Allowable Expenditures Limited by Concept of Reasonableness

Allowable Expenditures Limited by Concept of Reasonableness

Although many expenditures are allowable and are part of the normal spenddown, expenditures which are disproportionate or unreasonable will be denied. This concept is based upon my discussions with Medicaid supervisors rather than personal experience or regulation.

For example, if a single individual has a house and a $100,000 in cash, reasonable expenses on the house in preparation for sale are an acceptable spenddown. However, unjustifiable and unneeded expenses would be denied.

Post 8 indicates that family resources that are not part of the community spouse resource allowance, need not be spent on the nursing home. However, the expenditures that are not part of the protected amount are subject to reasonableness. Assuming $400,000 in resources and a community spouse resource allowance of $109,560, if the community spouse uses the balance to go on a trip around the world, this will be suspect.

Funds set aside for a family funeral plot are traditionally excludable under 10:71-4.4. However, expenditures for a plot during the Medicaid application process which are extraordinary will be carefully reviewed.

Prepaid funeral expenses (i.e. prepaid irrevocable funeral trust) must relate to actual expenses incurred. At one time, funds were paid in excess of the actual costs, and after the applicant received Medicaid, the balance of the monies paid were returned to the family. This is no longer allowable.

As indicated by Post 11, real estate owned by an applicant, spouse of an applicant, or jointly, is not counted as a resource. A spenddown technique which I have used has been to use funds to improve the property. My general approach has been to have the contractor verify the costs and have pictures of the property prior to the expenditure. Merely listing the expenditures on the home without verification could be denied as a spenddown.

Obviously, the list of such excess expenditures is infinite. Other thoughts that come to mind are the purchase of an inordinate amount of health insurance (see Post 1), payments by an applicant to a child in excess of what is reasonable in the community under a caretaker agreement (see Post 52), delay of inheritance to be received by the community spouse or applicant (not really excess funds, but in that category, see Posts 27 and 28), etc.


Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© September 2009, Post 53