Understanding A Medicaid Spend Down

A Medicaid spend down centers on people who make too much money to qualify for Medicaid. The question quickly shifts to why someone would want to have less money. And why would anyone do so for Medicaid?

Why Someone Would Do A Spend Down

This comes down to long-term care and assisted living, e.g., nursing home and retirement communities. With the high costs of both things, people who need these may find themselves in the financial middle. They don’t have enough money to pay the nursing home costs. And they have too much money and assets to be eligible for Medicaid.  

Medicaid is a state and federal program that helps with health care costs—and even assisted living or nursing homes. 

People who are in this position must spend the excess amount of money they possess to become eligible. And this pertains to assets and income.


The person who needs Medicaid to pay for his nursing home will have to apply the spend down to his assets. Several strategies could accomplish this. The easiest and most efficient way to determine which one is right for you is by discussing your situation with an attorney. Someone who practices elder law and estate planning would be in a position to advise you. 

Assets are also commonly referred to as resources. What is critical to know about assets is that some of them may be exempt. Anything exempt will not prevent you from being eligible for Medicaid. These can be broken up into the following two categories. 

  1. Countable Assets
  2. Non-Countable Assets 

Countable assets are liquid assets—things that convert into cash relatively quickly. 

  • Bank Accounts (Checking, Savings)
  • Property (your primary residence is not included) 
  • Stocks & Bonds

It is important to note that states govern spend downs differently. Whether your retirement accounts are countable assets depends on your state. 

Non-countable assets include:

  • Cars
  • Life Insurance 
  • Primary Home (if you or your spouse live in it)
  • Funeral Costs

Because of state laws, there are ways in which you can and cannot limit your countable assets. For example, there are such things as a look-back period. If you have a secondary home and sell it to someone significantly under market value, this may be discovered during the look-back period. As a result, it could make you ineligible for Medicaid. 

Though there are income limits to receive Medicaid, people who make too much money can still get benefits through a spend down. How this is done is dependent on your unique situation. If you believe your income is too high to qualify for Medicaid, bring this to your attorney’s attention.

Kevin Tharpe, P.C.

At J. Kevin Tharpe, P.C., we have over a decade of experience with estate planning and elder law. If you have any questions about your Medicare or Medicaid, contact J. Kevin Tharpe, P.C. to schedule your consultation.

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Kevin Tharpe

With 25 years of experience, Kevin understands how estate planning, special needs planning, and government benefits programs work together. This is a crucial element of a thorough plan. He explains your eligibility for benefits programs and ensures that you do not make costly mistakes that may disqualify you or deplete your assets.

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