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