Since the 1960s, Medicaid has offered health coverage for low-income individuals across the U.S. For millions of seniors, it provides financial assistance to help cover long-term care costs. Today, this federal-state program extends to other eligible groups with limited income, such as children and people with disabilities.
Eligibility for Medicaid
You may not think about applying for Medicaid in the future, but research shows that approximately one in seven seniors will require long-term care at some point. Since long-term care can be costly, many rely on Medicaid to help cover these expenses.
Given these statistics, it’s wise to understand Medicaid and plan ahead. In some cases, qualifying for Medicaid may require actions taken at least five years before applying. State Medicaid agencies often review the five years leading up to your application.
If you made certain purchases or gifts during this “lookback” period, penalties could apply, potentially delaying your eligibility for months or even years.
Medicaid is designed for those with limited income. To qualify, you generally cannot have more than $2,000 in assets (though this limit may vary by state).
If you exceed this limit, you might need to “spend down” excess assets to meet the threshold. Once you’ve met the requirements, Medicaid will start covering basic long-term care costs.
However, not all assets count against you for Medicaid eligibility. Your primary home is usually exempt, and you can own one car without exceeding the asset limits. Depending on your state, you may also be able to use excess funds for certain purchases to improve your quality of life.
Medicaid Spend Down
Each state sets its own income and asset limits, and these limits often change yearly. Check your state’s current limits or contact your local Medicaid agency for details. Not every state allows a Medicaid spend down, and some have “income cap” rules with different regulations. It’s important to remember that any purchases you make during your spend down should be for the Medicaid applicant’s benefit.
What Can You Spend On?
You can typically spend excess income in various ways that will be of personal benefit, such as paying off credit card debt, medical bills, or prepaying funeral expenses. Though these may not be exciting purchases, they can help reduce your excess assets.
In many cases, spending down can include medical services, equipment, or health insurance premiums. For example, if you rely on a wheelchair, cane, or hearing aids, these expenses may count toward your spend down. You could also use the funds for an eye exam or new glasses.
Your excess income can also be used for items that improve your life quality, such as:
- A new vehicle – If you need a reliable car or wheelchair-accessible vehicle, this could count, though some states limit the value of the car.
- Electronics – Some states allow the purchase of a new smartphone, laptop, or TV.
- Clothing – Consider using the funds to buy new clothing like socks, pajamas, or other essentials.
- Books or subscriptions – Entertainment like books, magazines, or streaming services such as Netflix could be part of your spend down.
- Towels and bedding – If you’re moving into a long-term care facility, check if they will provide these items for you.
- Furniture – If you’re relocating to a care facility, some may allow you to bring furniture like a recliner chair.
- Home improvement – If you’re staying at home, you may be able to use excess funds for modifications such as wheelchair ramps or plumbing repairs.
To ensure you’re making permissible purchases, consult with a local attorney who specializes in Medicaid planning. You may even be able to include legal fees in your spend down.
Why You Should Consult an Elder Law Attorney
Medicaid rules can be complex, so it’s essential to consult an elder law attorney who specializes in Medicaid planning. They can help you navigate your options for spending down assets while preserving your savings and avoiding penalties. Whatever purchases you decide to make, keep all receipts and detailed records in case of any questions. You don’t want to accidentally violate the rules and face penalties. Reach out to an elder law attorney near you today for guidance.
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