This is because Medicaid has assets that are considered countable (non-exempt) and assets that are not countable (exempt) towards Medicaids asset limit. Some homes, however, may become countable assets because their value exceeds a certain amount. 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. Individual applicants do not get to combine their assets with anyone else in their family even if they are residing in the same household. Summary Photo credit: iStock.com/designer491, iStock.com/cbies, iStock.com/Maksim Labkouski. Some states, which are called income caps states, allow applicants with excess income to qualify for Medicaid by converting their extra income into a Qualified Income Trust (QIT), also called a Miller Trust. Medicaid is a joint federal and state program that, together with the Children's Health Insurance Program (CHIP), provides health coverage to over 72.5 million Americans, including children, pregnant women, parents, seniors, and individuals with disabilities. When one cancels their policy or decreases the cash value of the policy, the extra cash value goes to the policyholder, and must be spent. Vacation homes or properties other than the applicants primary home It is suggested one contact a Medicaid expert before undertaking any of the following purchases. Pay Off DebtOne can pay off credit card debt, their mortgage loan, their automobile loan, etc. While one may think to request assistance from their local Area Agency on Aging (AAA) office, this is not a good option. Some states, which are called income caps states, allow applicants with excess income to qualify for Medicaid by converting their extra income into a Qualified Income Trust (QIT), also called a Miller Trust. Assets held in irrevocable trusts or Asset Protections trusts are not counted towards the asset limit. The limits often vary based on the specific Medicaid program and on ones marital status. The car in question must be used for the transportation of the applicant or for a member of the applicants family. Update your browser to view this website correctly.Update my browser now, Medicaid eligibility for Medicare beneficiaries who need long-term care in the home or community, Cost-Saving Programs for People with Medicare, Spend-down program for beneficiaries with incomes over the Medicaid limit, Social Security Disability Insurance (SSDI), (Make a selection to complete a short survey), Coordinating Medicare with Other Types of Insurance, Medicare Prescription Drug Coverage (Part D), Planning for Medicare and Securing Quality Care, Types of Medicaid for people with Medicare, Aged, blind, and disabled Medicaid eligibility, Medicaid eligibility for Medicare beneficiaries who need long-term care in a nursing home, The Fully Integrated Duals Advantage (FIDA) program, Level 4: Other Insurance and Assistance Programs -, Your spend-down amount will be the difference between your income and the Medicaid eligibility limit, as determined by your state over a given length of time (one to six months). While the spend down program can refer to both income and assets, it is much more common when discussing assets. 100% Special Rule States In just two states, in 2022, the maximum amount of assets the healthy spouse is able to retain is different from the $137,400 that most states allow. If the applicants income or countable assets exceed Medicaids financial limits in their state, it is possible to become eligible by spending down ones income or assets to the point where they become financially eligible. #kt-modal_059d8c-e8 .kt-blocks-modal-link {color:#ffffff;background:#74941f;border-radius:5px;font-size:15px;line-height:24px;font-weight:bold;border-width:0px 0px 0px 0px;padding:8px 16px 8px 16px;margin:0px 0px 0px 0px;}#kt-modal_059d8c-e8 .kt-modal-overlay, #kt-target-modal_059d8c-e8 .kt-modal-overlay, .kb-modal-content_059d8c-e8 .kt-modal-overlay {-ms-flex-align:flex-start;align-items:flex-start;}. And the healthy spouse is able to keep up to 100% of the rest of the couples combined assets up to the $137,400 maximum. Miller trusts fall under the category of supplemental needs trust, and are designed to protect the assets of a disabled person while they are making use of state benefits for their care. Heres how you know. Prior to developing a Medicaid Spend Down plan, families should take the following steps. Copyright 2023 All rights reserved. What Assets Are Exempt From Medicaid Spend Down? A senior makes $66,000 in ineligible transfers over the last five years. Medicaid is a "needs-based" program, and a successful Medicaid applicant must have insufficient assets to pay for one's own care. Furthermore, some states will only exempt a non-applicant spouses retirement account. This article focuses on the asset test for . Our. Being over the limit(s) does not mean one cannot become Medicaid eligible. Gifting ones assets can put one in violation of Medicaids 5-Year Look-Back Period, resulting in a period of Medicaid ineligibility. Having assets over the Medicaid asset limit does not mean a single senior or married elderly couple will not be able to receive Medicaid benefits. You can still get Medicaid coverage later if you meet your spend-down amount during another period of the year. Personal items including wedding/engagement rings The non-applicant spouse, commonly called the community spouse, can keep a higher amount of the couples combined assets as a Community Spouse Resource Allowance (CSRA). Cash However, there are some exceptions. This adds to the complexity of the calculation. While asset limits vary by state, all states allow asset spend-down. Medicaid is the single largest source of health coverage in the United States. An applicant must have limited monthly income to be eligible for Medicaid. Asset Spend Down An applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. This site is for information and support; it is not a substitute for professional advice. In states with this option, the amount of income that puts an applicant above the Medicaid limit may be spent on medical costs like prescriptions, past-due bills, health insurance premiums, and doctors appointments, and then the applicant becomes eligible. Medicaid analyzes up to five years worth of financial transactions to ensure that assets were not transferred illegitimately. Trusts allow people with disabilities and income or. No one applying for Medicaid benefits needs to worry about spending down exempt assets, because they dont count toward eligibility. Enrollment in Medicaid and the Children's Health Insurance Program, known as CHIP, has soared to nearly 94 million people during the roughly three years that states could not winnow their rolls. Medicare will pay first for covered medical services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing. IRAs / 401Ks are sometimes considered countable assets unless they are currently paying out. One such rule prohibits gifting, and if this rule, or any of the other spend down rules are violated, the applicant will be denied Medicaid. By clicking "Get Pricing & Availability" I am providing express written consent to receive calls including automated/pre-recorded calls and automated texts for which I may incur a cost, as well as emails from Caring and its partners, about senior living solutions or Medicare insurance. A third party, called a trustee, controls the QIT. The money that is put into the trust cannot be used for anything aside from funeral / burial expenses. Utilizing the Spend Down Option to Maintain SSI and/or Medicaid Eligibility Married Couples The spouse applying for Medicaid is still able to receive a portion of the couples assets. These limits vary by state, by marital status (single versus married) and, in many states, by program. Read More Avoiding Probate Law in ArizonaContinue. Married Applicant Applying as an Individual: If the individual applicant is married to someone who does not need Medicaid benefits, then the applicant will generally need to have assets under $2,000. Non-Countable Assets This should be done with caution. Make note, the pay, with consideration of the seniors life expectancy, must be fair and reasonable. Its also important to mention that Medicaid has a look back period of 60-months in all states, but California, and in this state, the look back period is 30-months. If one is over the asset limit after considering all non-countable assets, one will have to spend down assets in order to meet Medicaids asset limit. What is a Medicaid spend down? What Is Medicaid Spend Down? - MSN Spending down assets to qualify for Medicaid - Freedom Care When thinking about asset spend-down for Medicaid eligibility, it is extremely important to know which assets are considered countable and which ones are considered non-countable. Income and Asset Limits for Medicaid | Michigan Legal Help Fortunately, the answer is no. Married couples, where only one spouse is applying for long term care Medicaid, have different asset limits. Equity interest is the portion of the home equity value owned by the applicant. Updated on February 20, 2022 Reviewed by Michael J Boyle Fact checked by Vikki Velasquez Photo: Jeff Topping / Getty Images Medicaid is a needs-based health insurance program that exists to help people with healthcare needs who can't otherwise afford healthcare coverage. These states are called income cap states, and in these states, Medicaid applicants can still become income eligible via Qualified Income Trusts (QITs). If an applicant is over the asset limit for Medicaid eligibility, spending down excess non-exempt assets becomes paramount. Or, stated differently, not all states allow applicants to spend down their extra income on medical expenses. On the contrary, his spouse is healthy and does not need Medicaid care. There are no guarantees that working with an adviser will yield positive returns. 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. In exchange, they or their spouse will receive monthly payments for a set period of time or the duration of their life. Again, this amount is generally $2,000. It only makes sense to spend down countable assets, because countable assets are considered when Medicaid offices determine whether an application should be approved. Use of this content by websites or commercial organizations without written permission is prohibited. When you apply to Medicaid for long-term care benefits, they will review recent financial transactions for disallowed transfers of money or property. In addition to heartache, you may also have to deal with the frustrating process of setting the estate of the diseased. Average Retirement Savings: How Do You Compare? Even couples who have made legal and financial preparations for retirement quickly exhaust their savings when just one spouse develops a need for long-term care. In states where that medically needy pathway for spending down income is not available, someone with income above the limit may still become eligible through Qualified Income Trusts (QITs) or Miller Trusts. As a couple, they have $46,000 in countable assets. Fortunately, there are approaches that make it possible to get approved for Medicaid LTC and preserve some monies for spouses and family members. What Is Medicaid Spenddown, and Why Do People Need to Do It - GoodRx 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. This program allows you to deduct certain medical expenses from your income so that you can qualify for ABD Medicaid. What Is Medicaid Spend Down? - WTOP News These include investments and money in ones bank account (see longer list below), but fortunately ones house and vehicle are generally considered exempt, meaning they dont count toward the Medicaid asset limit. The Medicaid spend down program offers a way for beneficiaries with high medical expenses to qualify for Medicaid. Learn if your state is an income cap/categorically need state or a spend-down/medically needy state. Other exceptions exist. Before going through the spend down period, consider whether or not some of your assets may be considered exempt according to Medicaid eligibility requirements. On the other hand, there are many assets that she can purchase as a means to spend down her assets that are over Medicaids asset limit. A Medicaid Spend Down Calculator is available here that will give an applicant an estimate of how much of their retirement savings and assets must be spent to become Medicaid eligible. It seeks to prevent a scheme where a senior has the government pay for their care instead of using their money or other assets. One car may be considered an exempt asset when applying for Medicaid. In 2023, this is generally $29,724. If Medicaid finds ineligible transactions, the applicant will be assessed a penalty. But many other assets are counted for Medicaid eligibility purposes, such . Non-Countable (exempt) assets are not counted towards Medicaids asset limit. For more on look-back periods, click here. Some people want to qualify for Medicaid but have too much money to meet the program's income requirements. Therefore, they have spent down their excess assets and Grant is eligible for Medicaid. ($10,680 each = $21,360). It is then spent on the elderly individuals care and / or medical expenses. Other ways of spending down income are described below. How Does Medicaid Spenddown Work? Not having enough income in retirement is one of the biggest fears people have. Basically, an individual pays a lump sum of money. Primary Home In order for the home to be exempt, the Medicaid applicant must live in their home (or have an intent to return to their home) or have a spouse who lives in it. Use or replication of this content by other web sites or commercial entities without written permission is strictly prohibited. To prevent people from dropping their life insurance policies and leaving their family with no guarantee of financial stability upon their death, the government exempts life insurance policies as long as there is no cash value.For policies with cash values, if the value of a universal, variable or permanent life insurance policy goes beyond an upper limit of $1,500, it will not be considered exempt. Missouri Medicaid Spend Down Rules, Eligibility, & the Nursing Home Medicaid Excess Income ("Spenddown" or "Surplus Income") Program The money in the trust is exempt from Medicaids income limit. A locked padlock For instance, some states do not count the non-applicant spouses IRAs, while some states do not count the applicant spouses or the non-applicant spouses IRAs. When one spouse applies for nursing home Medicaid or long-term care via a HCBS (Home and Community Based Services) Medicaid waiver, the applicant spouse is generally limited to $2,000 in assets. Some states also set a limit to the equity value of ones home for exemption purposes. This is done via a program that is most commonly referred to as Medicaid Spend-Down., In this article, we will define income spend-down, asset spend-down and discuss what can be done to meet these requirements. In 2023, this can be as much as $148,620. An 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 the look-back period, which is a timeframe (often 5 years) 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. What is Medicaid Spend Down. When someone wants to apply for long-term care Medicaid, whether for services in their home, an assisted living facility, or a nursing home care, there is an asset (resource) limit. All investing involves risk, including loss of principal. For instance, the income and asset limits might be different for the regular state Medicaid program versus a Home and Community Based Services (HCBS) Medicaid waiver or nursing home Medicaid. While this type of arrangement is most common for an adult child to care for an aging parent, other types of arrangements can be made. Official websites use .gov For example: Funeral assistance of $1,500.00 is available to Medicaid beneficiaries in Colorado. In approximately 30 states, 401Ks and IRAs are countable assets. Professional Medicaid planners can assist one in reallocating income and / or assets, maintaining maximum assets for healthy spouses, and spending down assets without violating Medicaids look-back period. However, there are Medicaid spend down rules about how one can legally spend down their financial resources. It is best to work with an attorney and a financial advisor to create a plan before making any transfers. How Medicaid Spend Down Works: Rules, Exemptions & Strategies Medicaid has strict asset rules that compel many applicants to "spend down" their assets before they can qualify for coverage. For example, if an applicant were to find out she was $1,000 above the Medicaid requirements and decided to give a $1,001 gift to a family member, she would not become immediately eligible for Medicaid. Lock Commonly called Miller Trusts, an applicants excess income is directly deposited into an irrevocable trust, which means it cannot be changed or dissolved. This is discussed further under Countable Assets and Non-Countable Assets. However, in California, the lookback period is only 2.5 years (30 months). Again, the asset limits vary by the state in which one resides. However, applicants cannot give away their money and they must spend it only in ways that are acceptable to the Medicaid program. The current national median cost of a semi-private nursing home room is $7,908 per month. Example 1 Billy is a single, elderly resident of Illinois who requires long-term Medicaid care in his home. Medicaid is one of the government safety nets that helps seniors pay for their care. For more on CSRA and how marital status affects eligibility, click here. When spending down your moms assets, there are things that she can and cannot spend down on, or said another way, spend excess assets on. Create a Life Care AgreementLife Care Agreements, also called Personal Care Agreements, are formal contracts between an elderly individual and, generally, a family member or close friend. Most life insurance policies, The value of exempt assets, or non-countable assets, does not get considered as part of Medicaids asset limit. Married Couples with Both Spouses Applying for MedicaidWhen a couple is married, all assets are considered joint assets. Non-countable assets do not count toward the Medicaid asset limit. Read our accessibility statement or click here to enable. Asset limits for Medicaid programs, even those programs that primarily serve elderly individuals, are complicated. This figure may vary based on the state in which one resides. 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. This is not an offer to buy or sell any security or interest. For example, one might put on a new muffler, fix the air conditioner, or purchase new tires. These are some of the most common mistakes that you can make that result in unexpected penalties: In order to safely transfer your assets and get Medicaid to pay for your long-term care, use these strategies: Medicaid steps in to help seniors pay for long-term care when they do not have enough money to personally pay for it. Mind the Look-Back Period While the preceding factors are relatively simple to calculate, states also vary in the way they calculate the amount of countable assets a healthy spouse can keep. Out-of-Pocket Cost Exemptions | Medicaid There are rules preventing seniors from transferring money to friends and family to avoid using their own money.