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In-laws need to spend down for Medicaid eligibility- need a car as current car is on last legs and only worth max of $500. Is it ok to buy a replacement vehicle from a private seller as long as there is a bill of sale and registered properly and paying sales tax on sales price? And then potentially scrapping old vehicle? Not sure if anyone would buy it in current condition. Or, is it best to go thru a dealer and trade it in? But in that case would likely pay more for the replacement car that way. Only have about $10k to spend on replacement used car so price is a concern and this is their only vehicle. Thx so much!

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I’d suggest that you find out
1. what your states Medicaid program has as the maximum amount that a vehicle can be in order to be under Medicaid exempt assets limits. So whatever replacement vehicle they are buying is under the max.
2. find the current Kelly Blue book value on their current car. If it’s $500 or under, I don’t see any Medicaid problems in the future as you their donating it and getting under $500 tax deduction.

As an aside, buying an old used a car, to me is going to be fraught w future problems. Are your folks able to deal with mechanics and getting to / from the repair shop if need be? I’d suggest you take a look at thier buying a newer better used car from a dealership. Yeah it will cost more but will come w some sort of warranty, plus often a dealership will have a van that will take them home if repairs will be a while or routinely do loaner vehicle. If they both have SS mo income, they will qualify for lending. And if in the future, should dad care & needs get to the point that mom just cannot do it so dad needs to go into a Nursing Home, mom (ok you as dads & her DPOA) will use that car payment as part of her documentation as to why as she as the CS (community spouse in Medicaid speak) needs his mo income to be “waived” in some degree to go to her instead of his mo income having to go as the required by Medicaid copay to the NH.
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As long as the new car is for them and registered and titled in their names. Otherwise using their money on a car registered and titled to someone else, is gifting. Not allowed in spend down.

The old car is kind of iffy. Have Dads mechanic write, on his letterhead "that the cost of repairing the car outweighes what it is worth, $500 and he recommends scraping it" Then take it to the junk yard and get a receipt on their letterhead.
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Makes sense - and of course the car is for them, but I understand some people may try to do shady things. I am just trying to ward off any verification delays ahead of time which could in turn delay approval of his Medicaid application. Car will be registered to my mother in law as my father in law no longer drives. Thank you
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