What Is Medicaid Spend Down
If your income and assets disqualify you from Medicaid, you can still get help paying for your medical expenses. You just need to spend your âexcess income,â i.e., the income that prevents you from being eligible for Medicaid.
Medicaid spend down can be compared to a deductible: once you put a certain portion of your income and assets towards the cost of medical care, youâre eligible to receive coverage for the rest of it.
To give an example, letâs say youâre making $100 more per month than the Medicaid income limit. Once youâve spent that $100, youâll be eligible to receive Medicaid benefits.
Give Your Home Some Tlc
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. Maybe you need a wheelchair ramp, stairlift, or other accommodations for yourself or somebody who has a medical condition. Or the roof needs replaced or the décor is looking a little dated. Anybody who owns a home knows that its easy to spend a lot of money fast.
What Assets Are Exempt From Medicaid Spend
Countable assets dont include your primary home, car, or personal belongings. Unless, for example, the dollar value of the home is very high. Yet, Medicaid usually deems most money as countable assets.
The countable funds could be in a savings account or retirement account. They can also include investments such as stocks, bonds, and mutual funds.
Additionally, if you have a second home, it may be a countable asset that you would be able to sell for the money needed to cover your medical expenses. Ultimately, the state determines what assets count and determine your eligibility for a spend-down program.
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Cancel Life Insurance Policies
Remember, youre allowed up to $1,500 in the cash value of your life insurance policies. Anything above that might make sense to cancel. 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. Thats when the trust becomes an attractive option.
Learn How Much Of Your Assets Must Be Spent Down To Be Eligible For Medicaid Long Term Care
The Spend Down Calculator will tell you how much of your and / or your spouses assets must be spent-down before you can qualify for Medicaid long term care benefits. There are many factors that impact this amount such as the total value and financial structure of ones assets, home ownership, marital status and state of residence. This tool is current for the calendar year 2022 and relevant only for persons aged 65+ that require long term care.
Note when answering questions about assets, include assets held in trusts if either spouses name is on the trust.
Confused about Medicaid Spend Down?To be eligible for Medicaid long term care, applicants and / or their spouses must have countable assets less than their states asset limit. Any assets over the limit must be spent in a Medicaid-compliant fashion and without violating Medicaids look-back period. Non-liquid assets, such as property other than ones primary residence, must be sold and that money must also be spent down. Except for limited exceptions, money or assets cannot be given away to family members. More.
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How Can Spending Your Excess Income Help You Meet Medicaid Income Limits
To reach your state’s income and asset thresholds, you may need to spend down your excess income. Some states refer to spenddowns as “medically needy” or “surplus income” programs.
Each state sets an income limit for people to qualify as medically needy. In general, the medically needy pathway limits are under $1,000 a month for an individual. The allowance is higher for couples. To qualify, youll need to spend any income above the limit on medical bills and related expenses. Income in most states includes:
Individual retirement account distributions
Once you meet the income limit, youre eligible for Medicaid for the remainder of the spend-down period. That period can range from 1 to 6 months. A 1-month spend-down period, for example, means that youd need to spend your excess income down to your state’s Medicaid limit every month.
In some states, there is no medically needy pathway. But you may still qualify for Medicaid in these states by paying excess income into a qualified income trust and naming a trustee. Because the funds arent yours anymore, that money doesnt count as your income. The funds in the trust can only be used for certain purposes, such as personal needs or spousal allowances.
What Other Planning Strategies Do People Use To Qualify For Medicaid
Planning ahead is a key part of qualifying for Medicaid. Some strategies to consider may include:
Spending on qualifying home and vehicle improvements where the equipment is not covered by insurance. For example, you might have a wheelchair ramp installed in your home.
Using funds to pay off your mortgage and credit card debt.
Preparing a family caregiver or life care contract. You hire a family member to care for you, paying the fair-market value for their services.
Opening an irrevocable trust and transferring assets to it. You’ll want to make sure this doesn’t happen within the look-back period.
To develop a strategy that wont trigger a look-back penalty, consider working with:
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Whats The Difference Between Income Spenddown And Asset Spenddown
If your state has a medically needy program, you can spend down your income to meet its requirements. Your excess money would pay allowable medical bills and expenses.
In addition to these income limits, most states have asset limits for Medicaid. So, you may also need to spend assets down to meet state requirements and qualify for coverage.
If so, pay attention to state guidelines and what Medicaid considers a countable asset. Some items that dont count as assets for Medicaids purposes are:
Your primary home
Under your state’s Medicaid rules, countable assets might include:
Investment and retirement accounts
Secondary residences, such as a vacation home or rental property
Medicaid Spend Down Guide And Faq
If youâre looking for senior living in Lombard, thereâs a good chance youâve seen how expensive eldercare can get. Even if you have a healthy income, you may be unsure that youâll be able to cover all your medical expenses.
This is where Medicaid spend down comes in. Below, weâll explain what Medicaid spend down is and answer some frequently asked questions about it. We hope this helps you determine your best options for financing your healthcare costs.
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What Is The Look
The Medicaid look-back rule prevents people from giving assets away below fair-market value in order to get under state thresholds. Typically, the state has a 5-year period to review your transactions, counting back from the date you applied for Medicaid.
If the state finds you spent down improperly, you could face a time penalty. That would delay your eligibility for Medicaid.
To help avoid penalties, check the rules in your state. There are exemptions and qualifying people you can transfer assets to without penalty.
Can Any Of My Past Assets Count Against Me
When applying for Medicaid, the program will look back over the last five years of assets you held. This is known as the Five-Year Look-Back Period, and it is designed to prevent people from quickly giving away assets to qualify for the program.
This means that any assets that were given, or sold below market value, are counted against your spend down limit when youâre trying to get Medicaid.
Typical examples of this include gifts given to children, or even trusts youâve set up for them. However, there are some financial arrangements that you may not even consider, such as paying a caregiver without having a formal care agreement.
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Does Medicare Cover Lung Cancer
Medicare covers many services for lung cancer, but costs can still add up. A 2018 study in Cancer Medicine looked at the amount people on Medicare spent for lung cancer at different stages.
During the screening and diagnostic phase, the average spent was $861. Chemotherapy and radiation costs averaged $4,242 to $8,287 per month over the first six months of care. The average cost of surgery, if pursued, was $30,096. This analysis, again, did not include the cost of more expensive immunotherapies.
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What Special Conditions Must You Meet To Qualify For Medicaids Long
Medicaid is a partnership program between federal and state governments, but its administered by the state. This means Medicaid eligibility and requirements vary depending on where you live. So, there is no one-size-fits-all approach.
The federal government sets the baseline requirements to qualify for Medicaid long-term care. Applicants must:
Have a permanent disability or blindness
Meet income and asset thresholds
Each state is responsible for administering Medicaid and complying with federal standards. Some states have expanded Medicaid through the Affordable Care Act , making more people eligible.
In addition, a handful of states have Partnership for Long-Term Care programs. These programs let you qualify for Medicaid without spenddowns. You must meet other eligibility requirements, though.
Its also possible to be on Medicare and Medicaid at the same time. In these cases, Medicaid pays for costs not covered by Medicare.
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Once My Past Medical Bills Have Been Used To Meet My Excess Income How Do I Meet My Excess Income From Then On
Each month in which you need Medicaid services, bring in, send or fax your paid or unpaid medical bills to your local department of social services. Only send these bills when they are equal to or more than the amount of your excess income. You can send in paid or unpaid bills or receipts for multiple bills that add up to your excess income.
You should make doctors’ appointments or fill prescriptions early in the month. This will help you meet your excess income amount faster. Once you reach your excess income amount, Medicaid will pay for covered services for the rest of the month.
How To Lower Your Assets To Qualify For Medicaid
Medicaid is a needs-based health insurance program that exists to help people with healthcare needs who cant otherwise afford healthcare coverage. Its coverage for 76.7 million Americans makes it the largest source of health coverage in the United States.
To qualify for Medicaid you have to be at or below a certain income level and cant have assets below a certain monetary value. These thresholds vary widely from state to state but generally speaking, you can have no more than $2,000 in countable assets if youre single and $3,000 if youre married.
If youre above the limits, that doesnt mean you dont qualifyyou might just have to spend down some of your assets each month.
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Q What Documents Will I Need To Provide When I Apply
A. You will need to provide verification of your income. You do not need to provide proof of your assets or resources or come into our offices to be interviewed unless you are applying for one of the Long Term Care Medicaid programs .
If you are pregnant, you will need to provide proof that you are pregnant. If you are not a U.S. citizen, you will need to provide proof of your alien status. For example, you can provide a copy of your green card.
If you apply online using ASSIST, a web page at the end of the application will tell you exactly what documents must be sent by mail to support the application you are submitting, and the appropriate mailing address.
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Medigap And Medicare Advantage
You may also consider a MSP in combination with a Medigap or Medicare Advantage plan.
Medigap policies cover some of the costs Original Medicare does not cover like copayments, coinsurance, and deductibles. You have to pay a separate premium for Medigap in addition to any Medicare Part A, B, and D premiums you pay. Medigap policies generally do not cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing. A Medigap plan may be a good option for you instead of Medicaid with a spenddown if 1) you have no home care or do not have many dental or vision needs, 2) you do not qualify for QMB, 3) you have high out-of-pocket costs for cost-sharing or Medicare-covered services, and 4) the costs associated with the Medigap plan are less than your spenddown amount.
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How To Spend Down To Meet Medicaid Requirements
If your income or assets exceed your states Medicaid income threshold, your state may run a spend-down program that lets you qualify for coverage by spending the income above your program limits. You can spend down by incurring expenses for medical and remedial care for which you have no health insurance coverage.
Spend-down works like an insurance deductible. You cover medical care expenses up to a specific amount for a given base period, usually three or six consecutive months.
Once the incurred medical expenses exceed the difference between your income and your states Medicaid income limit, as part of the spend-down, Medicaid benefits will be authorized for all or part of the base period. States with a medically needy program must also allow spend-down for blind, aged, and disabled people who dont meet the Medicaid eligibility requirements.
S Before Spending Down Assets
Prior to developing a Medicaid Spend Down plan, families should take the following steps.
Mind the Look-Back PeriodAn applicant over the limit has the option to spend down their assets in order to become Medicaid-eligible, though the process can be complicated and the applicant must always consider thelook-back period, which is a timeframe that will be reviewed by Medicaid officials to make sure applicants have not spent assets in a way that violates Medicaid rules, such as large-sum cash gifts or selling items at less than market value.
Determine Your Asset LimitThe first step of spending down assets is to determine the applicants asset limit and then figure out how much must be spent down. Asset limits for Medicaid programs, even those programs that primarily serve elderly individuals, are complicated. Most state Medicaid programs have a blanket figure for a single person and a married couple , but many other factors must be weighed.
Its crucial to understand ones asset limit before applying for Medicaid Long Term Care programs, because a mistake will lead to denial of benefits, and appealing a denial is time-consuming and difficult.
The CSRA is usually an option for married couples with one spouse applying for Nursing Home Medicaid or a Home and Community Based Services waiver. When one spouse applies for Aged, Blind, and Disabled Medicaid, however, the CSRA is not applicable, and the couples combined assets must be valued below $3,000 .
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Medicare And Medicaid Costs
Medicare is administered by the Centers for Medicare & Medicaid Services , a component of the Department of Health and Human Services. CMS works alongside the Department of Labor and the U.S. Treasury to enact insurance reform. The Social Security Administration determines eligibility and coverage levels.
Medicaid, on the other hand, is administered at the state level. Although all states participate in the program, they arenât required to do so. The Affordable Care Act increased the cost to taxpayersparticularly those in the top tax bracketsby extending medical coverage to more Americans.
According to the most recent data available from the CMS, national healthcare expenditure grew 4.6% to $3.8 trillion in 2019. Thatâs $11,582 per person. This figure accounted for 17.7% of gross domestic product that year. If we look at each program individually, Medicare spending grew 6.7% to $799.4 billion in 2019, which is 21% of total NHE, while Medicaid spending grew 2.9% to $613.5 billion in 2019, which is 16% of total NHE.
Understanding The Difference Between Exempt And Countable Assets
Assets are a persons financial resources, including cash, money in bank accounts, and the value of ones home. When applying for Medicaid Long Term Care programs, including Nursing Home Medicaid and Home and Community Based Services waivers, one needs to divide their assets into two groups: countable and exempt.
No one applying for Medicaid benefits needs to worry about spending down exempt assets, because they dont count toward eligibility. It only makes sense to spend down countable assets, because countable assets are considered when Medicaid offices determine whether an application should be approved.
List of Countable Assets
The application for Medicaid must include documentation of ones countable assets. Countable assets are also called non-exempt and include the following: Cash Vacation homes or properties other than the applicants primary home Mutual funds Bonds Most life insurance policies
List of Exempt Assets
The value of exempt assets, or non-countable assets, does not get considered as part of Medicaids asset limit. An example of an exempt asset is the applicants primary home, so the value of that home does not matter when figuring out whether someones assets exceed the states Medicaid limit.
Other assets that do not count toward the asset limit include: Personal vehicles Term life insurance policies valued below $1,500 Furniture Personal items including wedding/engagement rings Prepaid burial and funeral expenses
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