Medicaid spend-down applies when an individual or a couple have countable resources in excess of the eligibility limits. Before the individual or couple will be entitled to Ohio Medicaid assistance, the excess resources must be expended in some permissible manner. Most expenditures, other than gifts, will qualify for this purpose.
When a couple is involved, this will generally mean that the countable resources must be reduced by half, subject to a "floor" and "ceiling." The floor is currently $25,284. The ceiling is currently $126,420. In determining values, the assets of the couple at the time the first of the them had a period of institutionalization of thirty days or more is utilized. Accordingly, if the countable assets were $100,000 when the one spouse entered the nursing home, this amount is cut in half and the assets must be spent down to $50,000. If the original amount was $300,000, the ceiling comes into play and more than half must be spent (maximum that can be retained by the healthy spouse is $119,220). Similarly, if the original amount was $15,000, then there is no required spend down because of the $23,844 floor.
An example will illustrate the importance of understanding these rules. Take two couples with a pending nursing home stay on the part of the husband. The wives, Jennifer and Kimberly, are in the exact financial situation. Each has a home worth $150,000, subject to a $25,000 mortgage, assets in the bank worth $50,000, and credit card debt of $15,000.
Jennifer decides that she should take care of a few things before her husband enters the nursing home. So, she sells their home, places the proceeds from the sale in the bank, and pays off her debts. She now has $160,000 in the bank. Jennifer's husband then is placed in the nursing home, and upon application for Ohio Medicaid, she is told they must spend down $80,000.
Kimberly does nothing until after her husband enters the nursing home. She has $50,000 of countable assets, so she must spend down $25,000. She does this by paying off the mortgage. Kimberly does not have to spend any money on the nursing home and the facility begins to receive Ohio Medicaid vendor payments immediately. Medicaid law and practice should allow Kimberly to later sell the home and place the proceeds in investments. She could then pay off the other credit card debt and end up with $160,000 in investments, whereas Jennifer would only have $80,000.