How do I Meet My Medicaid Spend Down? Are there certain things on which I can and cannot spend the “spend down” money?
To meet your Medicaid spend down, you must “spend down” your “excess” assets. To clarify, for long term care Medicaid, there is an asset limit, and when an applicant has assets over this amount, he / she must reduce his / her countable assets to this level in order to be asset eligible. However, one must exercise caution when “spending down”, as there is a Medicaid look back rule (covered below), and if violated, will result in a period of Medicaid ineligibility.
Generally speaking, the asset limit for Medicaid is $2,000 for an individual applicant, although there is some variance based on the state in which one lives. (To see state specific asset limits, click here). However, not all assets are counted towards Medicaid’s asset limit. For example, one’s primary home, household furnishings, and personal items are generally exempt and not calculated towards the limit. It is only non-exempt (countable) assets over Medicaid’s asset limit that need to be “spent down” in order to become asset eligible.
There are several ways in which applicants can “spend down” their countable assets to meet their Medicaid spend down. For example, one can pay off mortgage and credit card debt, pay their medical expenses, make home repairs and modifications, and purchase an irrevocable funeral trust.
It is vital that applicants do not away give money / valuables to loved ones or sell assets for under fair market value in an attempt to meet their Medicaid spend down. This is because Medicaid has a look back rule that does not allow it. When a long term care Medicaid application is submitted, the Medicaid agency “looks back” for 60-months at all of an applicant’s asset transfers. (30-months in California, and starting October 1, 2020, 30-months in New York for Community Medicaid, the program through which long term home and community based services is provided). If it is determined that one has violated the look back rule, the penalty will be a period of Medicaid disqualification.