Medicaid Spend Down Rules

Learn what counts, what's exempt, and how to spend down smartly — from 1-800-MEDIGAP.

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Quick answer

Medicaid spend down rules require you to reduce countable assets to your state's limit — often around $2,000 for an individual — before qualifying for long-term care. You can 'spend down' on allowed expenses like medical bills, home repairs, or paying off debt. Call 1-800-MEDIGAP for guidance.

If your assets are over Medicaid's limit, spend down is the process of reducing them to qualify — but doing it the right way protects more of your money.

What does Medicaid spend down mean?

Medicaid spend down is the process of reducing your countable assets (and sometimes income) to meet your state's eligibility limit for long-term care. Most states cap countable assets at around $2,000 for a single applicant in 2026, though figures vary. 'Spending down' doesn't mean wasting money — you can use excess assets on legitimate, exempt expenses: paying medical bills, eliminating debt like a mortgage or credit cards, repairing or modifying your home, prepaying funeral and burial costs, or buying needed items. Done strategically, spend down lets you qualify for help while putting your money to good, lasting use rather than simply handing it to a nursing home.

What assets are exempt from spend down?

Not everything counts. Common exempt (non-countable) assets include your primary home up to an equity limit, one vehicle, personal belongings and household goods, an irrevocable prepaid funeral plan, and certain burial funds. For married couples, the community spouse resource allowance protects a portion of joint assets for the spouse staying at home. Because exemptions and limits vary by state and change yearly, mistakes are easy to make. Improper transfers can trigger penalties under the 5-year look-back. Call 1-800-MEDIGAP to understand the rules in your situation before spending or moving any assets.

More on Medicaid & LTC Planning

← Medicaid & LTC Planning (overview)pillar guide Medicaid Asset Protection Trust Community Spouse Resource Allowance How to Protect Assets From Medicaid Medicaid Planning for Nursing Home Medicaid 5-Year Look-Back Period Medicaid Gifting Rules How to Qualify for Medicaid Long-Term Care

Frequently asked questions

How much do I have to spend down for Medicaid?+

You generally must reduce countable assets to your state's limit, often around $2,000 for an individual in 2026. Married couples have higher allowances. Exempt assets like your home, a car, and personal belongings don't count. The exact amount depends on your state and household, so confirm current figures before spending down.

Can I just give away money to spend down?+

No. Giving away or selling assets below value within 5 years of applying triggers Medicaid's look-back penalty, delaying your eligibility. Instead, spend down on allowed expenses like medical bills, debt payoff, home repairs, or prepaid funeral costs. Gifting to qualify is one of the most common and costly mistakes.

What is a Medicaid income spend down?+

In some states, if your income exceeds the Medicaid limit, you can still qualify by 'spending down' the excess on medical expenses each month or period — similar to a deductible. Once your spent medical costs reach the threshold, Medicaid covers the rest. Rules differ by state, so verify your local program.

Does my house count toward Medicaid spend down?+

Usually not while you live in it. Your primary home is typically exempt up to a home equity limit, especially if a spouse or dependent lives there. However, after death the state may seek estate recovery against the home. Planning ahead — sometimes with a trust — can help protect it.

How can I spend down without losing everything?+

Use excess assets on exempt, lasting purchases: pay off debt, repair your home, buy a reliable car, or prepay funeral costs. Avoid gifting, which triggers penalties. For larger estates, an elder law attorney can structure additional protections. Call 1-800-MEDIGAP (1-800-633-4427) for trusted guidance first.

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