When it comes to public healthcare assistance, understanding eligibility requirements and the intricate processes for obtaining benefits can be a daunting task. One policy that often comes under the spotlight is the spend-down process, a Medicaid policy that allows individuals with income too high for regular Medicaid eligibility to qualify by deducting certain medical expenses from their income.
As a large state with a diverse population, Texas faces unique healthcare policy challenges. The state’s Medicaid program is tailored to address the needs of its residents, especially those with limited income. Medicaid Spend Down, although not universally adopted, is a crucial aspect for many, as it enables individuals with significant medical expenses to qualify for Medicaid support, even if their income exceeds traditional limits. It’s essential, therefore, to understand if this policy is implemented in Texas and how it might affect eligible individuals.
If you or a loved one is facing the challenges of applying for or maintaining Medicaid eligibility in Texas, an experienced Houston Medicaid planning lawyer can help. Call The Law Office of Whitney L. Thompson today at (281) 214-0173 for assistance in understanding these processes and obtaining the necessary support for you or your loved ones.
What Is Spend Down Medicaid?
Medicaid, a federal and state program, provides vital healthcare coverage to millions of Americans, including some low-income adults, children, pregnant women, elderly adults, and people with disabilities. However, not everyone who needs Medicaid can meet its strict income and asset criteria. This is where the concept of Spend Down Medicaid comes in.
Spend Down Medicaid, often referred to as a “Medicaid spend down” or a “Medicaid spend down plan,” is a provision in the Medicaid program that allows individuals with income or assets exceeding eligibility thresholds to “spend down” their excess income or assets on medical or care expenses. This effectively lowers their income to meet Medicaid’s stringent financial eligibility criteria.
Availability of Spend Down Medicaid in Texas
Medicaid programs can vary from state to state, with each having its own set of rules, eligibility criteria, and inclusions. Texas, being one of the largest states in terms of population, has a diverse set of Medicaid programs to address the healthcare needs of its residents.
Overview of Medicaid Programs in Texas
In Texas, Medicaid programs are often categorized based on age, family status, and special health needs. For instance, there are specific programs for children (Texas Health Steps and Children’s Medicaid), pregnant women (Pregnant Women Medicaid), the elderly (Medicaid for the Elderly and People with Disabilities), and individuals with specific medical conditions (Medicaid Buy-In for Adults). These programs are designed to provide comprehensive health coverage to vulnerable populations within the state.
Does Texas Offer Spend Down Medicaid?
Yes, Texas offers Spend Down Medicaid. Also referred to as the Medically Needy Pathway, this process allows individuals who have too much income or assets to qualify for regular Medicaid to become eligible by spending the surplus on medical or care-related expenses. It serves as a critical pathway for providing health coverage to those who might otherwise be left uninsured due to slightly exceeding the Medicaid income or asset limits.
Texas Eligibility Requirements for the Medically Needy Pathway
The eligibility requirements for Medicaid in Texas are comprehensive and designed to ensure that those most in need of healthcare coverage can access it. Here are the primary eligibility requirements:
Residency and Citizenship
You must live in Texas and be a U.S. citizen or have the right immigration status to apply.
Age/Disability
You also must have medical needs that match the care you are asking for. You must need care for at least thirty (30) days in a row. It is important to remember that Texas does not extend its Medically Needy Pathway Plan to seniors. Elderly applicants are advised to consult a skilled Medicaid planning attorney to determine and plan for eligibility through other methods.
Income Limitations
Texas lets people put money into a Miller Trust. This is for money that is more than the income limit for Medicaid services. The money you make every month (from jobs, Social Security benefits, pensions, veteran’s benefits, annuities, SSI payments, IRAs, etc.) must be $2,829 or less if you are single. The limit is higher if you are married and both people need care.
There is also a $75/month personal needs allowance that doesn’t count in the income.
Asset Limitations
Medicaid splits assets into two groups: Exempt and Available. Exempt assets won’t cause you to lose benefits. If an asset is not listed as exempt, it needs to be sold and the money used for nursing home care before you can get Medicaid benefits. Texas checks the past 5 years and can penalize people who sell assets for less than they are worth, move assets to others, or give away money and property. Basically, all money, property, and any item that can be turned into cash counts unless it is listed as exempt.
Exempt Assets in 2024:
- $2,000 in cash/non-exempt assets.
- One home (equity limit $713,000). The home is exempt if you plan to go back to it or if a spouse, a child under 21, or a disabled person lives in it. If you sell a home that was exempt, the money from the sale counts as an asset. You may then lose Medicaid until you have spent down the money and your countable resources are less than the maximum allowable amount.
- One car, no equity amount specified.
- Irrevocable burial trust, no amount specified.
- Property that can’t be sold, household items, furniture, clothing, jewelry, and other personal items do not count.
| Eligibility Requirement | Details |
|---|---|
| Residency and Citizenship | Must live in Texas and be a U.S. citizen or have the right immigration status to apply. |
| Age/Disability | Must be 65 or older, blind, or disabled and require care for at least thirty (30) consecutive days. |
| Income Limitations | Monthly income must be $2,742 or less for single individuals. The limit is higher for married couples. |
| Asset Limitations | Assets are categorized as Exempt and Available. Exempt assets won’t affect eligibility. |
Rules for Spouses
The spouse who doesn’t need care can keep half of countable assets up to $154,140. If the spouse’s assets are less than $30,828, they can keep assets from the spouse who needs care until they reach the minimum.
Community Spouse Income Protection
The spouse who doesn’t need care can keep some of the income of the spouse who does if they make less than $3,853.50 per month. The most income they can keep is $3,853.50. Texas is an “income first” state, which means the state only lets couples ask for more community spouse resources (CSRA) if their combined income is less than what the spouse needs. This means a spouse can ask for more CSRA only if there’s an income gap after first counting the income of the spouse in the nursing home.
It’s important to note that eligibility for Medicaid isn’t automatic, and individuals must apply and provide the necessary documentation to verify their income, assets, and medical expenses. Consulting with a legal professional with relevant experience or a social worker can be beneficial in understanding the complex eligibility requirements and the application process.
What Expenses Qualify for Medicaid Spend Down?
Medicaid spend down rules allow individuals to qualify for Medicaid by using excess income on approved medical and healthcare expenses. Understanding what costs qualify is crucial for compliance and benefit maximization. Here’s a concise guide on eligible expenses:
- Home Health-Related Improvements: Expenses for home modifications that support medical needs are covered. This includes the installation of stair lifts, wheelchair ramps, and safety devices like grab bars, which facilitate safe movement and access throughout the home.
- In-Home Care Services: Costs for in-home care services provided by healthcare professionals are eligible. These services may include assistance with daily activities such as bathing, eating, and other routine tasks that the individual cannot perform independently due to medical conditions.
- Nursing Home Care: Expenses for care provided in a licensed nursing home facility are included. This covers both short-term rehabilitative stays and long-term care.
- Medications: Both prescribed medications and over-the-counter drugs that are necessary for treatment can be included in the spend down.
- Medical Bills: All medical bills, whether paid out-of-pocket or unpaid, contribute to the spend down. This includes both past and current bills for treatments, consultations, and procedures.
- Transportation: Costs related to travel to and from medical appointments, including payments for mileage, public transit, or dedicated transportation services, are eligible.
For effective management of your Medicaid spend down, maintaining a thorough record of all related expenditures is essential. Keep all receipts and documentation to prove these expenses during your application process. This organized approach facilitates a smooth and compliant qualification process.
Planning for Medicaid
With the intricacies involved in the application process and eligibility requirements, planning for Medicaid can be a challenge. However, with strategic planning and professional assistance, it’s possible to navigate these complexities effectively.
Strategies to Meet Eligibility Requirements
When seeking to qualify for Medicaid, most individuals find themselves grappling with stringent asset limits. It’s not uncommon to have more assets than the Medicaid program allows, putting Medicaid approval out of reach. To overcome this hurdle, a common strategy is to “spend down” non-exempt assets, effectively reducing one’s wealth to meet the eligibility threshold.
Home Improvements
Your primary residence is considered a non-countable asset for Medicaid eligibility. Therefore, investing in home improvements is a common and sensible way to spend down non-exempt assets. This approach not only enhances the value and comfort of your home but also reduces your countable assets.
Home improvements can encompass a variety of projects, from major renovations to minor upgrades. Examples include installing a new roof for enhanced durability, adding a wheelchair ramp or a stairlift for improved accessibility, building a handicap-accessible bathroom for convenience, updating aging plumbing systems for better functionality, or constructing a shed in the backyard for additional storage space.
Vehicle Repairs or Purchase
Like your home, your primary vehicle is also considered an exempt asset by Medicaid. Thus, spending money on vehicle repairs or purchasing a new vehicle can help you effectively spend down your assets.
This could involve routine maintenance or more substantial repairs, such as installing a new muffler, fixing the air conditioner, replacing old tires, or repairing the transmission. Alternatively, you could consider selling your old car and using the proceeds plus additional funds to purchase a newer model. However, it’s important to note that only one vehicle per person is considered an exempt asset.
Acquisition of Uncovered Medical Devices
Acquiring medical devices not covered by Medicaid or other insurance is another viable strategy to spend down assets. This category includes items like hearing aids, dentures, eyeglasses, wheelchairs, walkers, and more. These purchases not only reduce your countable assets but also improve your health and quality of life.
Debt Repayment
Paying off existing debts is another effective method of spending down assets. This strategy reduces your financial liabilities and can relieve the stress associated with carrying debt. Debts that can be paid off include credit card balances, mortgage loans, automobile loans, medical bills, and personal loans.
Hiring a Family Member for Care
Creating a Family Caregiver Contract allows you to compensate a relative or close friend for providing care. This formal agreement outlines the type of care to be provided, the frequency of care, and the agreed-upon compensation. While this arrangement is most common among adult children caring for aging parents, it can also apply to other relatives or close friends. The payment should be reasonable and in line with the prevailing rates for similar care in your area.
Creating a Life Care Agreement
Life Care Agreements, also known as Personal Care Agreements, are contracts that provide for the long-term care of an elderly individual. Typically, the caregiver, often a family member or close friend, is paid a lump sum in exchange for agreeing to care for the senior for their life expectancy.
The lump sum payment must be carefully calculated to be fair and reasonable, taking into consideration the senior’s life expectancy and the cost of care in their area. This agreement not only ensures the senior’s care needs are met, but it also provides a legitimate way to spend down assets.
Purchasing an Irrevocable Funeral Trust
An Irrevocable Funeral Trust is a contract between an individual and a funeral home that safeguards funds for future funeral and burial expenses. The money placed in this trust is exempt from Medicaid’s asset limit. Expenses covered by an irrevocable funeral trust can include funeral director services, the casket, burial plot, and other related costs.
Buying an Annuity
Annuities are financial products that convert a lump sum of money into a steady stream of income over a specified period. For Medicaid purposes, an annuity can help individuals or couples convert non-exempt assets into an income stream, reducing their countable assets and potentially helping them qualify for Medicaid.
Cancelling Life Insurance Policies with a High Cash Value
If you own life insurance policies with a cash value of more than $1,500, these are considered countable assets for Medicaid. Therefore, it may be beneficial to cancel or reduce these policies to bring the cash value below the exempt limit.
The proceeds from the cancellation or reduction of the policy can then be spent down in ways that comply with Medicaid rules. For instance, you could use the money to pay off debts, make home improvements, or purchase an Irrevocable Funeral Trust.
Working with an Experienced Houston Medicaid Planning Lawyer
Navigating the complex landscape of Texas Spend Down Medicaid can be a daunting prospect. The rules, regulations, and processes involved are intricate and often confusing. For many individuals and families, working with a Medicaid lawyer based in Houston can prove invaluable. These legal professionals can help make sense of the system, provide guidance on how to best preserve assets while still qualifying for Medicaid, and offer crucial assistance in the application process.
At The Law Office of Whitney L. Thompson, our team of Houston Medicaid planning lawyers may be able to help with properly executing the spend-down process, potentially preventing costly mistakes and ensuring that the needs of your loved ones are adequately met. Remember, the goal isn’t just to qualify for Medicaid—it’s to strategically plan for the future while maintaining the highest possible quality of life. Contact us today at (281) 214-0173 to learn more about how we can help.
from The Law Office of Whitney L. Thompson, PLLC https://www.wthompsonlaw.com/does-texas-have-spend-down-medicaid/
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