How Does the Medicaid Spend-Down Work?


Quick Answer

The Medicaid spend-down program allows certain individuals, whose income and assets are too high to qualify for medical assistance under normal guidelines, to use them for other expenses and so qualify. This program includes paying rent and contractual debts to reduce income. The rules for the program vary by state.

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Full Answer

Medicaid exempts some assets by law, so an individual does not need to sell his home or automobile to qualify. He has the option to make full or partial credits for bills, including credit cards, mortgages or car loans. The program also gives him the option to prepay these bills or to pay the total amount he owes and reduce the payment from his income or assets.

With the spend-down program, an applicant can also buy new assets, such as a home or vehicle, as long as he or his spouse live in the home or drive the car. The cost of car or home repair is also exempt. An individual has the choice of purchasing a pre-need funeral or burial plan and exempting the money.

If an applicant is married, he has the option of purchasing an annuity for his spouse. The annuity provides long term income for the spouse, but a spouse's income does not count against the applicant's limits to qualify for Medicaid.

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