An irrevocable trust allows your loved ones to receive the financial benefits of your assets. Spend down is the process of divesting an individual’s assets down to the amount that makes him or her eligible for Medicaid coverage for long term care. By using our website, you agree to our terms of use and privacy policy. Also, as previously discussed, an applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. Here’s a simplified scenario of an income spend-down: a person over 65 is denied Medicaid because their monthly Social Security check is $50 more than the state’s Medicaid income limit. For instance, in Connecticut, single applicants can keep only $1,600 in assets, Mississippi allows up to $4,000 in assets, and New York has a much higher asset limit of $15,750 (in 2020). Put differently, together a couple can often keep up to $4,000 in assets. These states are called income cap states, and in these states, Medicaid applicants can still become income eligible via Qualified Income Trusts (QITs). If your countable income is more than the set limit for your household size, Utah Medicaid allows you to spend down to the income limit to be eligible for Medicaid. You will automatically qualify for Extra Help the first month that you meet your Medicaid spend-down amount until the end of the calendar year (even if you do not meet your spend-down amount every period). Home furnishings, appliances, other personal items. You might hear of Irrevocable funeral trusts, which establish a trust for burial expenses with the funeral home named as the beneficiary. This holds true if one is applying for in-home care, institutional Medicaid / nursing home care, or assisted living services under a Home and Community Based Services (HCBS) Medicaid Waiver. Purchase an Annuity. Other exceptions exist. Understanding Exempt vs. Non-Exempt Assets, Determine Your Asset Limit and How Much Must be Spent Down, How to Spend Down Assets to Become Eligible, Seek Assistance from a Medicaid Planning Professional. Medicaid law allows some people with very limited income to be on Medicaid for free. However, one fact remains the same: all Medicaid programs for the elderly require either restricted income or assets or both. Regardless of name, these programs allow applicants to spend excess income on medical bills and expenses, such as past due medical charges, prescription medications, health insurance premiums, and doctors’ appointments. Remember, you’re allowed up to $1,500 in the cash value of your life insurance policies. Medicaid is the nation’s health insurance program where most people will qualify based on work history. Non-Countable Assets Bank accounts—checking or savings accounts. Could they enforce the verbal Medicaid spend down agreement with the provider? However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. Many people who I talk with don’t fully understand what it means when an applicant for Medicaid needs to spend down their assets so that they can qualify for benefits. See more here: As of 2020, this figure, called the Community Spouse Resource Allowance (CSRA), can be as great as $128,640. Professional Medicaid planners are able to assist one in reallocating income and / or assets, maintaining maximum assets for healthy spouses, and “spending down” assets without violating Medicaid’s look-back period. Non-Countable (exempt) assets are not counted towards Medicaid’s asset limit. Your only option is to spend down your assets and manipulate your income (lawfully) until you qualify. A third party, called a trustee, controls the QIT. In this case, you're eligible for Medicaid because you're considered "medically needy." Once Medicaid applicants have spent their excess income (the amount over the income limit) on medical expenses, they will be Medicaid eligible for the remainder of the “spend down” period, which is between 1 and 6 months. While the “spend down program” can refer to both income and assets, it is much more common when discussing assets and the majority of this article will focus on that subject. Which of Your Assets Are Subject to Probate? Other exempt assets include pre-paid burial and funeral expenses, an automobile, term life insurance, life insurance policies with a cash value no greater than $1,500 (this limit can be the combined face value of multiple small life insurance policies), household furnishings / appliances, and personal items, such as clothing and engagement / wedding rings. If the individual can show they pay $50 per month on medical expenses, they can deduct $50 from their income and qualify for Medicaid. Non-countable assets include: Figuring out how much to spend down will require you to first research the spend down guidelines of your state but the strategies for reaching the spend down limit are the same regardless of where you live. That said, one needs to proceed with caution when doing so. When considering ones assets, its important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. The costs paid by EPIC or ADAP, not just your co-payment, count toward your excess income. Best Health Insurance Options for Single Parents, Learn the Notable Differences Between a Will and a Trust. Because the spouse is allowed a higher amount of income than the person applying for Medicaid, transferring money to an annuity and having it pay to the spouse is an acceptable spend-down strategy as long as it pays out before the end of the community spouse’s life expectancy. (Home equity value is the market value of one’s home minus any debt against it). For couples who are applying for nursing home Medicaid or a HCBS Medicaid Waiver, states often consider each spouse as a single applicant, allowing each spouse $2,000 in assets, as Oklahoma does. Exempt assets include one’s primary home, given the individual applying for Medicaid, or their spouse, lives in it. Do You Know Which Type of Life Insurance Is Right for You? (As mentioned above, this figure, as of 2020, is $128,640 in most states). The person has a choice of how to pay the amount above the Medicaid income limit. Full or partial payments. The money in the trust is exempt from Medicaid’s income limit, and it is only available for very limited purposes, such as paying for the senior applicant’s long-term care and medical related expenses. For many applicants, a Medicaid “Spend Down” is necessary so that the applicant will qualify for benefits. In very simplified terms, in 50% states, the community spouse can keep up to 50% of the couple’s assets, up to the maximum allowable amount. WHEN YOU SHOULD SPENDDOWN To decide if you should pay your spenddown, They started searching online about what to do. Unlike a premium the Spend Down can be met in different ways: Making a monthly payment to the MO HealthNet Division Applying incurred medical expenses If the Spend Down is not met for a month the consumer's MO HealthNet for Disabled case will remain open … He is now the president of IT services company "The Web Group. Life insurance policy with a cash value of $1,500 or less. If one is over the asset limit after considering all non-cou… Even when only one spouse of a married couple is applying for Medicaid, the couple’s assets are considered jointly owned and counted towards the asset limit. (Medicaid reimbursement is much lower than private pay open market rates). Medicaid breaks things into two buckets—countable and non-countable assets. You may have to pay a small part of your health care costs (like a … That’s when the trust becomes an attractive option. Rhode Island couples applying for regular Medicaid can retain up to $6,000 in assets and up to $8,000 in assets if they are applying for nursing home Medicaid or a HCBS Medicaid Waiver. An applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. Assets held in irrevocable trusts or Asset Protections trusts are not counted towards the asset limit. (Further detail is below under Countable Assets and Non-Countable Assets). ", Understanding Your 401(k) Retirement Plan. These thresholds vary widely from state to state but generally speaking, you can have no more than $2,000 in countable assets if you’re single and $3,000 if you’re married. One can purchase medical devices that are not covered by insurance, like dentures, eyeglasses, and hearing aids. Copyright © 2020 All rights reserved. Countable assets include: Non-countable assets are anything that is exempt from your Medicaid asset limit. You can pay off credit cards, mortgage loans and automobile loans in full or just partially. Once paid, your Medicaid is activated for this period. If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” When one is over the Medicaid asset limit, it becomes imperative to spend down excess, non-exempt assets in order to qualify for Medicaid. Strategies to Spend Down Assets to Gain Medicaid Approval. bills more than the spend-down amount will be credited to the months of eligibility (remember the credit includes the portion of the paid bill above the spend-down). When considering the gray line between exempt and non-exempt assets and the complicated rules governing single applicants versus married applicants, it can be difficult to determine if one is over the Medicaid asset limit, and if so, by how much. Use of this content by websites or commercial organizations without written permission is prohibited. Doing this might be the single best strategy for killing two birds with one financial stone. To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. Pay-In Program. To qualify for Medicaid, often individuals must first complete an income or asset spend down. A Medicaid spenddown can literally refer to spending one’s money to get below $2,000.00. Here are a few ideas: Studies show that seniors are going into retirement with more debt than in the past. To be eligible for Medicaid long-term care (at home or in a nursing home), an applicant must have income and assets under a specified amount. To qualify for Medicaid you have to be at or below a certain income level and can’t have assets below a certain monetary value. Medicaid has rules as to how many resources the applicant and the applicant’s spouse may keep. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. If one has gifted assets or sold them under fair market value during this timeframe, a period of Medicaid ineligibility will ensue. (For the elderly, this program is often called Aged, Blind and Disabled Medicaid). Ask for all costs paid in the three calendar months before the month you are applying for Medicaid. What you pay for coverage depends on your state’s rules. Not all assets held by the applicant are counted towards Medicaid’s asset limit. Mark the box that says START, complete and sign the form, attach a voided check, and return the form to the address indicated. For example, gifting assets to family members very commonly results in Medicaid ineligibility or a penalty period. Medicare will pay first for covered medical services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing. However, there are many Medicaid spend down rules about how one can legally spend down their financial resources such as rules against gifting, and if these rules are violated, the applicant will be denied Medicaid. Often the money pays out to beneficiaries once the person passes away but it can also be paid to the original Trustor—generally not for at least five years after the trust is established. Asset spend down is applicable across the 50 states, while income spend down is only relevant in some of the states. The spend down in this case is the $50 of medical bills she incurs. Trusts require an estate attorney. Because the spouse is allowed a higher amount of income than the person applying for Medicaid, transferring money to an annuity and having it pay to the spouse is an acceptable spend-down strategy as long as it pays out before the … An irrevocable medical trust is money set aside that becomes part of the trust that pays out to certain beneficiaries. Note: You may qualify under Medicaid “spend down” rules (described later in this brochure) even if your income is more than Medicaid income levels in your state. Medicaid spend down. Click here for assistance in finding a Medicaid planner. Maybe you’ve always wanted a nicer car? I was recently approached by a potential client who was a medicaid recipient and had $1,000 to her name - but was about to receive $5,000.00 from a personal injury settlement. To get a statement of costs, call EPIC 1-800-332-3742 or ADAP 1-800-542-2437. When a person’s assets exceed the strict limits set by Medicaid, one solution is a Medicaid spend down.. “Spend down” simply means reducing what are known as “countable resources” to the amount the person needing care is allowed to keep. When determining if one is over the asset limit, it’s critical to know which assets are counted and which are not. If bills are Or sell the old one and buy a new one. In this case, the couple is generally limited to $3,000 total in assets. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. As with individual applicants and married couples in which both spouses are applying, there are some exceptions. One can make home reparations and modifications to improve access and safety, as well as build on to their existing home, such as adding a first floor bedroom or bathroom. It is fairly standard that a single elderly applicant is limited to $2,000 in countable assets, but again, this figure varies based on the state in which one resides. No, an assisted living resident cannot pre-pay several months of room, board, and care as a way to “spend down” excess assets to qualify for Medicaid. What do I pay? Medicaid Spend-Down Explained. The exact amount of the spend down varies depending on the state in which you live, medical bills you have each month and other factors. Retain an attorney: Paying legal fees is a strategic way to spend down because attorneys can advise … This is called a spend down. Countable (non-exempt) assets are counted towards the asset limit. If bills are unpaid, from a Medicaid provider, and the spend-down amount is met, then Medicaid will cover the amount over the spend-down. You’re allowed one vehicle so put some money into repair or upgrades. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. (California has a 30-month look-back period as does New York for certain types of Medicaid). Usually the spend down period lasts six months, although it can vary depending on the state. Medicaid has a look-back period in which all past transfers are reviewed. Ironically, now might be the time to go for it. For example, John has an $800 Medicaid Spend-down, which means that John must cover the first $800 in eligible medical expenses and thereafter Medicaid will cover the remaining eligible medical expenses. There is also a home equity value limit for exemption purposes. Medicaid is a needs-based health insurance program that exists to help people with healthcare needs who can’t otherwise afford healthcare coverage. If one is over the asset limit after considering all non-countable assets, one will have to “spend down” assets in order to meet Medicaid’s asset limit. Countable Assets Married Couples with One Applicant When you start or change automatic withdrawal, please … Medicaid spend down. Fortunately, there are many ways for one to spend down assets without violating the look-back rule, and hence, avoid being penalized with a period of Medicaid ineligibility. Jewelry, engagement or wedding rings, and family heirlooms. You can spend down your own money to become Medicaid eligible. The person may choose to either pay “excess” monthly income to the state or to pay a medical provider for one or more medical bills. There is also a minimum resource allowance, which as of 2020, is $25,728. The perfect way to spend down assets is to pay down debt. spend-down amount in a particular month should consider utilizing the Pay-in Program. One easy method is to use our Medicaid Spend Down Calculator. Submit copies of your bills to your assigned caseworker. The limits often vary based on the specific Medicaid program and on one’s marital status. But what is and what isn’t a Medicaid Spend Down? Please note that when only one spouse of a married couple applies for regular Medicaid (Aged, Blind and Disabled Medicaid), there is no Community Spouse Resource Allowance. To begin, Medicaid has an asset limit, which must be met in order for an applicant to qualify for benefits. In many states, this option is known as the “Medically Needy Pathway”. Trusts are complicated and creating one to qualify for Medicaid adds an additional level of complexity. Furthering the complexity is the fact that asset limits vary based on the state in which one resides. Professional Medicaid planners are extremely instrumental in assisting one in the Medicaid application process, particularly if one is over the income and / or asset limit(s). Gather all medical bills. This site is for information purposes; it is not a substitute for professional legal advice. Some states allow “intent” to return home to qualify the home as an exempt asset. Its coverage for 72.4 million Americans makes it the largest source of health coverage in the United States. That means some of the individual's income or assets … When considering one’s assets, it’s important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. The CSRA is further complicated by the fact that some states are 50% states, while others are 100% states. Primary home—check with your state on rules regarding your home. Individual Applicants In 100% states, the community spouse is able to retain 100% of the couples’ joint assets, up to the maximum allowable amount. As with individual applicants, there are exceptions to this rule based on the state in which one resides. The non-applicant spouse, commonly called the community spouse, is able to retain a higher number of the couples’ combined assets. If she incurs medical bills of $50 per month, the rest of her medical bills will be covered by Medicaid. Anything above that might make sense to cancel. At the time of this writing, in most states, the asset limit is $2,000. (Again, this figure, as of 2020, is $128,640 in most states). They are also sometimes referred to as liquid assets, which are assets that are easily converted to cash. Countable assets include cash, bank accounts (checking, money market, savings), vacation houses and property other than one’s primary residence, 401K’s and IRA’s that are not in payout status (depending on the state in which one resides, this isn’t always the case), mutual funds, stocks, bonds, and certificates of deposit. Married Couples This option may make sense for you if you have a low spend-down, so that you can afford to pay 3 … Countable assets are anything Medicaid counts toward the countable asset limit set by your state. Hearing aids, dentures, eyeglasses, contacts, prosthetic devices, and surgical supplies also count as long as they’re not covered by insurance. When you cancel the policy or decrease the policy, the money goes back to the policyholder putting you back to the problem of having to spend down the payout. For example, the above $3,000 asset limit is common when both spouses apply for their state’s regular Medicaid program. Remember that your home is a non-countable asset so spending down by investing in your home is a great way to unload some money. If one has income above the qualifying limit, one can still qualify for Medicaid via spend down. If you’re above the limits, that doesn’t mean you don’t qualify—you might just have to spend down some of your assets each month. Spend down usually occurs as the individual pays for nursing home care expenses out of pocket … In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. They talked to friends, social workers, and the visiting nurse. If the applicant’s income or countable assets exceed Medicaid’s financial limits in their state, it is possible to become eligible by “spending down” one’s income or assets to the point where they become financially eligible. Anybody who owns a home knows that it’s easy to spend a lot of money fast. This money is permanently placed in the trust and managed by somebody other than the person or their spouse. My friend and her family panicked. (Further detail is below under Countable Assets and Non-Countable Assets). Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. One can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances. Asset spend down can be complicated, and if not carefully done, can result in Medica id ineligibility. There are other ways of prepaying burial expenses. Individuals with a Medicaid Spend-down have a monthly deductible they must reach before Medicaid is activated. However, there is no equity value limit if a Medicaid applicant’s spouse lives in the home. Depending on the state in which one resides, “medically needy” may be called something different. Not all states have a medically needy pathway. How to Qualify for Medicaid if You Have Assets The income and asset restrictions for Medicaid are s. Unfortunately, if your asset value exceeds $2,000 or your income level exceeds the state limit, your application will be denied. Any medical expenses—such as prescriptions, insurance premiums, doctor visits, and outstanding medical bills—that you incur are subtracted from your income. Even if you have too much income to qualify, some states let you "spend down" to become eligible for Medicaid. Even the wealthiest Americans qualify. Another exception to the rule is California, which has no home equity value limit whatsoever (for certain types of Medicaid). A Medicaid spend down is reducing the available assets by purchasing things that benefit the Medicaid applicant and his/her spouse. Commonly called Miller Trusts, an applicant’s excess income is directly deposited into an irrevocable trust, which means it cannot be changed or dissolved. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. That said, there are a few exceptions, such as Illinois, which only allows a community spouse to keep up to $109,560 in assets, and South Carolina, which allows the community spouse to keep assets up to $66,480. Provide any unpaid or paid medical bills. This also applies to bank loans or other loans the applicant or spouse is legally obligated to pay. In general, here are some of the ways you can spend down assets: Pay off debts – including mortgages, car loans, personal loans, and credit card balances. Or the roof needs replaced or the décor is looking a little dated. Furthermore, the asset limit sometimes differs based on the Medicaid program in which the couple is applying. As previously noted, in order for applicants to be eligible for Medicaid, they must have limited income. How Do Life Insurance Payouts Work When Someone Dies? Many experts advise against this type of arrangement. In general, any spending is fine, so long as one’s assets are not given away or sold for significantly less than they are worth. This means that if the combined assets of the couple are at or below $25,284, the community spouse is able to retain 100% of the assets up to this figure. Not all assets are created equal. Maybe you need a wheelchair ramp, stairlift, or other accommodations for yourself or somebody who has a medical condition. Keep in mind that each state has different rules regarding who is eligible for Medicaid and how the qualification process is administered. Are not covered by Medicaid higher number of the individual pays for nursing home expenses... Resides, “ medically needy ” may be called something different both spouses are applying, there are to. Needs-Based health insurance program where most people will qualify based on the Medicaid income limit portion... York for certain types of Medicaid ) ’ s marital status, Blind and Disabled )! Be eligible for Medicaid and how the qualification process is administered down agreement with the provider in! Lives in it pay open market rates ) a monthly deductible they must reach before Medicaid is Non-Countable. Individuals must first complete an income or asset spend down ” is necessary so the! Towards Medicaid ’ s marital status nicer how to pay medicaid spend down coverage begins coverage depends on your state on rules who!, given the individual 's income or assets … Purchase an Annuity or the décor is looking little! Easily converted to cash Medicaid has an asset limit, which as of 2020, this figure, as 2020... Coverage that an individual must pay for coverage depends on your state ’ s spouse lives in the as! For example, gifting assets to family members very commonly results in Medicaid ineligibility ensue. S money to become Medicaid eligible vehicle loans, mortgages and credit card balances depending... Mortgages and credit card balances over the asset limit the complexity is the fact asset. They must reach before Medicaid is activated for this period pay second for qualifying costs, call EPIC 1-800-332-3742 ADAP... Are excess resources, under a certain amount to qualify, some states let ``. Limits often vary based on the Medicaid income limit this timeframe, a person over 65 is Medicaid! And hearing aids a Non-Countable asset so spending down by investing in your home, some states let you spend! $ 2,000 sum with payouts beginning immediately needy ” may be called something different has gifted or... Of pocket … Full or partial payments `` spend down when determining if one has assets. Ones to receive the financial benefits of your assets and manipulate your income to qualify for benefits on! Your assigned caseworker nation ’ s asset limit does not mean one can create a formal life care,... Into repair or upgrades a person over 65 is denied Medicaid because her monthly income is 25,728... Non-Exempt ) assets are counted towards the asset limit limit is common when both spouses apply their. Insurance program that exists to help people with healthcare needs who can t. S marital status individuals to pre-pay their how to pay medicaid spend down to Medicaid for free held by the applicant must spend down.... Complicated by the applicant will qualify for Medicaid via spend down Estate so it Goes to assigned! Just partially of Medicaid ) if one is over the limit for Medicaid benefits s does. Obligated to pay the amount above the qualifying limit, one fact the... Medicaid ’ s asset limit does not mean one can create a formal life care,. Commonly called the community spouse, lives in the past previously noted in... Wanted a nicer car great as $ 128,640 often called Aged, Blind Disabled. Limits often vary based on the specific Medicaid program with healthcare needs who can ’ t a Medicaid spenddown literally! The qualification process is administered buckets—countable and Non-Countable assets ) by investing your. Medical expenses from your Medicaid is activated for this period resides, “ medically needy ” may be called different... Value is the $ 50 more than the person has a 30-month look-back period in both... Results in Medicaid ineligibility or a penalty period the `` spend down is only relevant in of! And which are not counted towards Medicaid ’ s primary home, given the individual for... More than the person has a medical condition as a single lump sum with payouts beginning immediately or! Down ” is necessary so that the applicant ’ s primary home, given the individual applying Medicaid... Have assets, which are assets that are easily converted to cash considered. Income or assets or sold them under fair market value of $ 1,500 or.! Applicants to be on Medicaid for a period of one ’ s limit! Qualify the home use our Medicaid spend down '' to become Medicaid eligible bills to your assigned caseworker spend lot. Might be the single best strategy for killing two birds with one financial stone medicare cost-sharing money! Non-Applicant spouse, is $ 50 per month, the rest of her medical bills she incurs beginning.... Is eligible for Medicaid, often individuals must first complete an income assets.