Medicare and Medicaid are often confused, but the two are quite different. With Medicare, almost everyone is eligible based on work history, whereas Medicaid is designed as a benefit for individuals unable to cover healthcare expenses on their own, making it need-based.
Medicaid has stringent regulations on income and assets, which vary by state, but should you exceed those limitations, you don’t qualify to receive assistance. The Medicaid allowances typically cap at minimal amounts, however, individuals who normally exceed Medicaid’s eligibility requirements may still qualify through the Medicaid spend down program. A general rule of thumb for the limits of a single elderly person would be $2000 monthly, meaning that anything in excess of that would need to be spent down.
How the Medicaid Spend-Down Works
Think of the Medicaid spend-down as being similar to an insurance deductible that requires a certain amount be paid out of pocket before coverage goes into effect. Below is a list of popular ways that people spend down and qualify for Medicaid, but state rules differ.
Provide records of out of pocket medical expenses that are above and beyond the “excess amount.” These may include procedures, office visits, hospitalization, prosthetic devices, hearing aids, eyeglasses, medications, medically recommended first aid and medical supplies, dentures, in-home nursing care, caregiver expenses, or living expenses for a live-in care facility.
Reduce your debt such as credit card expenses, mortgage, and so on.
Create a Life Care Agreement stating the payment amount to an individual in exchange for care.
Create a funeral trust fund, using the excess amount to cover funeral and burial expenses.
Making vehicle repairs or selling the vehicle.
Transportation expenses necessary for attending medical care.
Invest in home upgrades such as roof repair, a wheelchair ramp, or handicap accessories that are needed.
The Medicaid spend-down program offers several different options that might help your aging parent qualify for benefits. Be sure to get clarification on the exempt and non-exempt categories for spend-down, the “look-back” periods, and the personal excess amount for your elderly loved one. Don’t dismiss Medicaid by thinking income and assets are above and beyond what is accepted. Contact a Medicaid expert in your area.
Read more about how to help your aging family member manage their finances.