Medicaid Spend Down for Senior Care
What to do when one’s assets are above the Medicaid limits.
Medicaid eligibility criteria will vary by state, each having a set amount of income and assets allowed for an elderly individual or couple looking to obtain Nursing Home Medicaid or HCBS Waivers.
Despite the limits in place, the Medicaid spend-down option allows seniors to legally qualify for Medicaid approval if their assets can be ‘spent down’ in accordance with the Medicaid spend-down allowances.
Medicaid Spend-down//Defined
In a nutshell, spend-down means that the state allows Medicaid applicants to subtract specific non-covered medical expenses and living costs from their countable assets to lower their asset total and qualify for Medicaid.
This program is also referred to as Surplus Income, Excess Income, Share of Cost, or Medically Needy.
*Although most states do, some states do not participate in this program.
What may be included in Medicaid spend-down?
If your loved one’s income and assets exceed the Medicaid limits, here are the specific details about expenses and assets that may be removed from the asset total, to hopefully amount to less than the state limits.
Income Spend-down
Spending down income is pretty straightforward and means that if an elderly applicant’s income exceeds the state’s limit, and his monthly medical bills add up to the exceeded amount or more, his net income will meet the eligibility criteria and thereby allow him to be approved for Medicaid.
Applicable medical bills may include:
- ✦ Health Insurance Premiums
- ✦ Unpaid Medical Bills
- ✦ Prescription medications
- ✦ Doctor’s visits
Pooled Income or Qualified Income Trusts (PIT or QIT) is another option allowed by some states for individuals with excess income. This involves automatically depositing extra income into a trust designated for use for personal needs and medical expenses.
Asset Spend-down
As with income spend-down, realizing that the total of your loved one’s assets exceeds the state Medicaid limit does not automatically mean that he or she is not eligible for Medicaid senior care. The options for applicants who exceed the asset limit include removing non-countable assets and spending down countable assets as applicable.
Understanding Countable vs. Non-countable Assets
Countable assets – also referred to as available assets – are considered assets regarding Medicaid eligibility, while non-countable assets are not.
Countable assets may include:
- ✦ Cash
- ✦ Checking or Savings Account Balances
- ✦ Properties that are not the primary residence of the applicant
- ✦ Retirement Accounts (IRAs and 401ks are sometimes counted, depending on the state.)
- ✦ CDs, Mutual Funds, Bonds, and Stocks
These assets must amount to below the Medicaid limit in the applicable state for a candidate to be Medicaid eligible.
Non-countable assets may include:
- ✦ The applicant’s primary residence – the applicant must reside in this home or have an intent to return home. A spouse living in the primary home will also make it a non-countable asset.
- ✦ Prepaid burial or funeral expenses
- ✦ A Vehicle
- ✦ Whole Life Insurance Policies (below the designated combined cash value)
- ✦ Term Life Insurance
- ✦ Household appliances and Personal items
- ✦Jewelry and Family Heirlooms
Spend-down Strategies
When deciding on your asset spend-down strategy, it is important to realize that spending down certain assets by buying additional assets or gifting assets can violate other Medicaid regulations, including the 5-year look-back period.
Therefore, it is highly recommended that a Medicaid expert be consulted to guide your family on this intricate process.
Applying for Medicaid is a very complex, confusing, and overwhelming task. Reach out to Senior Planning Services to get clarity about Medicaid.
Call us at 855.775.2664 or email us today for a free no-obligation consultation.