At The Forefront Of Disability And Elder Law

Allowable Medicaid spend down items as of 2022

On Behalf of | Mar 8, 2022 | Elder Law |

For many individuals, qualifying for long-term care Medicaid is difficult for the sole fact that they do not meet the program’s asset limit. More specifically, the value of their assets greatly exceeds the set limit which, as of 2022, is $2,000 for single applicants and $3,000 for a married couple applying together.

Understandably, many aspiring Medicaid recipients have assets that far exceed the $2,000 limit. In an attempt to qualify for benefits, they may try to get rid of their assets by spending them down, gifting them, donating them or getting rid of them via other means. To prevent applicants from doing this, The Centers for Medicare and Medicaid Services developed the lookback period.

The Medicaid lookback period

According to the American Council on Aging, the Medicaid lookback period is a period in which one cannot gift, donate or transfer assets that he or she could otherwise have used to pay for long-term care. In all states but California, the lookback period begins 60 months prior to the date of the Medicaid application. Applicants also cannot sell assets for less than the fair market value during this time.

All financial transactions that applicants make during the 60-month period will come under review when the CMS reviews their applications. If CMS determines that an applicant violated the lookback rule, it will enact a penalty period, which is basically a period of ineligibility for Medicaid benefits. Examples of transactions that may trigger a penalty period include gifting money to a granddaughter, donating a vehicle to a local charity or transferring a house to a son or daughter.

Spending down assets the right way

Also according to the American Council on Aging, there do exist ways for Medicaid applicants to spend down assets without violating the lookback rule. Allowable Medicaid spend down items include the following:

  • Payments toward accrued debt
  • Certain home modification costs
  • Costs associated with medical devices and equipment not covered by insurance
  • The cost of vehicle repairs
  • Annuity purchases
  • Costs associated with life care agreements
  • Contributions to irrevocable funeral trusts

Even allowable expenses come with contingencies. Individuals who hope to spend down assets without triggering a penalty period should discuss strategies with an experienced professional.


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