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Horizon Elder Law & Estate Planning Blog

Monday, August 17, 2020

What Is the Medicaid Spend Down?

Many Americans get caught in a financial bind because they can't afford to pay for the nursing home out of pocket, but they have too many assets to qualify for Medicaid to pay for their long-term care and provide other valuable benefits. There is no asset limit for Medicare, but state and federal law require limited countable assets to be eligible for Medicaid.

A California Medicaid planning attorney could help you plan your Medicaid spend down to qualify for help with your nursing home bills and other Medicaid benefits. Medicaid spend-down rules are strict the period if you make a mistake in your spend down Strategy, you could lose your eligibility for Medicaid.

How Medicaid Spend Down Works

An individual can only have $2,000 of countable assets ($3,000 for a couple) to qualify for Medi-Cal (California’s Medicaid program). Medi-Cal does not count a person's home, clothing and other personal items, household goods, and one motor vehicle toward the countable assets.

Let's say that an individual has $60,000 in countable assets. She would have to spend down her assets until she had only $2000.00 of countable assets before Medi-Cal will help pay for her nursing home costs. Unfortunately, many people misunderstand the spend-down requirement.

If you give away your assets, you could violate the Medi-Cal spend down rules. For example, if the person with $60,000 in countable assets gives her children and grandchildren $58,000, she will only have $2,000 in actual assets, but Medi-Cal will consider the gifts as improper transfers of property. It could be as long as 30 months before Medi-Cal will help pay for her long-term care.

Medi-Cal’s Look-Back Period

Medi-Cal has a look-back period of 30 months. Any property transfers that a person makes within the 30 months before applying for Medi-Cal will get examined for propriety. The look-back period only applies to the transfer of non-exempt assets; in other words, countable assets.

Exceptions to the General Rules About Medi-Cal Spend Down

There are as many exceptions to the rules as there are general rules about Medicaid spend down in California. Here are some examples:

  • You can give as many assets as you want at any time to your blind or disabled child without affecting your eligibility for Medi-Cal. The child must qualify as disabled under the standards of Social Security disability insurance (SSDI) or Supplemental Security Income (SSI) benefits. You might want to be aware that such a gift could render the child ineligible for SSI benefits. The age of your child is irrelevant for purposes of Medicaid spend down.
  • Medi-Cal will view a transfer as a gift if you sell it at less than fair market value. For example, if you sell your vacation home to your adult child for $1, Medi-Cal will consider the full market value (minus $1) as the amount of the gift or improperly transferred property.
  • When one spouse lives in a nursing home, and the other spouse lives at home (community spouse), Medi-Cal will apply higher limits for assets and monthly income. The purpose of this exception to the general rule is to protect the community spouse from being impoverished.

Contact us today. Our California elder law attorneys can help you navigate through this complicated and sometimes conflicting set of rules and guidelines.


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