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What is the Medicaid spend down rule?

On Behalf of | Aug 7, 2021 | Estate Planning

Medicaid spend down is a financial strategy. This strategy is used to help someone qualify for Medicaid when their income is too high or they have too many assets to do so at the present time.

When you want to apply for Medicaid, you’ll see that you have to meet state eligibility requirements. In Georgia, for example, a single-person household is allowed to bring in an income of $31,814 (before taxes) before they will no longer qualify for Medicaid. For two people, the amount is $43,028. It increases for each additional family member.

If you earn more than this or your assets are too valuable to qualify, then you will need to go through the spend down procedure unless you plan to reduce your estate’s value through other means.

How does the income spend down work?

If you bring in $1,000 a month but your state limit is $500, as an example, you’d have to spend down $500 before you could receive Medicaid support. For instance, if you go to a nursing home and earn $500 too much each month, then that money would need to be spent before Medicaid would kick in.

With assets, it’s a little different. Certain assets have to be below a particular limit. If they are above it, then those assets would likely need to be sold or spent down before you could qualify for Medicaid.

The good thing is that there are estate planning methods that can help you reduce your estate’s value or lower your income without having to spend down those assets on your medical care or other expenses. Trusts, for example, may be able to hold your assets outside your estate to help you qualify for Medicaid. It’s wise to learn what you can do if you’d like to qualify for Medicaid or start working on your long-term care plans.