When one is over the Medicaid asset limit, it becomes imperative to spend down excess, non-exempt assets in order to qualify for Medicaid. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. If she incurs medical bills of $50 per month, the rest of her medical bills will be covered by Medicaid. In 100% states, the community spouse is able to retain 100% of the couples’ joint assets, up to the maximum allowable amount. To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. 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. 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. 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. Medicaid has a look-back period in which all past transfers are reviewed. 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 program allows individuals to pre-pay their spend-down to Medicaid for a period of One to Six months. You can spend down your own money to become Medicaid eligible. One can pay off accrued debt, such as personal and vehicle loans, mortgages and credit card balances. When determining if one is over the asset limit, it’s critical to know which assets are counted and which are not. 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 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. To get a statement of costs, call EPIC 1-800-332-3742 or ADAP 1-800-542-2437. By using our website, you agree to our terms of use and privacy policy. The "spend down" process lets you subtract your medical expenses from your income to become eligible for Medicaid. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. Exempt assets include one’s primary home, given the individual applying for Medicaid, or their spouse, lives in it. 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. Use of this content by websites or commercial organizations without written permission is prohibited. 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. 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. That’s when the trust becomes an attractive option. What do I pay? However, there is no equity value limit if a Medicaid applicant’s spouse lives in the home. Full or partial payments. To begin, Medicaid has an asset limit, which must be met in order for an applicant to qualify for benefits. Some states allow “intent” to return home to qualify the home as an exempt asset. 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. 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. Trusts require an estate attorney. The CSRA is further complicated by the fact that some states are 50% states, while others are 100% states. 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. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. 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. 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. 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. Retain an attorney: Paying legal fees is a strategic way to spend down because attorneys can advise … How Do Life Insurance Payouts Work When Someone Dies? Your only option is to spend down your assets and manipulate your income (lawfully) until you qualify. This money is permanently placed in the trust and managed by somebody other than the person or their spouse. Mark the box that says START, complete and sign the form, attach a voided check, and return the form to the address indicated. Remember, you’re allowed up to $1,500 in the cash value of your life insurance policies. There is also a home equity value limit for exemption purposes. 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. 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. Click here for assistance in finding a Medicaid planner. Medicaid spend down. (Again, this figure, as of 2020, is $128,640 in most states). (Home equity value is the market value of one’s home minus any debt against it). Could they enforce the verbal Medicaid spend down agreement with the provider? In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. The costs paid by EPIC or ADAP, not just your co-payment, count toward your excess income. Once paid, your Medicaid is activated for this period. At the time of this writing, in most states, the asset limit is $2,000. 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). Pay-In Program. Individuals with a Medicaid Spend-down have a monthly deductible they must reach before Medicaid is activated. 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. Keep in mind that each state has different rules regarding who is eligible for Medicaid and how the qualification process is administered. As of 2020, this figure, called the Community Spouse Resource Allowance (CSRA), can be as great as $128,640. (Medicaid reimbursement is much lower than private pay open market rates). This is called a spend down. If there are excess resources, the applicant must spend down to the applicable resource limit. The perfect way to spend down assets is to pay down debt. Another exception to the rule is California, which has no home equity value limit whatsoever (for certain types of Medicaid). Or sell the old one and buy a new one. Life insurance policy with a cash value of $1,500 or less. 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. In many states, this option is known as the “Medically Needy Pathway”. If one is over the asset limit after considering all non-cou… Which of Your Assets Are Subject to Probate? You’re allowed one vehicle so put some money into repair or upgrades. Provide any unpaid or paid medical bills. 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. Primary home—check with your state on rules regarding your home. For example, the program might be called any of the following: Share of Cost, Excess Income, Surplus Income, or simply, Spend Down. 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. Countable (non-exempt) assets are counted towards the asset limit. 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. Tim Parker covered personal finance for The Balance. The limits often vary based on the specific Medicaid program and on one’s marital status. They are also sometimes referred to as liquid assets, which are assets that are easily converted to cash. If the individual can show they pay $50 per month on medical expenses, they can deduct $50 from their income and qualify for 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). The person has a choice of how to pay the amount above the Medicaid income limit. They talked to friends, social workers, and the visiting nurse. Medicaid Spend-Down Explained. This option may make sense for you if you have a low spend-down, so that you can afford to pay 3 … The spend down in this case is the $50 of medical bills she incurs. 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. As with individual applicants, there are exceptions to this rule 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. Also, as previously discussed, an applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. Medicaid has rules as to how many resources the applicant and the applicant’s spouse may keep. One can purchase medical devices that are not covered by insurance, like dentures, eyeglasses, and hearing aids. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. Usually the spend down period lasts six months, although it can vary depending on the state. Not all assets are created equal. Purchase an Annuity. Furthermore, the asset limit sometimes differs based on the Medicaid program in which the couple is applying. 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. This site is for information purposes; it is not a substitute for professional legal advice. Hearing aids, dentures, eyeglasses, contacts, prosthetic devices, and surgical supplies also count as long as they’re not covered by insurance. 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. 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. He is now the president of IT services company "The Web Group. As mentioned above, being over the limit(s) does not mean one cannot become Medicaid eligible. Put differently, together a couple can often keep up to $4,000 in assets. That said, one needs to proceed with caution when doing so. 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. An irrevocable trust allows your loved ones to receive the financial benefits of your assets. Asset spend down can be complicated, and if not carefully done, can result in Medica id ineligibility. You need to complete a Spend Down Automatic Withdrawal Form PDF Document. 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. Trusts are complicated and creating one to qualify for Medicaid adds an additional level of complexity. A Medicaid spenddown can literally refer to spending one’s money to get below $2,000.00. Ironically, now might be the time to go for it. 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. For example, a person over 65 is denied Medicaid because her monthly income is $50 more than the limit for Medicaid eligibility. What you pay for coverage depends on your state’s rules. What Is an Irrevocable Life Insurance Trust? 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. Medicaid breaks things into two buckets—countable and non-countable assets. In this case, the couple is generally limited to $3,000 total in assets. For example, gifting assets to family members very commonly results in Medicaid ineligibility or a penalty period. Medicaid spend down. Not all assets held by the applicant are counted towards Medicaid’s asset limit. (As mentioned above, this figure, as of 2020, is $128,640 in most states). 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 … Submit copies of your bills to your assigned caseworker. Non-Countable (exempt) assets are not counted towards Medicaid’s asset limit. For many applicants, a Medicaid “Spend Down” is necessary so that the applicant will qualify for benefits. 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. Any medical expenses—such as prescriptions, insurance premiums, doctor visits, and outstanding medical bills—that you incur are subtracted from your income. As of 2020, the equity value cannot exceed $595,000, or $893,000, depending on the state in which one resides. Medicaid is the nation’s health insurance program where most people will qualify based on work history. One easy method is to use our Medicaid Spend Down Calculator. When considering ones assets, its important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. Maybe you need a wheelchair ramp, stairlift, or other accommodations for yourself or somebody who has a medical condition. There is also a minimum resource allowance, which as of 2020, is $25,728. A third party, called a trustee, controls the QIT. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. You can pay off credit cards, mortgage loans and automobile loans in full or just partially. 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. Countable Assets You may have to pay a small part of your health care costs (like a … Income and asset limits for Medicaid do not remain consistent across the United States, nor do they remain the same even within each state. Depending on the state in which one resides, “medically needy” may be called something different. If one has gifted assets or sold them under fair market value during this timeframe, a period of Medicaid ineligibility will ensue. My friend and her family panicked. (Further detail is below under Countable Assets and Non-Countable Assets). Individual Applicants Countable assets include: Non-countable assets are anything that is exempt from your Medicaid asset limit. Married Couples with One Applicant Many experts advise against this type of arrangement. If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” For example, the above $3,000 asset limit is common when both spouses apply for their state’s regular Medicaid program. Copyright © 2020 All rights reserved. ", Understanding Your 401(k) Retirement Plan. As with individual applicants and married couples in which both spouses are applying, there are some exceptions. Or the roof needs replaced or the décor is looking a little dated. Non-Countable Assets These states are called income cap states, and in these states, Medicaid applicants can still become income eligible via Qualified Income Trusts (QITs). 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. 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