Secured Futures Blog
Unlock the Mystery of Spend Down:
Understand the Significance in Medicaid Eligibility and Financial Planning
What is Spend Down?
Can you ever have too much money? While most of us would excitingly say “of course not!”. Recipients of Supplemental Security Income (SSI) or Medicaid could risk losing their eligibility if they have too much cash, or too many assets, which put them over the income and asset limits for eligibility. This is when a Pooled Special Needs Trust comes in, and in some cases a Spend Down.
A Spend Down is a spending plan designed to ensure any assets over the established eligibility limits are spent in the same calendar month it is received. This spending plan is ideal when a person is receiving means-tested benefits which they can comfortably spend in one calendar month on themselves– no gifting or “paying back” is allowed.
While a Pooled Special Needs Trust is a great way for children and adults with disabilities to receive an inheritance or settlement and maintain their needs-based government benefit eligibility, there are some situations when a Pooled Special Needs Trust doesn’t make sense and in these cases, we recommend a spend down to satisfy immediate needs while keeping eligibility intact.
What can a Spend Down Pay for?
- Paying off debts
- Purchasing a primary residence or vehicle
- Rent or utilities within the calendar month
- Purchasing furniture or appliances
- Prepaid burial arrangements
- Legal fees
- Educational expenses
- Medical expense and equipment not covered by Medicaid
- Entertainment, recreation, or vacation expenses
- Personal products
This list is intended to give you a general idea of commonly allowed purchases but is not all-inclusive.
Money is spent, now what?
Government Agencies generally require notification of the funds received along with documentation of all expenses paid to avoid eligibility violations. This notice may include receipts, settlement or inheritance information, and bank statements. If you have additional questions or need assistance, we encourage you to contact your local Social Security and Medicaid office for details or consult a Special Needs Attorney.
- Utilizing the Spend Down Option to Maintain SSI and/or Medicaid Eligibility: Utilizing the Spend Down Option to Maintain SSI and/or Medicaid Eligibility (specialneedsalliance.org)
- SI 01150.007 Transfer of Resources by Spend-Down: SSA – POMS: SI 01150.007 – Transfer of Resources by Spend-Down – 02/24/2012
- SPOTLIGHT ON RESOURCES — 2021 Edition: SSI Spotlight on Resources (ssa.gov)
- SI 01110.210 Excluded Resources: SSA – POMS: SI 01110.210 – Excluded Resources – 12/15/2008
- SI 01150.121 Exceptions — Transfers to a Trust: SSA – POMS: SI 01150.121 – Exceptions — Transfers to a Trust – 07/12/2010
- SI 01150.125 Exceptions — Transfers for Purposes Other Than to Obtain SSI: SSA – POMS: SI 01150.125 – Exceptions – Transfers for Purposes Other Than to Obtain SSI – 12/24/2013
- SI 01150.001 What is a Resource Transfer: SSA – POMS: SI 01150.001 – What is a Resource Transfer – 07/15/2016
DISCLAIMER: The information provided by Secured Alliance is for informational purposes only and is intended to be used as a non-legal guide before consultation with an attorney familiar with your specific legal situation. Secured Alliance is not engaged in the practice of law or rendering legal advice or counsel. No such legal advice or counseling is either expressly or impliedly intended. This form is not a substitute for the advice or counsel of an attorney. If you require legal advice, you should seek the services of an attorney.
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