Where to start › When the money runs out › Spending down
Spending down to qualify
Spend-down is a normal, legal, expected part of how long-term care gets paid for in America. It is also two different things with one name. Knowing which one you are in makes all the difference.
Two kinds of spend-down
Spending down income. Some states have a "medically needy" program for people whose income is over the limit. CMS describes people who "can still become eligible by 'spending down' the amount of income that is above a state's medically needy income standard." They usually do it by running up medical bills. Thirty-six states and the District of Columbia use spend-down programs (called medically needy programs or 209(b) states).[1] If your state is not one of them, this way in does not exist for you.
Spending down savings. Separately, a person applying for long-term-care Medicaid may need to bring their assets (savings and other property that gets counted) under the state's limit for that coverage. Care in a facility has its own state-run rules for who qualifies, apart from the income rules.[3] That is a different test, in a different program, with different rules.
The first question to ask the state agency is which program and which limit apply to this person. Then ask if your state even runs the program you were told about.
What counts, and what we will not tell you
Under a state's rules, some things may not be counted, often with conditions. A home, a car and personal belongings are often treated differently from cash and investments.
What we are not going to do is give you a comforting list. We could not find any federal source that gives one list for the whole country, or one dollar limit on home value. A home most of all can be treated very differently. It depends on the program, on who lives there (a spouse or dependent), on the person's plan to return, and on what the state can collect after death. See what happens to the house.
A page that tells you the house is safe, and is wrong for your state, costs you the house. Get the state's current list, in writing, before you sell, spend or move anything.
The catch worth knowing
In general, you cannot give money or property away to get under a limit. Read that twice. CMS says people who need long-term care "will be denied LTSS coverage if they have transferred assets for less than fair market value during the five-year period preceding their Medicaid application."[1] (LTSS means long-term services and supports.)
Two details matter. First, this is about long-term-care coverage, not every kind of Medicaid. Second, the penalty is not always five years. Its length is the amount given away divided by the average monthly cost of nursing home care in your state or area. When the clock starts is its own technical question.[2] The look-back page explains how it works, including the exceptions written into the law.
There are legal ways to set up a spend-down. They depend on your state and your facts, and mistakes are costly and hard to undo. This is where an elder-law attorney earns their fee. If your family is arguing over why to bring in an attorney early, this is a good reason to point to.
What only your state can tell you
The limits, the program, and what you are allowed to spend on are decided by your state, based on your own facts.
Who to ask: your state Medicaid office for the limits and the program; an elder-law attorney before any money moves; and a free SHIP or benefits counselor to help you understand what you are told.
What to ask them:
- Which Medicaid program would apply to my person? Does it test income or savings?
- Does this state run a medically needy or 209(b) spend-down program?
- What are the income and savings limits right now? What date did they start?
- Which of the things we own are not counted here, and under what conditions?
- What are we allowed to spend down on right now?
- How would this state treat the house? What can the state collect from it after death?
Free local help. Your Area Agency on Aging will talk through your choices with you for free. Find yours through the federal Eldercare Locator at 1-800-677-1116 or eldercare.acl.gov (run by the Administration for Community Living).[4] An Area Agency on Aging does not decide who gets Medicaid. To learn about the four kinds of local helpers, see Who helps me locally.
Sources and what they support
Sources checked 2026-09-19 using AI-assisted editorial research. This is a source check, not legal advice.
- CMS, Medicaid eligibility policy. Supports the quoted description of income spend-down in medically needy programs, that 36 states and the District of Columbia use spend-down programs either as medically needy programs or as 209(b) states, and the quoted rule that beneficiaries needing long-term services and supports will be denied that coverage if they transferred assets for less than fair market value in the five years before applying. This page distinguishes income spend-down from institutional long-term-care asset rules; it does not publish any state's limits and it does not set out a nationwide list of exempt assets.
- CMS State Medicaid Director Letter SMD#18-004, 17 April 2018. Supports that the penalty period is calculated by dividing the amount transferred for less than fair market value by the average monthly cost of nursing facility services in the state or locality, and that the 60-month look-back runs from the point at which a person has both applied and is an institutionalised individual. Guidance to states on penalty start dates; it does not decide whether any particular transfer is penalised.
- CMS, institutional long-term care. Supports that institutional long-term-care coverage operates under its own state-administered eligibility rules, distinct from the income-based pathways. It does not establish a national exemption list, a home-equity limit, or how any state treats a particular asset.
- Administration for Community Living, Eldercare Locator. Supports the referral route to a local Area Agency on Aging for free options counselling. An Area Agency on Aging does not determine Medicaid eligibility or advise on transfers.
Corrected in this pass: the page treated income spend-down and asset spend-down as one thing; it presented a home, one vehicle and personal belongings as usually exempt, which no federal source establishes as a national rule; and it implied the look-back and its penalty apply to Medicaid generally rather than to long-term-care coverage.