Medicaid Spend Downs

By Gracie Davis – Deputy Executive Assistant at West Virginia Senior Legal Aid

A Medicaid spend down is the process of minimizing a single person’s or a couple’s finances and income to be deemed eligible for Medicaid. The eligibility requirements are especially difficult to meet in West Virginia because of its strict limits.

Now, Medicaid spend downs are not the most romantic thing for couples to discuss. However, it is important to discuss. It becomes even more important to discuss when one spouse enters a long-term care facility. This article should make the discussion flow smoother, whether with your partner or yourself!

There are criteria to qualify for Medicaid in West Virginia. An applicant must: (1) be a West Virginia resident, (2) be a United States citizen or a qualified immigrant, and (3) have low income and minimum assets. Furthermore, an applicant must fall into any of the following categories: (1) pregnant; (2) under 19 years old; (3) over 65 years old; (4) 19 to 65 years old; (5) family with dependent children; (6) disabled; (7) receive Supplemental Security Income (SSI). https://www.wvpath.wv.gov/programs&servicesgov. If one is not SSI-eligible, the spend-down process can be utilized to be eligible by incurring medical expenses. Assets must also be within established limits ($2,000 for an individual and $3,000 for a couple). https://dhhr.wv.gov/bfa/programs/Documents/Medicaid%20Eligibility%20and%20Requirements.pdf.

“Under the Medicaid Act, medically needy applicants are required to ‘spend down’ their excess funds by incurring medical expenses that reduce their net countable income to the amount of the eligibility standards.” There is a surplus of expenses to be utilized in the spend-down process: (1) medical costs (e.g., unpaid medical bills, prescription drugs, medical supplies, nursing home costs); (2) legitimate debts; (4) funeral and burial costs; (5) annuities; (6) caregiver agreements; (7) home repairs; (8) vehicle repairs. However, Medicaid has spend-down rules in place to prevent “gifting” assets. https://www.medicareadvantage.com/medicaid/medicaid-spend-down. These costs must be recorded in detail to track and prove precise spend-down amounts.

First, the Medicaid spend-down process starts with calculating one’s total income and assessable assets. Second, after one’s total income and assets are determined and calculated, the individual or couple must incur medical expenses until the income is below the Medicaid eligibility threshold. Third, apply for Medicaid through the West Virginia Department of Health and Human Resources. The application requires proof of West Virginia residency, documentation of United States citizenship or qualified immigration status, income verification (e.g., pay stubs or Social Security statements), asset information (e.g., bank statements or property deeds), and detailed records of medical expenses.

When one spouse a long-term care facility, the Medicaid spend-down process becomes more crucial. Medicaid has rules in place to protect the community spouse (i.e., spouse not in the long-term care facility). West Virginia follows the income-first rule in Medicaid. It is a strategy some states utilize to ensure financial stability for spouses of Medicaid applicants. When a couple qualifies for Medicaid, the community spouse can have up to half of the couple’s assets (limits vary by state). Despite this, the community spouse often has a low income since most assets are attributed to the spouse in long-term care. The income-first rule addresses this issue by reallocating part of the income of the spouse in long-term care to the community spouse, thereby boosting their income to a minimum acceptable level.

Some related rules include the Minimum Monthly Maintenance Needs Allowance (MMNA) and the Community Spouse Resource Allowance (CSRA). First, the MMNA allows Medicaid-covered spouses to transfer part of their income to the community spouse. Second, when applying for Medicaid, both spouses’ assets (regardless of ownership) count toward eligibility. In 2024, seniors usually need assets under $2,000 for eligibility. However, Medicaid allows safeguarding a greater share of assets for the community spouse via the CSRA. Under the CSRA, the community spouse can be given between $30,828 to $154,140 in West Virginia. https://www.medicaidplanningassistance.org/community-spouse-resource-allowance/.

Additionally, the Long-Term Care Partnership Program minimizes Medicaid costs by encouraging the purchase of private long-term care insurance. The program provides incentives for individuals to insure against long-term care costs, allowing for Medicaid qualification without depleting all resources. Under the program, every dollar paid out by a qualifying insurance policy increases how much money an individual can retain while maintaining Medicaid eligibility. W. Va. Code Ann. § 9-4E-1; W. Va. Code Ann. § 9-4E-3.

In sum, Medicaid spend downs act as a safety net for those above the income limit for Medicaid eligibility. Individuals and couples can access healthcare services without a heavy financial burden by properly managing medical expenses. Going through the spend-down process requires proper planning, documentation, and resources to ensure coverage that is fit for you (and perhaps your spouse). Please contact a licensed attorney or an organization informed on Medicaid for further assistance. West Virginia Senior Legal Aid is dedicated to defending West Virginia seniors’ rights.