Medicaid Spend Down

Answer: Whether you’re looking to enroll yourself or you’re handling the enrollment of your elderly loved one, you must apply for the program. To apply, the total income or assets of your elderly family member must be under a certain amount. If the income or assets exceed the amount that the Medicaid program in the residing state has in place as the financial limit, then certain funds are eligible for a Medicaid Spend Down.

Once the amount of income or assets is spent down to a certain point, your loved one will become financially eligible to apply for Medicaid. However, there are rules to ensure that the Medicaid spend down is done properly. 

To qualify for Medicaid, all of your loved one’s assets, including checking accounts, retirement accounts, owned vehicles, houses, or other property, will be considered. In certain cases, some assets, such as a car or one’s primary home that is currently lived in, will be exempt. In the case of a single applicant, the countable assets must not exceed $2,000. However, this amount may vary from state to state. For married couples applying, the limit may go up to $3,000. This limit also varies from state to state. In addition, the limit may also differ depending on the specific Medicaid program that is being applied.   

Medicaid Explained

Medicaid is a joint federal-state health insurance program that helps individuals who qualify to pay for health care services. Medicaid helps provide coverage to millions of Americans who have considerable medical needs and insufficient funds to cover the costs. Funded by state and federal governments, it offers aid to low-income seniors, pregnant women, low-income children, people with disabilities, and elderly adults. 

Due to being funded on both the state and federal levels, there are requirements set in place by federal and state governments. While federal requirements exist, the state can change the coverage through further generosity. A state can never be less generous than what the federal government has. Under federal law, there are certain mandatory services that each Medicaid program must offer. These mandatory services include hospital care, physician services, x-ray and laboratory services, nursing facilities, and home health services. Each state also offers its additional services, including vision services and dental care. 

Anyone who meets the eligibility requirements has the right to coverage through Medicaid. Seniors who receive funds through the Supplemental Security Income (SSI) program are automatically eligible for Medicaid coverage. Eligibility is based solely on finances, meaning if an individual’s income or assets fall over the maximum amount, they are not eligible to apply for Medicaid. However, just because someone may have those assets or income doesn’t mean they have the means to keep up with their long-term care costs. That’s where a Medicaid spend down comes into play.  

How Medicaid Spend Down Works

If an applicant has an asset amount over the limit in their state, they can spend down the amount to become eligible for Medicaid. However, certain items do not qualify under a spend down. spend down items include accrued debt, such as a vehicle or personal loans, medical devices such as hearing aids and eyeglasses, home reparations or modifications, vehicle repairs, personal care agreements, annuities, and irrevocable funeral trusts. Total assets can also be spent down by purchasing personal items such as clothing and furniture or paying for past or current medical bills and transportation services to and from medical care services.

A spend down can be done to assets or income if some income is received. For example, suppose a social security check is received monthly, which exceeds the income limit for Medicaid in your state. In that case, the excess amount can be used to pay for an eligible spend down cost, such as medical bills, to stay within the required limit of the state.  

What Is the Look-Back Period?

When partaking in a Medicaid spend down, it’s important not to violate Medicaid’s look-back period. The look-back period is the period that Medicaid reviews when evaluating assets. This period is in place to prevent applicants from giving away or selling assets under a fair market value to meet the asset limit. If an asset transfer occurs during the look-back period, it is reviewed. If this rule is violated, the applicant becomes ineligible to apply for Medicaid for a certain penalty period. The look-back period is typically 60 months, but the period varies from state to state.  

Calculating the Spend Down Amount

A Medicaid spend down can seem overwhelming, especially if you’re only just learning what it is. Everyone’s financial situation is different from the next person’s, and Medicaid spend downs aren’t exactly cookie-cutter. Many intricacies can affect how they spend down works for your loved one, so it’s important to know exactly what you’re doing. The last thing you need is an innocent mistake resulting in Medicaid ineligibility. 

At Senior Solutions Consulting, we can work with you or your loved one to determine the total assets and income to calculate the spend down amount needed to be met to be eligible for Medicaid. We can also help determine what is considered a countable asset and a noncountable asset. We’ll ensure you don’t violate the look-back period and that everything is done correctly so that your loved one’s transition to Medicaid is smooth and they are getting all the care they need to be covered.