Income and asset limits for Medicaid do not remain consistent across the United States, nor do they remain the same even within each state. 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). At the time of this writing, in most states, the asset limit is $2,000. They are also sometimes referred to as liquid assets, which are assets that are easily converted to cash. 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. A third party, called a trustee, controls the QIT. Or sell the old one and buy a new one. 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. 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. Ask for all costs paid in the three calendar months before the month you are applying for Medicaid. Also, as previously discussed, an applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. An irrevocable medical trust is money set aside that becomes part of the trust that pays out to certain beneficiaries. Keep in mind that each state has different rules regarding who is eligible for Medicaid and how the qualification process is administered. Maybe you’ve always wanted a nicer car? 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. 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. Remember, you’re allowed up to $1,500 in the cash value of your life insurance policies. Spend down usually occurs as the individual pays for nursing home care expenses out of pocket … 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. Even the wealthiest Americans qualify. Not all assets held by the applicant are counted towards Medicaid’s asset limit. In this case, you're eligible for Medicaid because you're considered "medically needy." 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. Non-Countable Assets 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. Bank accounts—checking or savings accounts. Provide any unpaid or paid medical bills. The costs paid by EPIC or ADAP, not just your co-payment, count toward your excess income. However, being over the asset limit does not mean one cannot qualify for Medicaid 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 One easy method is to use our Medicaid Spend Down Calculator. Medicaid has rules as to how many resources the applicant and the applicant’s spouse may keep. Strategies to Spend Down Assets to Gain Medicaid Approval. Pay-In Program. When you start or change automatic withdrawal, please … 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. Some states allow “intent” to return home to qualify the home as an exempt asset. 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. 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. 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. The perfect way to spend down assets is to pay down debt. 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. In this case, the couple is generally limited to $3,000 total in assets. Any medical expenses—such as prescriptions, insurance premiums, doctor visits, and outstanding medical bills—that you incur are subtracted from your income. Furthering the complexity is the fact that asset limits vary based on the state in which one resides. 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. 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 … Doing this might be the single best strategy for killing two birds with one financial stone. 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. Countable (non-exempt) assets are counted towards the asset limit. Non-Countable (exempt) assets are not counted towards Medicaid’s asset limit. If bills are Use of this content by websites or commercial organizations without written permission is prohibited. If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” Maybe you need a wheelchair ramp, stairlift, or other accommodations for yourself or somebody who has a medical condition. 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. 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 paid, your Medicaid is activated for this period. You’re allowed one vehicle so put some money into repair or upgrades. But what is and what isn’t a Medicaid Spend Down? For example, the program might be called any of the following: Share of Cost, Excess Income, Surplus Income, or simply, Spend Down. As mentioned above, being over the limit(s) does not mean one cannot become Medicaid eligible. That means some of the individual's income or assets … If an applicant is over the asset limit for Medicaid eligibility, spending down excess non-exempt assets becomes paramount. As of 2020, this figure, called the Community Spouse Resource Allowance (CSRA), can be as great as $128,640. (Further detail is below under Countable Assets and Non-Countable Assets). ", Understanding Your 401(k) Retirement Plan. (For the elderly, this program is often called Aged, Blind and Disabled Medicaid). What do I pay? These states are called income cap states, and in these states, Medicaid applicants can still become income eligible via Qualified Income Trusts (QITs). The limits often vary based on the specific Medicaid program and on one’s marital status. If the individual can show they pay $50 per month on medical expenses, they can deduct $50 from their income and qualify for Medicaid. Mark the box that says START, complete and sign the form, attach a voided check, and return the form to the address indicated. As with individual applicants and married couples in which both spouses are applying, there are some exceptions. Married Couples with One Applicant Individuals with a Medicaid Spend-down have a monthly deductible they must reach before Medicaid is activated. You may have to pay a small part of your health care costs (like a … 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 money is permanently placed in the trust and managed by somebody other than the person or their spouse. medical bills. Furthermore, the asset limit sometimes differs based on the Medicaid program in which the couple is applying. 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. As previously noted, in order for applicants to be eligible for Medicaid, they must have limited income. Do You Know Which Type of Life Insurance Is Right for You? They talked to friends, social workers, and the visiting nurse. 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. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. An applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. Essentially, you can use… Submit copies of your bills to your assigned caseworker. (Medicaid reimbursement is much lower than private pay open market rates). For example, the above $3,000 asset limit is common when both spouses apply for their state’s regular Medicaid program. spend-down amount in a particular month should consider utilizing the Pay-in Program. Medicaid breaks things into two buckets—countable 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. Or the roof needs replaced or the décor is looking a little dated. Trusts require an estate attorney. (As mentioned above, this figure, as of 2020, is $128,640 in most states). 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 exceptions exist. 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 … 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. One can purchase medical devices that are not covered by insurance, like dentures, eyeglasses, and hearing aids. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. 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. Click here for assistance in finding a Medicaid planner. Another exception to the rule is California, which has no home equity value limit whatsoever (for certain types of Medicaid). To begin, Medicaid has an asset limit, which must be met in order for an applicant to qualify for benefits. Anything above that might make sense to cancel. 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. There is also a home equity value limit for exemption purposes. Jewelry, engagement or wedding rings, and family heirlooms. Which of Your Assets Are Subject to Probate? Copyright © 2020 All rights reserved. If she incurs medical bills of $50 per month, the rest of her medical bills will be covered by Medicaid. Best Health Insurance Options for Single Parents, Learn the Notable Differences Between a Will and a Trust. Medicaid Spend-Down Explained. If they could, should they? Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. 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. What Is an Irrevocable Life Insurance Trust? Purchase an Annuity. 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. My friend and her family panicked. This program allows individuals to pre-pay their spend-down to Medicaid for a period of One to Six months. This site is for information purposes; it is not a substitute for professional legal advice. Its coverage for 72.4 million Americans makes it the largest source of health coverage in the United States. Medicaid has a look-back period in which all past transfers are reviewed. Put differently, together a couple can often keep up to $4,000 in assets. Not all assets are created equal. If one has gifted assets or sold them under fair market value during this timeframe, a period of Medicaid ineligibility will ensue. 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. Tim Parker covered personal finance for The Balance. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. Married Couples 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. Investment assets like CDs, stocks, bonds, mutual funds, and others. One can create a formal life care agreement, often referred to as. One can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances. (California has a 30-month look-back period as does New York for certain types of Medicaid). 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. 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. How Do Life Insurance Payouts Work When Someone Dies? In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. The non-applicant spouse, commonly called the community spouse, is able to retain a higher number of the couples’ combined assets. What you pay for coverage depends on your state’s rules. Not all states have a 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. In many states, this option is known as the “Medically Needy Pathway”. Exempt assets include one’s primary home, given the individual applying for Medicaid, or their spouse, lives in it. 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. 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. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. Hearing aids, dentures, eyeglasses, contacts, prosthetic devices, and surgical supplies also count as long as they’re not covered by insurance. 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. (Home equity value is the market value of one’s home minus any debt against it). There are other ways of prepaying burial expenses. This is called a spend down. Assets held in irrevocable trusts or Asset Protections trusts are not counted towards the asset limit. To qualify for Medicaid, often individuals must first complete an income or asset spend down. You can spend down your own money to become Medicaid eligible. Anybody who owns a home knows that it’s easy to spend a lot of money fast. 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. 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