Medicaid has strict asset rules that compel many applicants to spend down their assets before they can qualify for coverage. It's important to know what you can spend your money on without endangering your Medicaid eligibility.
Are You Eligible for Medicaid?
In order to be eligible for Medicaid, you generally must have no more than $2,000 in "countable" assets. (This dollar figure may be slightly higher, depending on the state where you live.)
In addition, Medicaid also has strict asset transfer rules. If you apply for Medicaid but transfer assets for less than market value, you will not be eligible for Medicaid for a certain period. (Learn more about the penalty period you could potentially face as part of Medicaid’s lookback period.)
Applicants for Medicaid and their spouses may protect their savings by spending them on non-countable assets.
Spend Down: Medicaid and Your Assets
A Medicaid applicant can spend down their money on anything that would be of benefit to them. The following are examples of what you may be able to do with your money in order to qualify for Medicaid:
- Prepay funeral expenses – A prepaid or pre-need funeral contract allows you to purchase funeral goods and services before you die.
- Pay off a mortgage, car loan, or credit card debt – You can pay off the debt fully or make partial payments.
- Make repairs to a home – Fix the roof, make the house accessible if you have a disability, buy new carpet, or make other improvements.
- Replace an old automobile – This can be useful for the healthy spouse who is not applying for Medicaid.
- Update your personal effects – Buy household goods or personal comfort objects. This could include a new wardrobe, electronics, or furniture.
- Medical care and equipment – Purchase items that Medicare or Medicaid do not cover. Consider seeing a dentist or booking an appointment with an eye doctor if your insurance doesn’t cover those types of services.
- Pay for more care at home – Make sure you get any caregiving agreements in writing, especially if any of your family members are the ones providing your care.
- Buy a new home – A home can be an exempt asset, so it may be possible to purchase a new home.
Protecting Your Spouse
In the case of some married couples, it may be important to consider spending down assets only after the spouse who is applying for Medicaid coverage has moved to a long-term care facility, such as a nursing home.
In part, this is because the individual seeking Medicaid may have a healthy spouse who wishes to continue living at home. There are special protections in place that permit the healthy spouse (community spouse) to keep a certain amount in countable assets. With long-term care remaining costly, this community spouse resource allowance, or CSRA, protects the healthy spouse from financial hardship. At the same time, it does not jeopardize the Medicaid eligibility of their spouse who is receiving long-term care benefits.
As of 2024, the maximum CSRA is $154,140, although this amount can be lower, depending on your state.
To begin an estimate of how much money you may need to spend down in order to qualify for Medicaid long-term care in your state, consider trying out this online calculator.
Connect With an Expert
Each state has different requirements when it comes to Medicaid spend down. In addition, the rules related to applying for and qualifying for Medicaid can be very complex. Before making any spend-down plans, be sure to consult with a qualified elder law attorney in your area.