What Is A Medicaid Spend Down?

Medicaid has income and asset limits. If you have more than these limits allow, you won’t qualify—unless you “spend down” your excess income or resources in a way Medicaid permits.

There are two types:

1. Asset Spend Down

If you have too much in savings or other assets, you may need to spend down those assets to qualify. For example:

Allowed: Paying medical bills, buying a prepaid funeral plan, replacing a car, making home repairs, or paying for care
Not allowed: Giving large gifts to family, transferring property without fair compensation

In most states (including Oklahoma), you must reduce countable assets to $2,000 (for an individual) to qualify. However, a spend down does not have to mean the money is gone forever, only that it has satisfied the Medicaid spend down rules. In some cases, the applicant's family can preserve all the assets and still satisfy the spend down rules, using legal planning techniques.

Many nursing homes will tell you that a spend down requires you to spend all the excess assets for care, but this is a common misconception that only benefits the nursing home.

2. Income Spend Down

If your monthly income exceeds Medicaid's limit (e.g., $2,901/month in Oklahoma for 2025), you may still qualify using a Qualified Income Trust (QIT)—also known as a Miller Trust. This trust redirects excess income into a restricted account, which is used only for Medicaid-approved expenses.

🛑 Important: What NOT to Do

Don’t give away money or property. Medicaid has a 5-year look-back rule, and gifts can result in a penalty period where you won’t receive benefits.
Don’t spend recklessly. Large or questionable purchases (vacations, luxury items) may be disqualifying.

⚖️ How a Medicaid Attorney Can Help

A Medicaid planning attorney can help you:

Identify which assets are countable
Create a legal and effective spend-down strategy
Plan ways to retain the value of your assets while still qualifying for Medicaid
Use tools like QITs, trusts, or annuities to protect wealth
Apply correctly and avoid penalties

📌 Bottom Line:

A spend down doesn’t mean losing everything—it means planning wisely and strategically to qualify for Medicaid while preserving as much as possible.

Contact our office to learn more.