult a financial consultant, sooner rather than later.

By the way, long-term care, does not only affect the elderly. If you visit a nursing home, you may be surprised to find many people as young as 20 or so, confined there. One never knows when health misfortune might hit them, health can be fleeting and its consequences, can be expensive. For this reason and others, I suggest you prepare for all possibilities in life.

My name is Tracy Renee Lee. I am a Certified Grief Counselor (GC-C), Funeral Director (FDIC), published author, syndicated columnist, Podcaster and founder of the “Mikey Joe Children’s Memorial” and Heaven Sent, Corp. I write books, weekly bereavement articles, Podcasts and Grief BRIEFs, related to understanding and coping with grief. I am the American Funeral Director of the Year Runner-Up and recipient of the BBB’s Integrity Award.

It is my life's work to comfort the bereaved and help them live on.

For additional encouragement, please visit my podcast “Deadline” at: https://open.spotify.com/show/7MHPy4ctu9OLvdp2JzQsAA Or at: https://anchor.fm/tracy874 and follow me on Instagram at: "Deadline_TracyLee."