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