LTC Medicaid Spend-Down Strategy Calculator
Medicaid requires spend-down to $2,000 in countable assets (excluding home if spouse remains, one vehicle, limited burial fund) before paying for nursing care. Strategic spend-down via half-loaf (gift 50%, immediate-annuity 50%) can save 30-50% of assets vs uncontrolled spend-down. Requires elder law attorney coordination.
Half-Loaf Strategy Mechanics
Sophisticated spend-down: gift 50% to children/trust, use other 50% to purchase Medicaid-compliant Single Premium Immediate Annuity (SPIA). Gift creates penalty period (gift ÷ state NH rate = months ineligible). SPIA payouts cover NH cost during penalty. After penalty expires, all SPIA principal exhausted, Medicaid eligibility begins. Net result: gift portion preserved for heirs, SPIA portion spent on care.
Exempt Assets That Don't Count
Several asset categories don't count toward Medicaid limit: primary residence (if community spouse lives there, or applicant intends to return), one vehicle, household goods, prepaid burial expenses (up to $1,500-15,000 by state), one term life insurance, IRA in payout status (some states). Strategic spend-down on exempt assets is the simplest approach — pay off mortgage, buy newer car, prepay funeral, repair home before applying.
Critical Mistakes To Avoid
Three common errors: (1) Outright gifting in look-back period — creates ineligibility penalty without protective structure. (2) Buying non-compliant annuity — must be Medicaid-compliant (specific actuarial age, state-named beneficiary, irrevocable, immediate). (3) DIY without elder law attorney — every state has different exempt asset rules. Average elder law attorney fee $4,500-8,500 for spend-down planning — saves 10-50x more in preserved assets.
Source: 42 CFR §435.916 (Medicaid asset limits), 42 USC §1396p (transfer of assets, spousal protections), HHS State Medicaid Manual. Last updated: May 2026.