Medicaid Spend Down
What is spenddown in Medicaid?
Medicaid spenddown is similar to a deductible in insurance.
WHAT IS MEDICAID SPEND DOWN?
Under the “spend down” process, some states allow you to become eligible for Medicaid as “medically needy” even if you have too much income to qualify. This process allows you to “spend down” or subtract your medical expenses (like the cost of hospital care or doctor’s visits) from your income to become Medicaid eligible.
Subtracting medical expenses from income can reduce your income to a level below the maximum allowed by your state’s Medicaid program. In order to be eligible as “medically needy,” your countable resources (savings accounts, certificate of deposits, etc.) also have to be under the established resource standard in your state.
Medicaid spenddown is used a lot in the world of Medicaid and Social Services. Spend down is the difference between the individual’s income and the Medicaid threshold.
Your medicaid spend-down is based on your monthly income. From that income, medicaid will subtract the “allowable income standard” and a “monthly income disregard” of $25. The monthly income standard is the amount that the Medicaid program allows for the household to use for expenses other than medical.
The amount that remains is considered to be available for you to use for medical expenses. That is your medicaid spend-down amount. For example, if your monthly income is $500 from Social Security Retirement benefits and you live alone, your spend-down will be $192.
An individual whose income is above a certain threshold (which differs from state to state) can not normally qualify for Medicaid. An individual who is eligible for Medicaid but makes excessive income can meet the criteria for eligibility by meeting their “Spend down”.
Medicaid Spend down
Some middle to high-income individuals may qualify for Medicaid benefits over their lower-income counterparts because their ages, illnesses, or disabilities do happen to fit said guidelines. Medicaid planners typically advise retirees and other individuals facing high nursing home costs to adopt strategies that will protect their financial assets in the event of nursing home admission.
State Medicaid programs do not consider the value of one’s home in calculating eligibility, therefore it is often recommended that retirees pursue home ownership. By adopting such strategies, many seniors hope they will quickly qualify for Medicaid benefits if the need for long-term care arises.
In other words, these individuals may seek Medicaid coverage in order to protect their assets and life savings from being used up by medical bills, including nursing home costs.
In an attempt to limit this practice, some states have a Medicaid spend down policy in which higher-income individuals must spend down or decrease their real assets in order to qualify for Medicaid benefits.