Medicaid has a look-back period in which all past transfers are reviewed. (As mentioned above, this figure, as of 2020, is $128,640 in most states). 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 … Tim Parker covered personal finance for The Balance. 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. (Again, this figure, as of 2020, is $128,640 in most states). 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. Medicaid law allows some people with very limited income to be on Medicaid for free. You might hear of Irrevocable funeral trusts, which establish a trust for burial expenses with the funeral home named as the beneficiary. 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. In 100% states, the community spouse is able to retain 100% of the couples’ joint assets, up to the maximum allowable amount. The non-applicant spouse, commonly called the community spouse, is able to retain a higher number of the couples’ combined assets. 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. 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. If she incurs medical bills of $50 per month, the rest of her medical bills will be covered by Medicaid. Medicaid Spend-Down Explained. For example, the program might be called any of the following: Share of Cost, Excess Income, Surplus Income, or simply, Spend Down. (Further detail is below under Countable Assets and Non-Countable Assets). Put differently, together a couple can often keep up to $4,000 in assets. Provide any unpaid or paid medical bills. Ironically, now might be the time to go for it. Individual Applicants Non-Countable Assets Purchase an Annuity. That means some of the individual's income or assets … 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. However, one fact remains the same: all Medicaid programs for the elderly require either restricted income or assets or both. 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. Retain an attorney: Paying legal fees is a strategic way to spend down because attorneys can advise … Furthering the complexity is the fact that asset limits vary based on the state in which one resides. 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. 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. The "spend down" process lets you subtract your medical expenses from your income to become eligible for Medicaid. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. This option may make sense for you if you have a low spend-down, so that you can afford to pay 3 … As previously noted, in order for applicants to be eligible for Medicaid, they must have limited income. 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. There are other ways of prepaying burial expenses. 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. This also applies to bank loans or other loans the applicant or spouse is legally obligated to pay. 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. Your only option is to spend down your assets and manipulate your income (lawfully) until you qualify. Best Health Insurance Options for Single Parents, Learn the Notable Differences Between a Will and a Trust. Home furnishings, appliances, other personal items. 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 As of 2020, this figure, called the Community Spouse Resource Allowance (CSRA), can be as great as $128,640. Even if you have too much income to qualify, some states let you "spend down" to become eligible for Medicaid. Copyright © 2020 All rights reserved. They talked to friends, social workers, and the visiting nurse. (Home equity value is the market value of one’s home minus any debt against it). 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. If bills are Medicaid breaks things into two buckets—countable and non-countable assets. 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. One can purchase medical devices that are not covered by insurance, like dentures, eyeglasses, and hearing aids. Some states allow “intent” to return home to qualify the home as an exempt asset. Non-Countable (exempt) assets are not counted towards Medicaid’s asset limit. If they could, should they? An irrevocable medical trust is money set aside that becomes part of the trust that pays out to certain beneficiaries. If the individual can show they pay $50 per month on medical expenses, they can deduct $50 from their income and qualify for Medicaid. Bank accounts—checking or savings accounts. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. When one is over the Medicaid asset limit, it becomes imperative to spend down excess, non-exempt assets in order to qualify for Medicaid. Not all assets held by the applicant are counted towards Medicaid’s asset limit. The limits often vary based on the specific Medicaid program and on one’s marital status. You’re allowed one vehicle so put some money into repair or upgrades. 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. This money is permanently placed in the trust and managed by somebody other than the person or their spouse. The costs paid by EPIC or ADAP, not just your co-payment, count toward your excess income. Anybody who owns a home knows that it’s easy to spend a lot of money fast. The perfect way to spend down assets is to pay down debt. Full or partial payments. However, there is no equity value limit if a Medicaid applicant’s spouse lives in the home. This site is for information purposes; it is not a substitute for professional legal advice. Income and asset limits for Medicaid do not remain consistent across the United States, nor do they remain the same even within each state. As with individual applicants, there are exceptions to this rule based on the state in which one resides. A third party, called a trustee, controls the QIT. 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. These states are called income cap states, and in these states, Medicaid applicants can still become income eligible via Qualified Income Trusts (QITs). Other exceptions exist. A Medicaid spenddown can literally refer to spending one’s money to get below $2,000.00. 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. In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. Not all states have a medically needy pathway. Medicaid is the nation’s health insurance program where most people will qualify based on work history. 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. Or sell the old one and buy a new one. medical bills. One can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances. You need to complete a Spend Down Automatic Withdrawal Form PDF Document. As of 2020, the equity value cannot exceed $595,000, or $893,000, depending on the state in which one resides. Life insurance policy with a cash value of $1,500 or less. 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). Ask for all costs paid in the three calendar months before the month you are applying for Medicaid. 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. Its coverage for 72.4 million Americans makes it the largest source of health coverage in the United States. 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. 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. 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. One easy method is to use our Medicaid Spend Down Calculator. If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” Medicaid spend down. Depending on the state in which one resides, “medically needy” may be called something different. 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. That’s when the trust becomes an attractive option. Countable assets are anything Medicaid counts toward the countable asset limit set by your state. 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). To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. Mark the box that says START, complete and sign the form, attach a voided check, and return the form to the address indicated. For example, the above $3,000 asset limit is common when both spouses apply for their state’s regular Medicaid program. Also, as previously discussed, an applicant must have assets, also called resources, under a certain amount to qualify for 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. 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). 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. To get a statement of costs, call EPIC 1-800-332-3742 or ADAP 1-800-542-2437. To qualify for Medicaid, often individuals must first complete an income or asset spend down. The spend down in this case is the $50 of medical bills she incurs. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. How Do Life Insurance Payouts Work When Someone Dies? Strategies to Spend Down Assets to Gain Medicaid Approval. 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. Medicaid is a needs-based health insurance program that exists to help people with healthcare needs who can’t otherwise afford healthcare coverage. See more here: 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. 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. Essentially, you can use… Do You Know Which Type of Life Insurance Is Right for You? Many experts advise against this type of arrangement. 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. In many states, this option is known as the “Medically Needy Pathway”. Keep in mind that each state has different rules regarding who is eligible for Medicaid and how the qualification process is administered. 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. That said, one needs to proceed with caution when doing so. Trusts require an estate attorney. Usually the spend down period lasts six months, although it can vary depending on the state. Hearing aids, dentures, eyeglasses, contacts, prosthetic devices, and surgical supplies also count as long as they’re not covered by insurance. Not all assets are created equal. Asset spend down is applicable across the 50 states, while income spend down is only relevant in some of the states. Exempt assets include one’s primary home, given the individual applying for Medicaid, or their spouse, lives in it. A Medicaid spend down is reducing the available assets by purchasing things that benefit the Medicaid applicant and his/her spouse. Any medical expenses—such as prescriptions, insurance premiums, doctor visits, and outstanding medical bills—that you incur are subtracted from your income. They are also sometimes referred to as liquid assets, which are assets that are easily converted to cash. The person has a choice of how to pay the amount above the Medicaid income limit. If one is over the asset limit after considering all non-cou… Click here for assistance in finding a Medicaid planner. They started searching online about what to do. If one has income above the qualifying limit, one can still qualify for Medicaid via spend down. This is called a spend down. 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. Gather all medical bills. Here are a few ideas: Studies show that seniors are going into retirement with more debt than in the past. Use of this content by websites or commercial organizations without written permission is prohibited. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. But what is and what isn’t a Medicaid Spend Down? Countable assets include: Non-countable assets are anything that is exempt from your Medicaid asset limit. 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. 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). Asset spend down can be complicated, and if not carefully done, can result in Medica id ineligibility. 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. 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. Medicare will pay first for covered medical services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing. Commonly called Miller Trusts, an applicant’s excess income is directly deposited into an irrevocable trust, which means it cannot be changed or dissolved. Submit copies of your bills to your assigned caseworker. This program allows individuals to pre-pay their spend-down to Medicaid for a period of One to Six months. Anything above that might make sense to cancel. Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. 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