Understanding Medicaid Spend Downs

Medicaid is an advantageous health benefit for those who cannot afford health insurance through other means. However, many people simply have too much income to qualify for this federal benefit. Nonetheless, you can legally become eligible if you strategically spend your excess income on medical bills. This process is referred to as a “spend down.”

Who Can Get a Spend Down?

Only certain people will be able to use a “spend down” to qualify for Medicaid. For example, children must be under 21 years of age, and adults must be over 65 years of age. Disabled and blind individuals will also likely qualify. Many families that have one or both parents absent, disabled, or out of work may also be eligible.

How Does a Spend Down Work?

A spend down is similar to paying a co-pay for private health insurance. You must first pay the amount that you are over the income limit in medical bills. Only then will Medicaid “pick up” the remaining health charges.

Consider an example. Mary is 67. Her income is $100 over the income limit for Medicaid eligibility. If she has over $100 in medical bills every month, she can pay that first $100 and then Medicaid will take care of the rest of her medical needs. Her “spend down” is that first $100 payment every month.

Which Bills Qualify to be Used as a Spend Down?

Most medical bills you have will qualify for use as a spend down. You can also use bills for your spouse or dependents as well. Past unpaid medical bills will make you eligible in most circumstances, too.

Medical expenses that are paid by another public program may also qualify. If you have Child Health Insurance (CHIP) or Elderly Pharmaceutical Insurance (EPIC), for example, expenses paid by those entities will likely be eligible as your “spend down.”

What About Assets?

In addition to an income limit, individuals and families can only qualify for Medicaid if they meet certain asset limitations as well. That is, you can only have a total asset value under a specific amount to qualify.

You can, however, “spend down” assets so that you qualify as well. This may include things like paying off outstanding unsecured debt obligations, making home improvements, prepaying for burial or funeral expenses, and other means to spend money. Keep in mind, however, that Florida has a five-year Medicaid look-back period, which means that you cannot simply give away assets or sell them for considerably less than they are worth within the previous five years from the date you applied for Medicaid.

The asset and income limitations for Medicaid require that you do a lot of advance planning to ensure that you qualify. Legacy Planning Law Group can help you and your loved ones with this type of planning to increase your likelihood of qualifying for Medicaid when you need it. Find out more by contacting our team today!

Written by Legacy Planning Law Group

Legacy Planning Law Group is dedicated to working with individuals and families to help protect the assets they have built throughout their life, and make everything simpler for families who have lost a loved one. We help thoughtful people achieve the peace of mind that comes with planning their personal legacy and passing on family harmony.