Furthering the complexity is the fact that asset limits vary based on the state in which one resides. What do I pay? 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. 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 Married Couples medical bills. See more here: Assets held in irrevocable trusts or Asset Protections trusts are not counted towards the asset 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). 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. Not all states have a medically needy pathway. Exempt assets include one’s primary home, given the individual applying for Medicaid, or their spouse, lives in it. Medicaid law allows some people with very limited income to be on Medicaid for free. As mentioned above, being over the limit(s) does not mean one cannot become Medicaid eligible. 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. Other exceptions exist. In this case, the couple is generally limited to $3,000 total in assets. 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. What you pay for coverage depends on your state’s rules. He is now the president of IT services company "The Web Group. Non-Countable Assets 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. 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. One can purchase medical devices that are not covered by insurance, like dentures, eyeglasses, and hearing aids. You’re allowed one vehicle so put some money into repair or upgrades. Another exception to the rule is California, which has no home equity value limit whatsoever (for certain types of Medicaid). That’s when the trust becomes an attractive option. Your only option is to spend down your assets and manipulate your income (lawfully) until you qualify. How Do Life Insurance Payouts Work When Someone Dies? If you can't, consider using a SUPPLEMENTAL NEEDS TRUST (SNT) TO ELIMINATE THE SPEND-DOWN - People who are "disabled" as defined for Social Security benefits -- whether under or over age 65 --may deposit their spend-down into an SNT, and request their local DSS to rebudget their income to disregard the deposited income - this eliminates the spend-down. In this case, you're eligible for Medicaid because you're considered "medically needy." Tim Parker covered personal finance for The Balance. 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. 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). 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. 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. Asset spend down is applicable across the 50 states, while income spend down is only relevant in some of the states. 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 person may choose to either pay “excess” monthly income to the state or to pay a medical provider for one or more medical bills. Usually the spend down period lasts six months, although it can vary depending on the state. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. When determining if one is over the asset limit, it’s critical to know which assets are counted and which are not. Furthermore, the asset limit sometimes differs based on the Medicaid program in which the couple is applying. Primary home—check with your state on rules regarding your home. Pay-In Program. (For the elderly, this program is often called Aged, Blind and Disabled Medicaid). 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. Provide any unpaid or paid medical bills. Medicaid Spend-Down Explained. If there are excess resources, the applicant must spend down to the applicable resource limit. spend-down amount in a particular month should consider utilizing the Pay-in Program. 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 … Home furnishings, appliances, other personal items. 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. Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. Mark the box that says START, complete and sign the form, attach a voided check, and return the form to the address indicated. (Further detail is below under Countable Assets and Non-Countable Assets). Many experts advise against this type of arrangement. One easy method is to use our Medicaid Spend Down Calculator. 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. The limits often vary based on the specific Medicaid program and on one’s marital status. Investment assets like CDs, stocks, bonds, mutual funds, and others. In many states, this option is known as the “Medically Needy Pathway”. 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 … ", Understanding Your 401(k) Retirement Plan. The "spend down" process lets you subtract your medical expenses from your income to become eligible for Medicaid. For example, a person over 65 is denied Medicaid because her monthly income is $50 more than the limit for Medicaid eligibility. Medicaid breaks things into two buckets—countable and non-countable assets. Countable assets include: Non-countable assets are anything that is exempt from your Medicaid asset limit. Bank accounts—checking or savings accounts. For many applicants, a Medicaid “Spend Down” is necessary so that the applicant will qualify for benefits. Do You Know Which Type of Life Insurance Is Right for You? Strategies to Spend Down Assets to Gain Medicaid Approval. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. 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. There is also a home equity value limit for exemption purposes. When one is over the Medicaid asset limit, it becomes imperative to spend down excess, non-exempt assets in order to qualify for Medicaid. An irrevocable medical trust is money set aside that becomes part of the trust that pays out to certain beneficiaries. 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. In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. (Again, this figure, as of 2020, is $128,640 in most states). By using our website, you agree to our terms of use and privacy policy. Purchase an Annuity. But what is and what isn’t a Medicaid Spend Down? Best Health Insurance Options for Single Parents, Learn the Notable Differences Between a Will and a Trust. There is also a minimum resource allowance, which as of 2020, is $25,728. You can spend down your own money to become Medicaid eligible. As of 2020, this figure, called the Community Spouse Resource Allowance (CSRA), can be as great as $128,640. Trusts are complicated and creating one to qualify for Medicaid adds an additional level of complexity. 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). Use of this content by websites or commercial organizations without written permission is prohibited. (Medicaid reimbursement is much lower than private pay open market rates). (Home equity value is the market value of one’s home minus any debt against it). When you start or change automatic withdrawal, please … There are other ways of prepaying burial expenses. 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. 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. 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 money is permanently placed in the trust and managed by somebody other than the person or their spouse. Individual Applicants 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. To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. 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. If one has income above the qualifying limit, one can still qualify for Medicaid via spend down. They talked to friends, social workers, and the visiting nurse. 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. Gather all medical bills. You need to complete a Spend Down Automatic Withdrawal Form PDF Document. 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. 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. (Further detail is below under Countable Assets and Non-Countable Assets). In the case of one spouse applying for nursing home Medicaid or long-term care via a HCBS (Home and Community Based Services) Medicaid waiver, the applicant spouse is generally able to retain up to $2,000 in assets. This also applies to bank loans or other loans the applicant or spouse is legally obligated to pay. 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. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. Submit copies of your bills to your assigned caseworker. 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. Maybe you’ve always wanted a nicer car? As of 2020, the equity value cannot exceed $595,000, or $893,000, depending on the state in which one resides. The 6 Best No Medical Exam Life Insurance Providers of 2020, 6 Steps You Should Take to Prepare for Retirement, Programs That Can Help With Your Medicare Premiums, How to Reduce Estate Taxes with an Irrevocable Life Insurance Trust, The 7 Best Burial Insurance Options of 2020. For example, the above $3,000 asset limit is common when both spouses apply for their state’s regular Medicaid program. If they could, should they? At the time of this writing, in most states, the asset limit is $2,000. (California has a 30-month look-back period as does New York for certain types of Medicaid). If an applicant is over the asset limit for Medicaid eligibility, spending down excess non-exempt assets becomes paramount. Anybody who owns a home knows that it’s easy to spend a lot of money fast. Ask for all costs paid in the three calendar months before the month you are applying for Medicaid. 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. 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. One can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances. You may have to pay a small part of your health care costs (like a … If one is over the asset limit after considering all non-cou… They started searching online about what to do. Medicaid is a needs-based health insurance program that exists to help people with healthcare needs who can’t otherwise afford healthcare coverage. Countable assets are anything Medicaid counts toward the countable asset limit set by your state. The CSRA is further complicated by the fact that some states are 50% states, while others are 100% states. 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. 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. 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. 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. 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. 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. In 100% states, the community spouse is able to retain 100% of the couples’ joint assets, up to the maximum allowable amount. That means some of the individual's income or assets … What Is an Irrevocable Life Insurance Trust? You can pay off credit cards, mortgage loans and automobile loans in full or just partially. For example, the program might be called any of the following: Share of Cost, Excess Income, Surplus Income, or simply, Spend Down. Medicare will pay first for covered medical services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing. The spend down in this case is the $50 of medical bills she incurs. If bills are Non-Countable (exempt) assets are not counted towards Medicaid’s asset limit. Also, as previously discussed, an applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. However, there is no equity value limit if a Medicaid applicant’s spouse lives in the home. 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. To begin, Medicaid has an asset limit, which must be met in order for an applicant to qualify for benefits. If the individual can show they pay $50 per month on medical expenses, they can deduct $50 from their income and qualify for Medicaid. Click here for assistance in finding a Medicaid planner. Any medical expenses—such as prescriptions, insurance premiums, doctor visits, and outstanding medical bills—that you incur are subtracted from your income. 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). A third party, called a trustee, controls the QIT. Could they enforce the verbal Medicaid spend down agreement with the provider? Individuals with a Medicaid Spend-down have a monthly deductible they must reach before Medicaid is activated. Income and asset limits for Medicaid do not remain consistent across the United States, nor do they remain the same even within each state. 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. However, one fact remains the same: all Medicaid programs for the elderly require either restricted income or assets or both. Essentially, you can use… Even if you have too much income to qualify, some states let you "spend down" to become eligible for Medicaid. Depending on the state in which one resides, “medically needy” may be called something different. 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. Hearing aids, dentures, eyeglasses, contacts, prosthetic devices, and surgical supplies also count as long as they’re not covered by insurance. Spend down usually occurs as the individual pays for nursing home care expenses out of pocket … 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 … An irrevocable trust allows your loved ones to receive the financial benefits of your assets. 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. 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. One can create a formal life care agreement, often referred to as. Keep in mind that each state has different rules regarding who is eligible for Medicaid and how the qualification process is administered. 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. Doing this might be the single best strategy for killing two birds with one financial stone. 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. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. 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. The costs paid by EPIC or ADAP, not just your co-payment, count toward your excess income. You might hear of Irrevocable funeral trusts, which establish a trust for burial expenses with the funeral home named as the beneficiary. WHEN YOU SHOULD SPENDDOWN To decide if you should pay your spenddown, For example, gifting assets to family members very commonly results in Medicaid ineligibility or a penalty period. This is called a spend down. Married Couples with One Applicant Medicaid has rules as to how many resources the applicant and the applicant’s spouse may keep. If she incurs medical bills of $50 per month, the rest of her medical bills will be covered by Medicaid. Maybe you need a wheelchair ramp, stairlift, or other accommodations for yourself or somebody who has a medical condition. Ironically, now might be the time to go for it. Medicaid has a look-back period in which all past transfers are reviewed. Copyright © 2020 All rights reserved. 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. Countable (non-exempt) assets are counted towards the asset limit. Or sell the old one and buy a new one. As with individual applicants and married couples in which both spouses are applying, there are some exceptions. This program allows individuals to pre-pay their spend-down to Medicaid for a period of One to Six months. Medicaid is the nation’s health insurance program where most people will qualify based on work history. 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 can be complicated, and if not carefully done, can result in Medica id ineligibility. If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” These states are called income cap states, and in these states, Medicaid applicants can still become income eligible via Qualified Income Trusts (QITs). My friend and her family panicked. 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. When considering ones assets, its important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. Some states allow “intent” to return home to qualify the home as an exempt asset. As previously noted, in order for applicants to be eligible for Medicaid, they must have limited income. Anything above that might make sense to cancel. The person has a choice of how to pay the amount above the Medicaid income limit. Commonly called Miller Trusts, an applicant’s excess income is directly deposited into an irrevocable trust, which means it cannot be changed or dissolved. Purchase medical devices that are easily how to pay medicaid spend down to cash is administered has no home equity value limit a! Ineligibility or a penalty period a nicer car, spending down excess non-exempt assets becomes.. Based on the state in which the couple is generally limited to $ 3,000 in... 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