Each program Medicare offers has its own federal guidelines. Although Medicaid provides health insurance for low-income children and adults. There may be specific circumstances in which this is not the case, earning an income above the eligibility requirements does not necessarily disqualify you from receiving Medicaid. You may “spend-down” the excess income to meet Medicaid’s requirements. So, how does this financial strategy work? And what qualifies beneficiaries for this program? Here’s what you should know.

How Does Income Spend-down Work?

Each state sets its income and assets requirements for Medicaid. According to the American Council on Aging, the income and asset limits vary depending on a person’s marital status and specific Medicaid program.

If you make more than the income limit set by Medicaid, you can spend-down as a type of financial strategy to become accepted into the program. This may be helpful for elderly adults that need to qualify for Medicaid to cover the costs of long-term care.

Keep in mind, that the spend-down rules may vary by state. Not everyone that applies for Medicaid may be able to do a spend-down. For example, spend-down rules may only apply to you if you are in one of the groups below:

  • Over the age 65
  • Blind
  • Child under 21
  • Disabled

To spend-down, excess income is used to cover medical expenses. In general, medical expenses may include:

  • Past or present unpaid medical bills.
  • Medical expenses, such as a hearing aid.
  • Prescription medications
  • Physician’s visits
  • Payments to a drug treatment program.
  • Expenses related to home health aides as required by a doctor.

The amount you need to spend-down is the difference between the Medicaid eligibility in your state and your income over a specific length of time. For instance, if the income limit in your state is $1000 a month and you make $1200 a month, you need to spend-down $200 a month on medical expenses to qualify each month.

What is Asset Spend-down?

In addition to meeting income eligibility, you must also meet the requirements for limited assets. Each state also sets limits on assets allowed to qualify for Medicaid.

Certain assets are countable, which means they are included when calculating a person’s assets for Medicaid. Other assets are non-countable when considering if someone meets the limited assets requirements.

Similar to the income spend-down, you may also spend-down assets. But before you do, it is important to understand what is a countable and a non-countable asset.

What is a Countable Asset?

Assets that count towards Medicaid eligibility include the following:

  • Cash
  • Retirement accounts
  • Savings
  • Property
  • Stocks

What are Non-countable Assets?

Other assets do not count towards your total asset level. They are non-countable. Although it may vary, usually, non-countable assets include:

  • Your primary home (Some states have a limit on the equity value of a primary home).
  • One vehicle
  • Pre-paid burial expenses
  • Term life insurance
  • Whole life insurance with a cash value of less than $1500.
  • Jewelry, such as wedding rings.
  • Household items, clothes, appliances.

How to Spend-down Assets

If you are over the asset limit for eligibility, you can spend-down some assets. It is essential to determine the asset limit in your state.

Spending down assets can be a bit more complicated and have more rules that a spend down of income. It is best to check with a Medicaid expert to make sure what spend-down strategies align with Medicaid rules. Some possible ways to spend-down assets include:

  • Spending down savings by paying off credit cards or other debts.
  • Making home repairs on a primary residence.
  • Purchasing ordinary household goods.

What Should I Keep in Mind With a Medicaid Spend-down?

If you do not meet the income or asset limit to receive Medicaid and want to spend-down, there are a few critical things to keep in mind, such as:

  • If you have been denied full coverage of Medicaid, your state office should send you information regarding whether you qualify for a spend-down.
  • Make sure you clarify what is a non-countable and countable asset. This will allow you to spend-down only the countable assets.
  • If you do not qualify for full Medicaid, ask about a monthly premium. Certain states may let you pay a premium every month for the amount you are over Medicaid’s spend-down level.
  • Keep receipts and bills. Some states may require you to submit bills or receipts to Medicaid to show your monthly expenses.


  1. Spending Down Assets to Become Medicaid Eligible for Nursing Home/ Long-term Care, Medicaid Planning Assistance.
  2. Spend Down Procedures, OMS.NYSED.