how does medicare spend down work

How does a spend down work? It works almost like a deductible for car insurance. When you have accumulated medical bills (paid or unpaid) greater than your excess income, you will get Medicaid

for that month.

Full Answer

How to spend down to qualify for Medicaid?

• Pay off a mortgage, credit card debt, or car loans
• Buy a new house
• Update and repair your existing home
• Buy a new vehicle to replace an older one
• Prepay funeral and burial expenses
• Spend on medical equipment and care not covered by Medicare or Medicaid
• Buy new household and personal items like furniture and clothing
• Increase in-home caregiver services.

What is meant by Medicare/Medicaid spend down?

A Medicaid spend down is a financial strategy used when an individual's income is too high to qualify for Medicaid. To be accepted into the program, some of the individual's income must be spent down to ensure his or her income is low enough to qualify for Medicaid.

How does a Medicaid spend down work?

“Spend down” means to deduct qualifying medical expenses from your income to bring it to a level that would make you eligible for Medicaid. Each state sets its own income limits for Medicaid eligibility, and there are different types of Medicaid programs, each with its own income and asset limits.

What are some ways to spend down to Medicaid?

There are also other opportunities Medicaid applicants can use to reduce their savings, including:

• Prepay final planning expenses, such as funeral services
• Invest in medical equipment, such as a newer wheelchair, extra eyeglasses, or a new hearing aid
• Pay for home repairs, which can be heath related (installing a chair lift) or not (putting on a new roof)
• Pay off debt (mortgage, car loan, credit cards, etc.)

More items...

How is spend down calculated?

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). Some states require you to submit receipts or bills to Medicaid to show your monthly expenses.

What is a Medicare buy down?

When subtracting medical expenses and cost sharing lowers a person's income to a level that qualifies them for Medicaid, this process is called a “spenddown.” States can choose to set spenddown periods anywhere between 1–6 months.

Is spend down the same as deductible?

How does a spend down work? It works almost like a deductible for car insurance. When you have accumulated medical bills (paid or unpaid) greater than your excess income, you will get Medicaid for that month.

What is the meaning of spend down?

Spend-down means the process of reducing countable income by deducting incurred medical expenses for medically needy individuals, as determined in the State Plan for Medical Assistance.

What assets are exempt from Medicare?

Other exempt assets include pre-paid burial and funeral expenses, an automobile, term life insurance, life insurance policies with a combined cash value limited to $1,500, household furnishings / appliances, and personal items, such as clothing and engagement / wedding rings.

What is a countable asset?

Countable asset means a resource that is available to meet the immediate and urgent needs of a Household, and includes: cash and funds on prepaid debit cards, money in a checking or savings account (health savings accounts, educational funds, and burial accounts are excluded), stocks or bonds, U.S.

What is the eligibility criteria for Medicaid?

Medicaid beneficiaries generally must be residents of the state in which they are receiving Medicaid. They must be either citizens of the United States or certain qualified non-citizens, such as lawful permanent residents. In addition, some eligibility groups are limited by age, or by pregnancy or parenting status.

What is Medicaid deductible?

What is a Medicaid deductible? A Medicaid deductible is the amount of medical expenses that you must incur before Medicaid will start paying any of your medical bills. For example, if you have a deductible of $1500, your medical expenses must add up to $1500 before Medicaid will start paying your medical bills.

What is the eligibility criteria for Medicare?

Be age 65 or older; Be a U.S. resident; AND. Be either a U.S. citizen, OR. Be an alien who has been lawfully admitted for permanent residence and has been residing in the United States for 5 continuous years prior to the month of filing an application for Medicare.

How much money can you have in the bank to qualify for Medicaid in NY?

For example, a single person can have up to $15,750 in resources and still qualify for Medicaid. A family of two can have up to $23,100. For non-disabled individuals under 65 who don't receive nursing home care, there is no limit to the amount of assets they can own; Medicaid simply looks at their income.

How much money can you have in the bank and still qualify for Medi-Cal?

To find out if you qualify for one of Medi-Cal's 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.

What is the maximum income to qualify for Medicaid in Missouri?

Adults under the age of 65 with household incomes up to 138% of the federal poverty level are now eligible for Missouri Medicaid. In 2021, this amounts to about $17,774 for an individual or $24,039 for a household of two.

How much can you spend on Medicaid in NJ?

NJ has a countable asset limit of $2,000 for long-term care Medicaid. You are currently over the limit because you have $20,000 in savings. You spend $18,000 adding a downstairs bathroom and a wheelchair ramp to your house, and now you are asset eligible for Medicaid.

What is excess income on medicaid?

In simple terms, excess income, income over the Medicaid income limit, is directly deposited into an account each month. It is then spent on the elderly individual’s care and / or medical expenses. To learn more about this option, click here. As with the medically needy option, not all states allow QITs.

How much can a married couple keep on Medicaid?

Typically, the spouse who is applying for Medicaid is able to keep $2,000 in non-exempt assets, while the healthy spouse can keep up to $128,640 (in 2020).

Do you have to spend down Medicaid?

While one may know it’s necessary to spend-down some of their countable assets to qualify for Medicaid, the exact amount that needs to be spent down may be unclear. This is because the asset limit varies by state, as well as if one is single or married, and if married, if one or both spouses are applying for Medicaid.

Can a married couple receive Medicaid if they have assets over the limit?

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. It should be noted that assets are also referred to as “resources”, and not all assets are “countable”.

Can you gift assets to medicaid?

Gifting one’s assets can put one in violation of Medicaid’s 5-Year Look-Back Period , resulting in a period of Medicaid ineligibility. It should also be mentioned that one should not spend down non-exempt assets by purchasing other non-exempt assets. Because those newly purchased assets would still be counted.

Does Grant need Medicaid?

On the contrary, his spouse is healthy and does not need Medicaid care.

What Is Medicaid Spend Down?

The Medicaid spend down program offers a way for beneficiaries with high medical expenses to qualify for Medicaid. Learn more about how this program works and find out if you’re eligible in your state.

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What is a way to spend down assets?

Vehicle repairs, such as replacing the battery, getting an engine tune-up, or replacing old tires are also a way to spend down assets, as is selling an existing car at fair market value and purchasing a new one. Life Care Agreements.

How long does it take for medicaid to pay off excess income?

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. Not all states have a medically needy pathway.

What is over the asset limit for medicaid?

An applicant must have assets, also called resources, under a certain amount to qualify for Medicaid. However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. When considering one’s assets, it’s important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. (Further detail is below under Countable Assets and Non-Countable Assets). If one is over the asset limit after considering all non-countable assets, one will have to “spend down” assets in order to meet Medicaid’s asset limit. That said, one needs to proceed with caution when doing so. Medicaid has a look-back period in which all past transfers are reviewed. If one has gifted assets or sold them under fair market value during this timeframe, a period of Medicaid ineligibility will ensue.

What happens if you exceed the asset limit for Medicaid?

If one is over the asset limit after considering all non-countable assets, one will have to “spend down” assets in order to meet Medicaid’s asset limit. That said, one needs to proceed with caution when doing so. Medicaid has a look-back period in which all past transfers are reviewed.

What is an annuity for Medicaid?

One can purchase an annuity, which in simple terms, is a lump sum of cash converted into a monthly income stream for the Medicaid applicant or their spouse. The payments can be for a set period shorter than one’s life expectancy or equal to the beneficiary’s life expectancy. Irrevocable Funeral Trusts.

Is Medicaid spend down in California?

Names and Misnomers. Medicaid is referred to by different names in different states. So spend down in California is called “Medi-Cal Spend Down”. In Illinois and other states “Medical Assistance Spend Down”. “Medicare Spend Down” is simply a misnomer. Medicare has no asset limit and therefore Medicare spend down does not exist.

Can you spend down assets on medicaid?

Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. For example, gifting assets to family members very commonly results in Medicaid ineligibility or a penalty period. Professional Medicaid planners are extremely instrumental in assisting one in the Medicaid application process, particularly if one is over the income and / or asset limit (s). As mentioned above, being over the limit (s) does not mean one cannot become Medicaid eligible. 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. Click here for assistance in finding a Medicaid planner.

What is Medicaid Spend Down?

A Medicaid spend down is a financial strategy used when an individual's income is too high to qualify for Medicaid. To be accepted into the program, some of the individual's income must be spent down to ensure his or her income is low enough to qualify for Medicaid. You can apply for Medicaid through your state Medicaid agency, ...

How does an asset spend down work?

The individual would spend down all eligible assets needed to be eligible to receive benefits, according to the threshold designated by the state. Fortunately, that doesn't mean anybody has to give up a house or a car.

What are some examples of health care costs that you might put toward a Medicaid spend down?

Some examples of health care costs that you might put toward a Medicaid spend down include: Medical bills, past and current. Transportation services to get medical care. Home improvements to help with medical care, like a chair-lift. Medical expenses, such as eyeglasses or a hearing aid.

What are some examples of medical expenses?

Some examples of health care costs that you might put toward a Medicaid spend down include: 1 Medical bills, past and current. 2 Transportation services to get medical care. 3 Home improvements to help with medical care, like a chair-lift. 4 Medical expenses, such as eyeglasses or a hearing aid.

Is Medicaid not available if you have Social Security?

If the Medicaid recipient is receiving Social Security income, then this option is not available because having Social Security income will impose a three year penalty period for any uncompensated transfers, she says.

Does Medicaid pay for nursing care?

However, keep in mind, each state regulates Medicaid spend-down eligibility differently and the process can be overwhelming and stressful, since Medicaid won't pay for medical or nursing care until you've submitted the medical bills that will make up the spend down amount.

What is Medicaid Spend Down?

A Medicaid spend-down program is available to people who aren’t eligible for Medicaid but who have high medical expenses in proportion to their income and assets. This program is also known as a medically needy pathway or excess/surplus income program. Not every state offers a spend-down program and, as Medicaid is state-specific, ...

What are the medical expenses that qualify for spend down?

Generally, the medical expenses that qualify include past and current medical bills, costs for transportation to receive medical care, medical-related home improvements, and items such as hearing aids.

What to do if you don't qualify for medicaid?

If you find that you don’t qualify for Medicaid but you’re having trouble paying your medical bills, contact your State Medicaid Agency to see if a spend-down program is available to you and whether you’re eligible. You may also wish to speak to an estate planning or elder care lawyer, depending on your needs.

What is the buy in program for disabled people?

For disabled individuals under 65 who are working, some states make available a program called the Medicaid Buy-In program. This program offers Medicaid benefits in exchange for a monthly premium.

Does Medicaid cover nursing home stays?

Additionally, spend-down programs in certain states allow for Medicaid coverage of nursing facility stays or home health services. If you live in a state that doesn’t have a spend-down program, the limits for Medicaid are likely higher for those needing nursing home care than in states that do offer the program.

Does Medicaid count as a savings account?

Unless, for example, the dollar value of the home is very high. Yet, Medicaid usually deems most money as countable assets. The count able funds could be in a savings account or retirement account. They can also include investments such as stocks, bonds, and mutual funds.

Does every state have a spend down program?

Not every state offers a spend-down program and, as Medicaid is state-specific, the limits and rules in each state differ. When someone is eligible and applies for this program, they receive ABD Medicaid (Medicaid for the aged, blind, and disabled).

What is Medicaid spend down?

If you have medical expenses that significantly reduce your usable income, you may qualify for a Medicaid spend-down. The spend-down program may also be referred to as a medically needy program or Medicaid’s Excess Income Program. Below is a general guide to the Medicaid spend-down process.

How long does it take to get a spend down on medicaid?

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). Some states require you to submit receipts or bills to Medicaid to show your monthly expenses.

What is a trust for Medicaid?

Trusts allow people with disabilities and income or assets higher than Medicaid eligibility guidelines to place a portion of their income or assets into the trust, where it will not be counted. Rules about how these trusts work vary greatly by state.

Does Medicare pay for nursing home care?

Note: If your state does not have a spend-down program, it should have more generous Medicaid income guidelines for people who need nursing home care than for those who do not. Medicare will pay first for covered medical services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing.

Does Medicare pay for inpatient hospital?

Medicare will pay first for covered services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing. Your state may require you to qualify and apply for spend-down for multiple periods in order to qualify for Medicaid inpatient hospital coverage. States with spend-down programs may allow you to use ...

When do you get extra help on 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).

Can you get Medicaid spend down for blind people?

Register. If you need Medicaid coverage and your income is above the Medicaid income guidelines in your state, your state may offer a Medicaid spend-down for aged, blind, and disabled (ABD) individuals who do not meet eligibility requirements.

How much does John have to pay for medicaid?

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. On December 1st, John receives medical care and is billed for $800 .

How long does Bob's medicaid stay active?

Bob’s Medicaid gets activated for three months because the $1200 medical bill he turned in to MDHHS in May meets his $400 deductible for three months . Sometimes MDHHS cannot apply medical bills to a Medicaid Spend-down because the medical bill does not contain the required information.

How long does a medical bill have to be billed?

The medical provider’s name, The date of the medical service (must be within 90 days), The other insurance that is billed. For example, if someone has Medicare, the medical bill must show that Medicare has been billed, and. The remaining amount of the medical bill that the individual is obligated to pay. In closing, the idea of the Medicaid ...

When will Bob's medicaid be activated?

After Bob turns this medical bill in to MDHHS and they determine that it qualifies, Bob’s Medicaid will be activated for three months: May, June, and July.

Can John pay the $800 medical bill?

John cannot afford to pay the full $800, so he arranges a payment plan with his medical provider. John also turns in a copy of the bill to his MDHHS caseworker. If the $800 medical care bill qualifies, because he hit the deductible of $800, John’s Medicaid will be activated for the remainder of the month of December, ...

Is Medicaid Spend Down a timely process?

In closing, the idea of the Medicaid Spend-down can seem complicated. It is recommended to submit all medical bills to MDHHS in a timely manner. If the deductible is reached, and Medicaid is activated for the month, try scheduling appointments or procedures during that month.

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.

What are the drawbacks of a Medicaid spenddown?

It may be hard to spend down your assets and stay within your state's Medicaid requirements. The rules and regulations can be very complex. If you spend down your funds incorrectly, such as giving assets away to a relative, you could get hit with a penalty. The penalty delays the date that you can begin claiming Medicaid benefits.

What expenses count toward Medicaid spenddown?

If you’re in income and asset spend-down mode, carefully track all of your medical bills and expenses. Any excess income or assets that are spent down must go toward qualifying bills or costs, which include:

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:

The bottom line

It’s possible to qualify for Medicaid's long-term care by spending down your income and assets. Be clear on the rules and guidelines within your state, as they vary widely. Planning far in advance for spenddown can help you figure out how to distribute assets while avoiding penalties.

How long does MO HealthNet allow for spend down?

MO HealthNet allows up to a year to meet the spend down either through pay-in or bills.

Can you meet spend down?

Even if the consumer normally cannot meet spend down, by maintaining an open case the consumer is protected in the event of an unexpected medical expense. The spend down can be met at any time during the month either with bills or by payment, and previous months within the past year can also be met.

Can a consumer submit bills to DMH?

Applying incurred medical expenses. The consumer or a provider can submit bills for medical services which the client is personally responsible for or which are billable to DMH. Coverage will begin the day the client reaches the Spend Down amount.

Qualification

Issues

Terminology

Example

Advantages

Statistics

Risks

• If an applicant is over the asset limit for Medicaid eligibility, spending down excess non-exempt assets becomes paramount. As mentioned above, one must proceed with caution in order to avoid violating Medicaids look-back period, which is 60-months in every state but California. (California has a 30-month look-back period). Fortunately, there are m...

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