What are people talking about when they say you have to “spend down” to become eligible for Medicaid? Well, it can describe two different things. Most of the time elder law attorneys are referring to to resource spend-down where the applicant is trying to get below the resource eligibiity threshold. But it can also refer to income.
Almost every Medicaid class of assistance has an income limit as well as a resource limit. If your monthly income exceeds the Medicaid income limit, sometimes you can qualify for the medically needy class of assistance by spending down any income that exceeds the Medicaid program guidelines. To get Medicaid benefits, you must submit current paid or unpaid medical bills equal to or greater than your monthly spend-down amount. Once your medical bills reach this amount, you will get Medicaid coverage for the remainder of the calendar month. In Georgia, if the applicant’s income is less than or equal to the adult medically needy income limit, then the applicant is “de facto eligible” and no spend down is necessary. If the applicant’s monthly income exceeds the income limit, then the excess is call the spenddown. The spend down must be met before the applicant is approved for medically needy eligibility. See Appendix A.2 for Georgia medically needy income limits.
Most Medicaid planning includes potential spenddown options. One reason for spending down is that applicant’s potentially save 100% of their resources when they convert countable resources into exempt resources. So, for example, if a married couple has countable resources exceeding the Community Spouse Resource Allowance, one plan might be to make long overdue repairs to the home or update appliances. The Community Spouse might be driving a clunker that should be traded in toward the purchase of reliable transportation. As long as direct or indirect gifting is not a component, there is no rule saying how a Medicaid applicant must spend-down. As long as the spending benefits the applicant, the applicant’s spouse, or their property, and it moves them closer to the eligibility threshold, any spending is acceptable. The goal is not to spend willy-nilly, but to spend on items that either increase the value of exempt resources (e.g., the home), or improve quality of life or safety for the applicant.
The following list, which is by no means complete, includes some potential spend-down options. The only real limits are your creativity and whether the purchased item(s) are for the benefit of the Medicaid applicant:
Examples Home Improvements or Modifications
Personal Items
Other Spending
Although technically it’s not spend-down, if the applicant is allowed to fund an individual or pooled special needs trust, resources placed in a special needs trust are exempt.
The key is that spending must be for the benefit of the applicant or the applicant’s spouse. This includes improvement of their property. For example, if repairs are done to an applicant’s home, the delivery address for supplies must be the applicant’s address. Purchases that are obviously for items the applicant will not or cannot use will raise questions with Medicaid caseworkers. For example, purchasing powers tools for a paraplegic may not pass the smell test. Having said that, creativity is allowed. There is nothing in the rules stating that a future Medicaid applicant is limited to a single bedroom hotel room when traveling. So, a person who is contemplating the possibility of a future Medicaid application could rent a beachfront home for the week and invite guests to join him or her. While there, if the future Medicaid applicant wanted to go deep-sea fishing, there’s no rule limiting the size of the boat he or she should rent. So he or she could rent a large boat and let family or friends tag along.
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