Medicaid Acceptable Ways To Spend Down Assets
An applicant for Medicaid who has assets valued above the allowable limit has some options when it comes to spending down. Its important to take the time to get these spend-down strategies exactly right, and hiring the service of an elder law attorney or certified Medicaid planner is a good idea because violations of Medicaids look-back period will result in a denial of benefits. For more on look-back periods, .
Personal Care / Life Care Agreements: A formal life care agreement, also called a personal care agreement, is between a person who has lost independence and their caregiver . Paying for caregiving, as long as documentation is drafted according to strict rules, can lower assets without violating Medicaids look-back period. The caregiver can continue being paid even after the move into a nursing home, as long as they continue advocating for the Medicaid recipient.
Medicaid Exempt Annuities: These annuities basically convert a large amount of money into a steady income stream. Again, its important for applicants to be sure they purchase annuities in a way that does not violate Medicaid look-back rules.
Paying Off Debt: Accrued debt such as credit card bills, vehicle loans, and mortgages can be paid off without violating the Medicaid look-back period.
Medical Equipment: Assets may be spent on medical devices that arent covered by insurance, such as glasses and hearing aids.
Past Paid Medical Bills
Past paid medical bills may be used if the medical services were provided and paid for within the three calendar months before the month you applied for Medicaid with excess income. They may be applied to meet your excess income for up to six months beginning in the month you applied, and sometimes beginning up to three months before you applied, if you want “retroactive coverage” for Medicaid to pay your recent medical bills.
Bills paid by EPIC or ADAP in the three months before the month in which you applied for Medicaid may be used to meet your excess income.
- Example 1: You paid your 17-year old child’s dental bill in June for dental care provided in May. You have your own unpaid medical bills in the months of June and July. You apply for Medicaid in August. You may use the paid dental bill toward your excess income beginning in the month of June.
- Example 2: Each month EPIC has been paying $100 for your prescriptions and you have been paying your $20 co-payment. In October you apply for Medicaid. You have no unpaid medical bills. You are determined eligible for Medicaid and your case is opened effective October 1 with a $50 monthly excess income. Since you do not need coverage in the three month retroactive period , the paid amount of $360 can be used to meet your excess income for six months . The $60 balance will be lost as paid bills can only be used up to a maximum of six months.
What If I Need Help Gathering And Submitting My Bills Or If It Is Difficult For Me To Travel To The Medicaid/dss Office Every Month
People with disabilities who find it difficult to go into a DSS/Medicaid office have a right to fax in bills as a reasonable accommodation for a disability. In some districts, including New York City, anyone can fax in their bills. Ask your caseworker for a fax number and fax cover sheet, or for another procedure to accommodate your disability. The fax number in New York City is 917-639-0645. If you fax bills, you must include your name, case and CIN number, the amount of your excess income, and say which month you want coverage. If you need help with producing your bills because of a disability, you can contact your local department of social services to see what reasonable accommodations can be made.
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How Much Money Can You Have In The Bank And Still Qualify For Medi
To find out if you qualify for one of Medi-Cals programs, look at your countable asset levels. You may have up to $2,000 in assets as an individual or $3,000 in assets as a couple. As of July 1, 2022 the asset limit for some Medi-Cal programs will go up to $130,000 for an individual and $195,000 for a couple.
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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How Does The Medicaid Spend Down Program Work
SummaryTo be eligible for Medicaid Long Term Care , an individual must have income and assets below the limits for the specific Medicaid program for which they are applying. Candidates with income or assets over those limits must spend-down their excess money until they meet the limits at which time, they will become eligible. However, applicants cannot give away their money and they must spend it only in ways that are acceptable to the Medicaid program. The Spend-Down process is complicated, and any mistakes can result in a Medicaid denial or penalty. Fortunately, there are approaches that make it possible to get approved for Medicaid LTC and preserve some monies for spouses and family members.
Tips To Eliminate The Spend
There are special budgeting rules for people who work even a small amount, and for people who used to receive SSI, and those who returned to the community from a nursing home or adult home, and others. See this article to see if you can benefit by these special rules.
If you can’t, consider using a SUPPLEMENTAL NEEDS TRUST 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. See more here:
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For Which Types Of Medicaid Long Term Care Does Spend
There are three main types of Medicaid Long Term Care benefits in every state. Each of these programs has both income and asset limits for beneficiaries, therefore spending down to meet the limits is relevant to all types of Medicaid Long Term Care.
Nursing Home MedicaidIn 2022, the income limit for Nursing Home Medicaid is often $2,523 per month, and the asset limit is often $2,000 for a single applicant. If an applicants income and/or assets are above those thresholds, then spend down financial strategies become necessary. For more on Nursing Home Medicaid, .
Home and Community Based Services Medicaid WaiversIn 2022, the financial limits for Medicaid waivers are close to, or the same as, those for Nursing Home Medicaid: $2,523 per month in income and $2,000 in assets . Anyone applying for Medicaid waivers whose income and/or assets are above those limits should research spend down strategies described on this page. For more information on HCBS waivers, .
Be Careful Of Transferring Money
A fast way to get rid of these assets may be transferring money to children or loved ones so its no longer considered your asset, however, Medicaid will penalize you greatly if you transfer these assets for less than fair market value within the past five years before your Medicaid application.
The penalty can range from a few months to many years before youll have the opportunity to qualify for Medicaid. And, in many cases, you or your loved ones don’t have that kind of time to live on their own and care for themselves.
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Inpatient/hospital Care And Services
- If you need hospital care or need help paying your hospital bills, you may be able to get Medicaid inpatient services, in addition to the outpatient care described above. You must have medical bills that are at least equal to your monthly excess income amount for six months. These bills can be paid or unpaid. They can also be for medical services other than hospital care.
- Once your medical bills are at least equal to your excess income amount for six months, you must bring or send these bills to your local department of social services. You will then receive Medicaid for six months.
What If I Don’t Have Bills That Are Equal To Or Exceed My Excess Income
If you do not have medical bills but you need medical care, there is another option called the Pay-In Program. You can pay your monthly excess income amount for any month to your local department of social services. You should only do this if you need services in that month. Ask your local department of social services about this option.
If you do not choose the Pay-In option and you do not have any medical bills that are equal to or exceed your excess income, you will not have Medicaid coverage for that month.
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How Much Is Too Much For Medicaid
States that signed up extended Medicaid eligibility to all adults earning up to 138 percent of the federal poverty level, or about $16,105 for an individual. But if you live in one of the 23 states that didnt expand coverage, the limits can be really strict, according to a new report from the Kaiser Family Foundation.
Past Unpaid Medical Bills
Past unpaid medical bills may be used to meet your excess income amount even if they are old, as long as they are still viable, meaning that the medical provider is still able to bring a legal action to collect them. These bills may be applied to meet your excess income indefinitely into the future.
- Example: You have a hospital bill from four years ago and received a collection notice from the hospital this year. The bill is for $2,000. Your excess income is $200. You may submit this bill to meet your excess income for six consecutive months. After the six months is over, if the provider is still trying to collect on the bill, you can continue to use the balance of the bill for four more consecutive months.
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How Is The Amount Of My Excess Income Determined
Your Medicaid caseworker will determine the monthly excess income amount. The amount is the difference between the monthly Medicaid income limit and your countable income. When we count your income, we take your gross monthly income and then subtract certain deductions. There are different deductions depending on whether you are certified disabled or blind or age 65 or older, or whether you are under age 21, pregnant, or a parent of a child under age 21.
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Term Life Insurance Vs Whole And Universal Insurance
A term life policy is in force for a specific period of time, and guarantees a stated payout to your beneficiaries when you pass. Term life insurance has no investment component and no cash value. These policies are not countable assets and do not affect your Medicaid eligibility.
Whole life and universal life insurance are both types of permanent life policies. They are called permanent because the policies remain in force over your lifetime as long as the premiums are paid. As noted above, permanent life policies accumulate cash value over time and that cash value may be considered a countable asset for Medicaid eligibility. Most states do allow you to hold a small whole life policy with a face value of less than $1,500. But larger whole life policies and all universal life policies are countable assets and do affect your Medicaid eligibility.
Because these policies can affect Medicaid eligibility, some people may lapse their universal or whole life policies to prevent the cash surrender value from counting against them. Dont let your policy lapse, cash out through a life settlement which allows you to sell your life insurance policy for a lump sum that can be used as you see fit.
Insurance strategies for spending down
With the help of a financial advisor, you can safely spend down your countable insurance assets. Your advisor might recommend:
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Learn More About Medicare
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Its important to note, however, that there are specific rules you must follow in order to qualify for Medicaid through a spend down program which might be called the Medically Needy Pathway, Share of Cost, Excess Income, Surplus Income or other name depending on your state.
What Is The Maximum Income To Qualify For Medicaid In Illinois
Medicaid income and asset limits vary based on marital status.
Unmarried applicants canât have more than $2,000 worth of assets. They also canât make more than $1,073 per month. Married applicants applying together canât make more than $1,452 per month, and they canât have assets totaling more than $3,000.
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What Is The Medicaid Excess Income Program
The Medicaid Excess Income program is sometimes referred to as the “Spenddown program” or the “Surplus Income program”. Here we will be referring to it as the Excess Income program.
If your monthly income is over the Medicaid level, you may still be able to get help with your medical bills. The amount your income is over the Medicaid level is called excess income. It is like a deductible. If you are eligible for Medicaid except for having excess income and you can show that you have medical bills equal to your excess income in a particular month, Medicaid will pay your additional medical bills beyond that for the rest of that month. This includes outpatient care, doctor and dental visits, lab tests, prescription drugs, and long-term care in the community such as home care and assisted living. There are special rules for hospital stays which is explained further below.
How To Meet A Spenddown
To meet a spenddown you must tell us about your medical expenses. These can include recurring medical expenses, bills for hospital visits or health insurance premiums. We may need to see proof of these expenses, like receipts for medications or copies of hospital bills. Eligible expenses are subtracted from your total spend-down amount. When your spenddown amount gets to zero, your Medicaid coverage begins.
Here are examples of expenses you should send us to meet a spend-down:
- Medical expenses your insurance does not cover
- Over the counter drugs and medical supplies. For examplevitamins, band-aids and antacids
- Travel costs to see a healthcare provider
- Medical bills you owe before or during the spenddown period
- Medical bills you paid during your spenddown period
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Please Answer A Few Questions To Help Us Determine Your Eligibility
Many individuals who apply for Medicaid find that they have too many assets to qualify. Medicaid is a “needs-based” program, and a successful Medicaid applicant must have insufficient assets to pay for one’s own care. Federal law establishes a benchmark for the amount of resources an individual may own to qualify for the program.
The process of reducing the value of your assets to qualify for Medicaid is referred to as “spending down.” One misconception is that the only way to reduce the value of one’s assets is to spend them on the Medicaid applicant’s medical care. In reality, there are a wide range of expenditures that will reduce the value of the applicant’s estate that will enable Medicaid eligibility.
How Do You Get Medicaid Through The Excess Income Program
First, you need to contact or visit your local department of social services to tell them that you want to be in the Excess Income Program.
If your Medicaid case is opened with excess income, you will get a notice telling you the amount of your excess income.
You can spenddown to the Medicaid level in one of two ways:
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Can A Family Member’s Bills Be Used Toward Your Excess Income Amount
Yes. Bills may be for medical care given to you, your spouse, or your children who are under 21 years old. If you provide medical support for a child not living with you, you may be able to use the child’s bills. Medical bills for your parent may also be used toward meeting your monthly excess if you are under 21 and live with your parent.
