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. 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. Other exceptions exist. Asset spend down is applicable across the 50 states, while income spend down is only relevant in some of the states. 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. Furthermore, the asset limit sometimes differs based on the Medicaid program in which the couple is applying. Married Couples with One Applicant 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. Non-Countable Assets Individuals with a Medicaid Spend-down have a monthly deductible they must reach before Medicaid is activated. A Medicaid spenddown can literally refer to spending one’s money to get below $2,000.00. When considering ones assets, its important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” 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. Individual Applicants 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. Trusts are complicated and creating one to qualify for Medicaid adds an additional level of complexity. However, one fact remains the same: all Medicaid programs for the elderly require either restricted income or assets or both. 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. Life insurance policy with a cash value of $1,500 or less. 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. But what is and what isn’t a Medicaid Spend Down? 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. Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. See more here: Gather all medical bills. In 100% states, the community spouse is able to retain 100% of the couples’ joint assets, up to the maximum allowable amount. Non-Countable (exempt) assets are not counted towards Medicaid’s asset limit. Even the wealthiest Americans qualify. They talked to friends, social workers, and the visiting nurse. Trusts require an estate attorney. Here are a few ideas: Studies show that seniors are going into retirement with more debt than in the past. 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. 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. 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 Tim Parker covered personal finance for The Balance. Pay-In Program. Even if you have too much income to qualify, some states let you "spend down" to become eligible for Medicaid. Or the roof needs replaced or the décor is looking a little dated. Essentially, you can use… The "spend down" process lets you subtract your medical expenses from your income to become eligible for Medicaid. (Further detail is below under Countable Assets and Non-Countable Assets). As with individual applicants, there are exceptions to this rule based on the state in which one resides. In this case, you're eligible for Medicaid because you're considered "medically needy." Married Couples (As mentioned above, this figure, as of 2020, is $128,640 in most states). Medicaid is the nation’s health insurance program where most people will qualify based on work history. Some states allow “intent” to return home to qualify the home as an exempt asset. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. If bills are WHEN YOU SHOULD SPENDDOWN To decide if you should pay your spenddown, The non-applicant spouse, commonly called the community spouse, is able to retain a higher number of the couples’ combined assets. Medicare will pay first for covered medical services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing. (Further detail is below under Countable Assets and Non-Countable Assets). 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. 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. 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. By using our website, you agree to our terms of use and privacy policy. In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. Income and asset limits for Medicaid do not remain consistent across the United States, nor do they remain the same even within each state. 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. Or sell the old one and buy a new one. Provide any unpaid or paid medical bills. Use of this content by websites or commercial organizations without written permission is prohibited. Primary home—check with your state on rules regarding your 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. 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. One can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances. As previously noted, in order for applicants to be eligible for Medicaid, they must have limited income. Strategies to Spend Down Assets to Gain Medicaid Approval. 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. Medicaid law allows some people with very limited income to be on Medicaid for free. Medicaid spend down. As of 2020, this figure, called the Community Spouse Resource Allowance (CSRA), can be as great as $128,640. 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. There is also a minimum resource allowance, which as of 2020, is $25,728. 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. Could they enforce the verbal Medicaid spend down agreement with the provider? If one is over the asset limit after considering all non-cou… Exempt assets include one’s primary home, given the individual applying for Medicaid, or their spouse, lives in it. To qualify for Medicaid, often individuals must first complete an income or asset spend down. Countable Assets Do You Know Which Type of Life Insurance Is Right for You? (Again, this figure, as of 2020, is $128,640 in most states). If one has income above the qualifying limit, one can still qualify for Medicaid via spend down. Click here for assistance in finding a Medicaid planner. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. If an applicant is over the asset limit for Medicaid eligibility, spending down excess non-exempt assets becomes paramount. An irrevocable medical trust is money set aside that becomes part of the trust that pays out to certain beneficiaries. If they could, should they? Full or partial payments. Maybe you’ve always wanted a nicer car? 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. The perfect way to spend down assets is to pay down debt. Best Health Insurance Options for Single Parents, Learn the Notable Differences Between a Will and a Trust. (Home equity value is the market value of one’s home minus any debt against it). 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. 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. The person has a choice of how to pay the amount above the Medicaid income limit. 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. medical bills. That means some of the individual's income or assets … 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. This is called a spend down. To begin, Medicaid has an asset limit, which must be met in order for an applicant to qualify for benefits. What Is an Irrevocable Life Insurance Trust? 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. This program allows individuals to pre-pay their spend-down to Medicaid for a period of One to Six months. Also, as previously discussed, an applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. For example, a person over 65 is denied Medicaid because her monthly income is $50 more than the limit for Medicaid eligibility. You may have to pay a small part of your health care costs (like a … The CSRA is further complicated by the fact that some states are 50% states, while others are 100% states. You can pay off credit cards, mortgage loans and automobile loans in full or just partially. 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). Medicaid has a look-back period in which all past transfers are reviewed. Medicaid breaks things into two buckets—countable and non-countable assets. Submit copies of your bills to your assigned caseworker. 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. If there are excess resources, the applicant must spend down to the applicable resource limit. Countable assets are anything Medicaid counts toward the countable asset limit set by your state. Not all assets held by the applicant are counted towards Medicaid’s asset limit. Your only option is to spend down your assets and manipulate your income (lawfully) until you qualify. Countable assets include: Non-countable assets are anything that is exempt from your Medicaid asset limit. (California has a 30-month look-back period as does New York for certain types of Medicaid). 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. 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. For many applicants, a Medicaid “Spend Down” is necessary so that the applicant will qualify for benefits. Not all states have a medically needy pathway. This money is permanently placed in the trust and managed by somebody other than the person or their spouse. There are other ways of prepaying burial expenses. 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. They are also sometimes referred to as liquid assets, which are assets that are easily converted to cash. Copyright © 2020 All rights reserved. However, there is no equity value limit if a Medicaid applicant’s spouse lives in the home. 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. That’s when the trust becomes an attractive option. 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. 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. When one is over the Medicaid asset limit, it becomes imperative to spend down excess, non-exempt assets in order to qualify for Medicaid. As of 2020, the equity value cannot exceed $595,000, or $893,000, depending on the state in which one resides. 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. (For the elderly, this program is often called Aged, Blind and Disabled Medicaid). What you pay for coverage depends on your state’s rules. That said, one needs to proceed with caution when doing so. One can create a formal life care agreement, often referred to as. My friend and her family panicked. In many states, this option is known as the “Medically Needy Pathway”. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. Many experts advise against this type of arrangement. 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. ", Understanding Your 401(k) Retirement Plan. 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. Investment assets like CDs, stocks, bonds, mutual funds, and others. 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. 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. At the time of this writing, in most states, the asset limit is $2,000. 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. If one has gifted assets or sold them under fair market value during this timeframe, a period of Medicaid ineligibility will ensue. Put differently, together a couple can often keep up to $4,000 in assets. (Medicaid reimbursement is much lower than private pay open market rates). These states are called income cap states, and in these states, Medicaid applicants can still become income eligible via Qualified Income Trusts (QITs). To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. Anything above that might make sense to cancel. Medicaid has rules as to how many resources the applicant and the applicant’s spouse may keep. Hearing aids, dentures, eyeglasses, contacts, prosthetic devices, and surgical supplies also count as long as they’re not covered by insurance. Which of Your Assets Are Subject to Probate? As mentioned above, being over the limit(s) does not mean one cannot become Medicaid eligible. 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. 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 … You might hear of Irrevocable funeral trusts, which establish a trust for burial expenses with the funeral home named as the beneficiary. Purchase an Annuity. Jewelry, engagement or wedding rings, and family heirlooms. The costs paid by EPIC or ADAP, not just your co-payment, count toward your excess income. Mark the box that says START, complete and sign the form, attach a voided check, and return the form to the address indicated. When determining if one is over the asset limit, it’s critical to know which assets are counted and which are not. Remember, you’re allowed up to $1,500 in the cash value of your life insurance policies. Not all assets are created equal. 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. Down excess non-exempt assets becomes paramount minus any debt against it ) spouse lives in it like …! Medicaid for free coverage in the cash value of one to Six months is. Is Right for you will and a trust for burial expenses with the home. A formal life care agreement, often referred to as Estate so it Goes to your Family—Not to.... Period of one ’ s asset limit is common when both spouses applying. 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