Laura Blumenstiel, JD Jan. 16, 2024

If you or someone you love needs long-term care, navigating the complexities of the Medicaid application process can be overwhelming and stressful. But, it's important to understand the Medicaid spend-down process to assess what benefits and care may be available.

Medicaid spend-down allows individuals to qualify for Medicaid by reducing their countable assets and income to a certain level. It is a daunting task, but with the right guidance and support from a qualified Medicaid attorney, the spend-down process can help accelerate Medicaid eligibility while protecting assets.

At the end of the day, it is crucial to prioritize the health and well-being of yourself or your loved ones – and the Medicaid spend-down process in Ohio can help make that possible.

Understanding Medicaid Eligibility and Spenddown

The basic premise of Medicaid spend-down is to reduce an individual's assets and income to qualify for Medicaid coverage. In Ohio, the threshold for eligibility is quite low. In 2024, a single Nursing Home Medicaid applicant must meet the following criteria:

  1. Income under $2,829 / month

  2. Assets totaling under $2,000

  3. Require a Nursing Home Level of Care

Up-to-date eligibility information can be found on the Ohio Department of Medicaid's website.

To achieve eligibility, individuals may need to "spend down" their assets and/or income on permissible expenses. Additionally, there are complicated methods for converting countable assets into exempt resources, as well as allocating income from the institutionalized spouse to the community spouse, thus preventing the impoverishment of the community spouse. This process is very complex, with strict rules and regulations. Any missteps could result in penalties or delays in eligibility. This is why it is important to work with an experienced Medicaid attorney.

The Look Back Period

Ohio’s look-back period is a crucial aspect of Medicaid eligibility. When someone applies for Medicaid, the county Jobs and Family Services Department will require them to provide bank statements and other financial records from five years prior. They must explain any "improper transfers" (i.e., assets that were given away or sold for less than fair market value). If the applicant made improper transfers, a penalty period may be imposed, during which they'll be ineligible for Medicaid benefits.

Assess Your Financial Situation

It is important to assess your financial situation before starting the Medicaid application process. This will help you understand what assets and income may need to be reduced to qualify for Medicaid coverage.

List All Assets

First, make a list of all your assets. This includes bank accounts, investments, real estate, vehicles, life insurance policies, retirement accounts, and any other assets of value. It is important to know the exact value of each asset and any potential income generated from them.

Review Income Sources

Next, review your sources of income. This includes wages, social security benefits, pensions, annuities, required minimum distributions, rental income, etc. Make sure to take note of any deductions that can be applied to reduce your income for Medicaid eligibility purposes. A qualified lawyer can help you determine this.

Identify Countable and Non-Countable Assets

In Ohio, not all of a person's assets count towards Medicaid eligibility. Some assets are exempt and don't count towards the limit. However, countable assets may need to be spent to achieve Medicaid eligibility.

Countable assets include:

  • Cash

  • Certificates of Deposit

  • Stocks, bonds, and other investments

  • Checking, savings, brokerage and other bank accounts

  • Pensions

  • Non-primary residences (such as vacation homes, rental properties, etc.)

Non-countable assets include:

  • Personal belongs (such as jewelry and household items)

  • Furniture

  • The primary home, to a certain extent

  • The primary automobile

  • Life insurance with a cash value under $1,500

Consider Future Expenses

It is important to consider any potential future expenses, such as medical bills or home care costs. These can be used towards the Medicaid spend-down process, reducing your assets and income.

Calculate The Medicaid Eligibility Threshold and Spenddown Amount

Once you have assessed your financial situation and identified countable and non-countable assets, it is time to calculate the Medicaid eligibility threshold and the spend-down amount.

Determine The Medicaid Eligibility Threshold

To determine the eligibility threshold, add up all your non-exempt assets. Then, determine your total income. These two figures will give you an idea of what needs to be reduced through the spend-down process to qualify for Medicaid.

Calculate the Spenddown Amount

To calculate the spenddown amount for an individual applicant, you will need to subtract the eligibility threshold from your total assets. This amount needs to be spent down or transferred to meet the eligibility requirements.

As mentioned earlier, navigating the complexities of Medicaid spend-down can be challenging. An experienced elder law attorney can help you create a spend-down plan that satisfies Medicaid's requirements while protecting as many of your assets as possible.

2 Ways to Meet Spend-down

If you need to reduce your income or assets to qualify for Medicaid, you can do so in two ways:

  1. Spend excess countable assets and income and/or

  2. Convert countable assets into exempt assets

Spend Excess Income and Countable Assets

Your Medicaid attorney and your county's Job and Family Services caseworker can help you determine expenses that can be counted toward the spend-down amount.

Some examples are:

  • Medical insurance premiums (like health, vision, dental and long-term care)

    • Past unpaid medical bills

    • Co-pays and deductibles

    • Paying off debt

    • Prescriptions

    • Physical therapy

    • Medical equipment and supplies

    • Transportation costs to get to medical appointments

    • Home modifications

    • Other care-related expenses

Convert Countable Assets into Exempt Assets

You can also use excess assets to purchase exempt assets. By converting countable assets into exempt assets, you can potentially qualify for Medicaid in Ohio without having to spend your entire savings. An experienced Medicaid planning attorney can help you determine which of the following strategies is right for you.

Transferring Home Ownership

To avoid losing your home to a Medicaid lien, you may want to transfer your home ownership. There are very strict rules that govern these types of transfers, and if done improperly, it can lead to Medicaid denials and penalties, as well as adverse tax consequences. This is not an option available to everyone, therefore it is important to consult with an estate planning attorney before taking this action.

Qualified Income Trust

If your income exceeds the limit for Medicaid, it may be necessary to establish a Qualified Income Trust. Any income over the limit will be placed into the trust and disregarded for Medicaid application purposes. Once you are approved for Medicaid, almost all of your income, including the income placed in the Qualified Income Trust, must be used to pay for care before Medicaid covers the remaining balance.

Gift Medicaid-Compliant Annuity

This strategy is usually used when long-term care is needed in the immediate future. It requires dividing the applicant’s assets into two shares: the “Gifted Share” and the “Medicaid-Compliant Annuity Share”. The gifted share is usually given to your children or an irrevocable trust for the children’s benefit. The Medicaid-compliant annuity share is used to purchase a special type of annuity that is not counted as an asset for Medicaid purposes. This annuity provides a monthly stream of income that can be used to pay for long-term care during the penalty period created by gifting.

Before you spend excess assets or income, meet with a trusted Ohio Medicaid attorney. Spending down assets may have unintended estate planning, Medicaid and tax consequences if not done carefully.

Tips for a Successful Medicaid Spenddown in Ohio

Plan Ahead and Start Early

The Medicaid application process can be complex and time-consuming, so it is best to begin the planning process as soon as possible. The sooner you meet with an attorney, the better you can protect your assets and ensure you get the quality medical care you need.

Keep Detailed Records of Spenddown Transactions

It is important to keep detailed records of all spenddown transactions. This will help you accurately report your spend-down amount and prevent any issues during the Medicaid application process.

Seek Professional Help from an Experienced Ohio Medicaid Attorney

Navigating the Medicaid system can be overwhelming, which is why it is crucial to seek professional help from an experienced Ohio Medicaid attorney. They can guide you through the process and help you develop a comprehensive spenddown plan that meets your unique needs and goals.

It is possible to qualify for this vital program while protecting your assets. By understanding the various strategies and options available, you can successfully spenddown your assets and receive the quality medical care you need without draining your savings. Just remember to start early, keep detailed records, and seek professional help.

Don't wait until it's too late, start planning for your future healthcare needs now. Your health and financial well-being are worth it. Call our office at 614-389-9711 to schedule a meeting with one of our experienced Medicaid attorneys.

Will you, or someone you love, need nursing home care in the future? Learn about your options by downloading our free ebook Age with Confidence.

About the Author

Having earned her law degree in 1997, Laura Blumenstiel has nearly three decades of legal experience. She is deeply committed to providing compassionate and effective legal services for our clients. Each day, she finds fulfillment in meeting with clients and meticulously crafting trusts and estate planning documents. Additionally, she works diligently on estate administration through probate court proceedings. She's passionate about helping individuals and families plan for the future and guiding them through the probate process during difficult times. She strives to make a genuine connection with all her clients.