Gather all medical bills. There are other ways of prepaying burial expenses. To qualify for Medicaid, the person agrees to “spend down” his or her monthly income to the Medicaid income standard. However, one fact remains the same: all Medicaid programs for the elderly require either restricted income or assets or both. A Medicaid spend down is a portion of health coverage that an individual must pay for before Medicaid coverage begins. Use of this content by websites or commercial organizations without written permission is prohibited. How to Protect Your Estate So It Goes to Your Family—Not to Taxes. To qualify for Medicaid you have to be at or below a certain income level and can’t have assets below a certain monetary value. Here’s a simplified scenario of an income spend-down: a person over 65 is denied Medicaid because their monthly Social Security check is $50 more than the state’s Medicaid income limit. A Medicaid spenddown can literally refer to spending one’s money to get below $2,000.00. In 100% states, the community spouse is able to retain 100% of the couples’ joint assets, up to the maximum allowable amount. See more here: However, being over the asset limit does not mean one cannot qualify for Medicaid benefits. They started searching online about what to do. Ask for all costs paid in the three calendar months before the month you are applying for Medicaid. Many experts advise against this type of arrangement. medical bills. As previously noted, in order for applicants to be eligible for Medicaid, they must have limited income. That said, one needs to proceed with caution when doing so. In this case, you're eligible for Medicaid because you're considered "medically needy." When determining if one is over the asset limit, it’s critical to know which assets are counted and which are not. He is now the president of IT services company "The Web Group. Countable Assets Even if you have too much income to qualify, some states let you "spend down" to become eligible for Medicaid. You can pay off credit cards, mortgage loans and automobile loans in full or just partially. Maybe you’ve always wanted a nicer car? You’re allowed one vehicle so put some money into repair or upgrades. Submit copies of your bills to your assigned caseworker. Here are a few ideas: Studies show that seniors are going into retirement with more debt than in the past. Income and asset limits for Medicaid do not remain consistent across the United States, nor do they remain the same even within each state. If one is over the asset limit after considering all non-cou… bills more than the spend-down amount will be credited to the months of eligibility (remember the credit includes the portion of the paid bill above the spend-down). Tim Parker covered personal finance for The Balance. To begin, Medicaid has an asset limit, which must be met in order for an applicant to qualify for benefits. Exempt assets include one’s primary home, given the individual applying for Medicaid, or their spouse, lives in it. If your countable income is more than the set limit for your household size, Utah Medicaid allows you to spend down to the income limit to be eligible for Medicaid. (Again, this figure, as of 2020, is $128,640 in most states). 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). Once paid, your Medicaid is activated for this period. Medicaid spend down. Put differently, together a couple can often keep up to $4,000 in assets. ", Understanding Your 401(k) Retirement Plan. Medicaid breaks things into two buckets—countable and non-countable assets. Countable assets include cash, bank accounts (checking, money market, savings), vacation houses and property other than one’s primary residence, 401K’s and IRA’s that are not in payout status (depending on the state in which one resides, this isn’t always the case), mutual funds, stocks, bonds, and certificates of deposit. 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. Process : In order to participate in this Program, the Medicaid recipient must mail a check or money order equal to the surplus amount to the Division of Accounts Receivable and Billing (DARB), not the local The money in the trust is exempt from Medicaid’s income limit, and it is only available for very limited purposes, such as paying for the senior applicant’s long-term care and medical related expenses. Individual Applicants Its coverage for 72.4 million Americans makes it the largest source of health coverage in the United States. In most cases, married couples (with both spouses as applicants) are able to retain up to $3,000 of their combined countable assets. Fortunately, there are many ways for one to spend down assets without violating the look-back rule, and hence, avoid being penalized with a period of Medicaid ineligibility. Usually the spend down period lasts six months, although it can vary depending on the state. Look for a single premium immediate annuity because the money is paid as a single lump sum with payouts beginning immediately. Not all assets held by the applicant are counted towards Medicaid’s asset limit. If there are excess resources, the applicant must spend down to the applicable resource limit. In very simplified terms, in 50% states, the community spouse can keep up to 50% of the couple’s assets, up to the maximum allowable amount. Remember, you’re allowed up to $1,500 in the cash value of your life insurance policies. If they could, should they? Medicaid Spend-Down Explained. When a person’s assets exceed the strict limits set by Medicaid, one solution is a Medicaid spend down.. “Spend down” simply means reducing what are known as “countable resources” to the amount the person needing care is allowed to keep. Medicaid spend down. Retain an attorney: Paying legal fees is a strategic way to spend down because attorneys can advise … Please note that when only one spouse of a married couple applies for regular Medicaid (Aged, Blind and Disabled Medicaid), there is no Community Spouse Resource Allowance. Medicare will pay first for covered medical services, and Medicaid will pay second for qualifying costs, such as Medicare cost-sharing. What you pay for coverage depends on your state’s rules. (Further detail is below under Countable Assets and Non-Countable Assets). Do You Know Which Type of Life Insurance Is Right for You? Not all assets are created equal. Spend down is the process of divesting an individual’s assets down to the amount that makes him or her eligible for Medicaid coverage for long term care. 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. One easy method is to use our Medicaid Spend Down Calculator. The person may choose to either pay “excess” monthly income to the state or to pay a medical provider for one or more medical bills. When considering ones assets, its important to be aware that some assets are exempt, or said another way, not counted towards the asset limit. Trusts are complicated and creating one to qualify for Medicaid adds an additional level of complexity. Regardless of name, these programs allow applicants to spend excess income on medical bills and expenses, such as past due medical charges, prescription medications, health insurance premiums, and doctors’ appointments. However, one must know the allowable Medicaid spend down items and they must proceed with caution in order to avoid violating Medicaid’s look-back period, which is 60-months in every state but California. What Is an Irrevocable Life Insurance Trust? Medicaid is the nation’s health insurance program where most people will qualify based on work history. An irrevocable medical trust is money set aside that becomes part of the trust that pays out to certain beneficiaries. If the remaining income isn’t more than your state’s income limit, then you can be eligible as “ medically needy.” The 6 Best No Medical Exam Life Insurance Providers of 2020, 6 Steps You Should Take to Prepare for Retirement, Programs That Can Help With Your Medicare Premiums, How to Reduce Estate Taxes with an Irrevocable Life Insurance Trust, The 7 Best Burial Insurance Options of 2020. Essentially, you can use… (Medicaid reimbursement is much lower than private pay open market rates). Asset spend down can be complicated, and if not carefully done, can result in Medicaid ineligibility. In general, here are some of the ways you can spend down assets: Pay off debts – including mortgages, car loans, personal loans, and credit card balances. Anybody who owns a home knows that it’s easy to spend a lot of money fast. Click here for assistance in finding a Medicaid planner. Strategies to Spend Down Assets to Gain Medicaid Approval. If an applicant is over the asset limit for Medicaid eligibility, spending down excess non-exempt assets becomes paramount. That means some of the individual's income or assets … For couples who are applying for nursing home Medicaid or a HCBS Medicaid Waiver, states often consider each spouse as a single applicant, allowing each spouse $2,000 in assets, as Oklahoma does. As of 2020, the equity value cannot exceed $595,000, or $893,000, depending on the state in which one resides. What do I pay? (California has a 30-month look-back period as does New York for certain types of Medicaid). For instance, in Connecticut, single applicants can keep only $1,600 in assets, Mississippi allows up to $4,000 in assets, and New York has a much higher asset limit of $15,750 (in 2020). This also applies to bank loans or other loans the applicant or spouse is legally obligated to pay. 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