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. Another exception to the rule is California, which has no home equity value limit whatsoever (for certain types of Medicaid). That means some of the individual's income or assets … To qualify for Medicaid, often individuals must first complete an income or asset spend down. 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. A Medicaid spend down is reducing the available assets by purchasing things that benefit the Medicaid applicant and his/her spouse. Your only option is to spend down your assets and manipulate your income (lawfully) until you qualify. 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. 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. 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. As previously noted, in order for applicants to be eligible for Medicaid, they must have limited income. As of 2020, this figure, called the Community Spouse Resource Allowance (CSRA), can be as great as $128,640. When one is over the Medicaid asset limit, it becomes imperative to spend down excess, non-exempt assets in order to qualify for Medicaid. 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 … Medicaid has rules as to how many resources the applicant and the applicant’s spouse may keep. Trusts are complicated and creating one to qualify for Medicaid adds an additional level of complexity. Primary home—check with your state on rules regarding your home. Non-Countable (exempt) assets are not counted towards Medicaid’s asset limit. 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. Commonly called Miller Trusts, an applicant’s excess income is directly deposited into an irrevocable trust, which means it cannot be changed or dissolved. (California has a 30-month look-back period as does New York for certain types of Medicaid). Anything above that might make sense to cancel. You can pay off credit cards, mortgage loans and automobile loans in full or just partially. If they could, should they? By using our website, you agree to our terms of use and privacy policy. My friend and her family panicked. ", Understanding Your 401(k) Retirement Plan. Furthering the complexity is the fact that asset limits vary based on the state in which one resides. If one has income above the qualifying limit, one can still qualify for Medicaid via spend down. What do I pay? Could they enforce the verbal Medicaid spend down agreement with the provider? Its coverage for 72.4 million Americans makes it the largest source of health coverage in the United States. Jewelry, engagement or wedding rings, and family heirlooms. To get a statement of costs, call EPIC 1-800-332-3742 or ADAP 1-800-542-2437. Essentially, you can use… The CSRA is further complicated by the fact that some states are 50% states, while others are 100% states. If the individual can show they pay $50 per month on medical expenses, they can deduct $50 from their income and qualify for Medicaid. How Do Life Insurance Payouts Work When Someone Dies? You can spend down your own money to become Medicaid eligible. There is also a minimum resource allowance, which as of 2020, is $25,728. For example, a person over 65 is denied Medicaid because her monthly income is $50 more than the limit for Medicaid eligibility. Anybody who owns a home knows that it’s easy to spend a lot of money fast. 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. One can create a formal life care agreement, often referred to as. 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. 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. 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? Non-Countable Assets Life insurance policy with a cash value of $1,500 or less. 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. The limits often vary based on the specific Medicaid program and on one’s marital status. MedicaidPlanningAssistance.org is a free service provided by the American Council on Aging, What is the Medicaid Estate Recovery Program, Medicaid Spend Down Calculator is available here, consult with a Medicaid planning professional, Allowable Medicaid Spend Down Items (Updated Sep. 2020). However, there is no equity value limit if a Medicaid applicant’s spouse lives in the home. The spend down in this case is the $50 of medical bills she incurs. Medicaid spend down. Hearing aids, dentures, eyeglasses, contacts, prosthetic devices, and surgical supplies also count as long as they’re not covered by insurance. The costs paid by EPIC or ADAP, not just your co-payment, count toward your excess income. What you pay for coverage depends on your state’s rules. Countable Assets This money is permanently placed in the trust and managed by somebody other than the person or their spouse. In this case, the couple is generally limited to $3,000 total in assets. Maybe you need a wheelchair ramp, stairlift, or other accommodations for yourself or somebody who has a medical condition. Submit copies of your bills to your assigned caseworker. The non-applicant spouse, commonly called the community spouse, is able to retain a higher number of the couples’ combined assets. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. 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. 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. A Medicaid spenddown can literally refer to spending one’s money to get below $2,000.00. Investment assets like CDs, stocks, bonds, mutual funds, and others. 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. 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 an applicant is over the asset limit for Medicaid eligibility, spending down excess non-exempt assets becomes paramount. Vehicle repairs, such as replacing the battery, getting an engine tune-up, or replacing old tires are also a way to spend down assets, as is selling an existing car at fair market value and purchasing a new one. This option may make sense for you if you have a low spend-down, so that you can afford to pay 3 … For many applicants, a Medicaid “Spend Down” is necessary so that the applicant will qualify for benefits. However, one must know the allowable Medicaid spend down items and they must proceed with caution in order to avoid violating Medicaid’s look-back period, which is 60-months in every state but California. Use of this content by websites or commercial organizations without written permission is prohibited. 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. Asset spend down is applicable across the 50 states, while income spend down is only relevant in some of the states. 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. Keep in mind that each state has different rules regarding who is eligible for Medicaid and how the qualification process is administered. Depending on the state in which one resides, “medically needy” may be called something different. Once paid, your Medicaid is activated for this period. 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. Even the wealthiest Americans qualify. 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. Pay-In Program. 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. One easy method is to use our Medicaid Spend Down Calculator. Maybe you’ve always wanted a nicer car? 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. Income and asset limits for Medicaid do not remain consistent across the United States, nor do they remain the same even within each state. 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. Usually the spend down period lasts six months, although it can vary depending on the state. Individuals with a Medicaid Spend-down have a monthly deductible they must reach before Medicaid is activated. Or the roof needs replaced or the décor is looking a little dated. 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). 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. You’re allowed one vehicle so put some money into repair or upgrades. They are also sometimes referred to as liquid assets, which are assets that are easily converted to cash. Medicaid law allows some people with very limited income to be on Medicaid for free. One can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances. To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. If she incurs medical bills of $50 per month, the rest of her medical bills will be covered by Medicaid. Ironically, now might be the time to go for it. When considering ones assets, its important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. Doing this might be the single best strategy for killing two birds with one financial stone. Even if you have too much income to qualify, some states let you "spend down" to become eligible for Medicaid. You may have to pay a small part of your health care costs (like a … Medicaid is a needs-based health insurance program that exists to help people with healthcare needs who can’t otherwise afford healthcare coverage. The perfect way to spend down assets is to pay down debt. 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. 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. In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. Put differently, together a couple can often keep up to $4,000 in assets. As of 2020, the equity value cannot exceed $595,000, or $893,000, depending on the state in which one resides. Mark the box that says START, complete and sign the form, attach a voided check, and return the form to the address indicated. As mentioned above, being over the limit(s) does not mean one cannot become Medicaid eligible. Not all assets held by the applicant are counted towards Medicaid’s asset limit. For example, the above $3,000 asset limit is common when both spouses apply for their state’s regular Medicaid program. One can purchase medical devices that are not covered by insurance, like dentures, eyeglasses, and hearing aids. 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. The "spend down" process lets you subtract your medical expenses from your income to become eligible for Medicaid. 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. For example, gifting assets to family members very commonly results in Medicaid ineligibility or a penalty period. That’s when the trust becomes an attractive option. 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. To begin, Medicaid has an asset limit, which must be met in order for an applicant to qualify for benefits. Married Couples 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). 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. Not all assets are created equal. Spend down usually occurs as the individual pays for nursing home care expenses out of pocket … (As mentioned above, this figure, as of 2020, is $128,640 in most states). If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” 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. Medicaid Spend-Down Explained. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. North Dakota allows married couples to keep up to $6,000 in assets, regardless of if they are applying for regular Medicaid, nursing home Medicaid, or a HCBS Medicaid Waiver. Best Health Insurance Options for Single Parents, Learn the Notable Differences Between a Will and a Trust. If there are excess resources, the applicant must spend down to the applicable resource limit. When you start or change automatic withdrawal, please … At the time of this writing, in most states, the asset limit is $2,000. What Is an Irrevocable Life Insurance Trust? Assets held in irrevocable trusts or Asset Protections trusts are not counted towards the asset limit. Countable (non-exempt) assets are counted towards the asset limit. Also, as previously discussed, an applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. Married Couples with One Applicant Full or partial payments. Some states allow “intent” to return home to qualify the home as an exempt asset. (Medicaid reimbursement is much lower than private pay open market rates). A third party, called a trustee, controls the QIT. If one is over the asset limit after considering all non-cou… 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. If one has gifted assets or sold them under fair market value during this timeframe, a period of Medicaid ineligibility will ensue. Not all states have a medically needy pathway. Medicaid has a look-back period in which all past transfers are reviewed. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. 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. They started searching online about what to do. 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. 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. Ask for all costs paid in the three calendar months before the month you are applying for Medicaid. (Further detail is below under Countable Assets and Non-Countable Assets). An applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. If bills are Countable assets are anything Medicaid counts toward the countable asset limit set by your state. This also applies to bank loans or other loans the applicant or spouse is legally obligated to pay. However, one fact remains the same: all Medicaid programs for the elderly require either restricted income or assets or both. 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. Medicaid is the nation’s health insurance program where most people will qualify based on work history. (For the elderly, this program is often called Aged, Blind and Disabled Medicaid). Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. Asset spend down can be complicated, and if not carefully done, can result in Medica id ineligibility. Copyright © 2020 All rights reserved. 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. Process : In order to participate in this Program, the Medicaid recipient must mail a check or money order equal to the surplus amount to the Division of Accounts Receivable and Billing (DARB), not the local Home furnishings, appliances, other personal items. An irrevocable trust allows your loved ones to receive the financial benefits of your assets. Medicaid spend down. 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). Strategies to Spend Down Assets to Gain Medicaid Approval. As with individual applicants and married couples in which both spouses are applying, there are some exceptions. In many states, this option is known as the “Medically Needy Pathway”. Provide any unpaid or paid medical bills. This site is for information purposes; it is not a substitute for professional legal advice. 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. (Further detail is below under Countable Assets and Non-Countable Assets). Bank accounts—checking or savings accounts. Medicaid breaks things into two buckets—countable and non-countable assets. 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. Gather all medical bills. Countable assets include: Non-countable assets are anything that is exempt from your Medicaid asset limit. Many experts advise against this type of arrangement. spend-down amount in a particular month should consider utilizing the Pay-in Program. Furthermore, the asset limit sometimes differs based on the Medicaid program in which the couple is applying. 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). However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. 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. This program allows individuals to pre-pay their spend-down to Medicaid for a period of One to Six months. 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. He is now the president of IT services company "The Web Group. In 100% states, the community spouse is able to retain 100% of the couples’ joint assets, up to the maximum allowable amount. But what is and what isn’t a Medicaid Spend Down? Here are a few ideas: Studies show that seniors are going into retirement with more debt than in the past. Retain an attorney: Paying legal fees is a strategic way to spend down because attorneys can advise … For example, the program might be called any of the following: Share of Cost, Excess Income, Surplus Income, or simply, Spend Down. WHEN YOU SHOULD SPENDDOWN To decide if you should pay your spenddown, That said, one needs to proceed with caution when doing so. 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. This is called a spend down. The person has a choice of how to pay the amount above the Medicaid income limit. Click here for assistance in finding a Medicaid planner. 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. An irrevocable medical trust is money set aside that becomes part of the trust that pays out to certain beneficiaries. (Again, this figure, as of 2020, is $128,640 in most states). As with individual applicants, there are exceptions to this rule based on the state in which one resides. Tim Parker covered personal finance for The Balance. They talked to friends, social workers, and the visiting nurse. 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. Until you qualify spend-down to Medicaid for free bank loans or other accommodations for yourself somebody! 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