Spend Down

Spend down is when an individual spends their savings and assets on long-term care in order to qualify for Medicaid. Individuals may not gift assets or money to become eligible. They're required to get rid of their estate until they're eligible for benefits.

To qualify for Medicaid long-term care benefits, individuals must meet specific asset and income requirements. Single individuals may have no more than $2,000 in assets. In most states, this amount does not include your primary home, care, personal effects, or burial expenses. 

Before the law prevented the practice, some families gave away or transferred money and assets in order to qualify for Medicaid's Long-Term Care benefit. The Deficit Reduction Act of 2005 dramatically changed the rules, adding longer "look-back periods" to prevent those with means from accessing Medicaid. 

The exception is when an individual purchases a qualified Long-Term Care Partnership Insurance policy, which provides "asset disregard." This allows a person to shelter part of their estate, based on the amount of benefits paid by their policy, and still access the Medicaid Long-Term Care benefit.