Paying for care

Medicaid spend down for nursing home care: how it works

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By Nursing Home Checker · Updated Oct 12, 2026 · How guides are checked · Share

What does "spend down" mean for Medicaid nursing home coverage?

In federal Medicaid rules, "spenddown" is about income. The everyday meaning, using up savings to reach an asset limit, comes from separate resource (asset) rules.

How does the income spend down work?

Medicaid.gov explains that people "spend down" by running up medical and remedial bills that no insurance will pay. The spenddown amount is the difference between the person's income and the state's medically needy income level. Once those bills exceed that amount, the person can be eligible, and Medicaid pays for covered care beyond it.

• A budget period. Federal rules say the state must look at income over a budget period of no more than 6 months. The spend down is figured for that period.
• Bills count when owed. If countable income is over the standard, the state must deduct medical bills that a third party will not pay. A bill counts on the date the person becomes liable for it, paid or not.
• What counts. Deductible expenses include Medicare and other health insurance premiums, deductibles and coinsurance, and necessary medical and remedial care, including care that state law recognizes but the state's Medicaid plan does not cover. States may set reasonable limits on some of these amounts.
• Nursing home costs. A state may count a nursing home resident's expected costs to the end of the budget period, at the Medicaid rate. This is a state option.
• Older bills. Federal rules require states to count bills from the 3 months before the month of application, paid or unpaid, if they were not already used. A state may choose to count older bills too.

Federal rules say Medicaid does not pay the bills used to meet the spend down. If countable income is already at or below the state's medically needy income standard, there is nothing to spend down.

Does every state have a medically needy spend down?

No. A medically needy program is a state option. Federal rules also require a spend down in so-called 209(b) states for older, blind and disabled applicants, even if the state has no medically needy program. Medicaid.gov says 36 states and the District of Columbia use spend-down programs, either as medically needy programs or as 209(b) states. It does not list them, so your state Medicaid agency is the place to ask which rules apply.

Some states use an income cap for nursing home Medicaid instead, as explained in the Medicaid income limit for nursing home care. A state with a medically needy program also sets a medically needy income standard and an asset standard, so a person who meets the income spend down must still be under the state's asset limit.

What is the asset limit, and what does "spending down assets" mean?

The federal SSI resource limit is $2,000 for one person and $3,000 for a couple, and CMS lists the $2,000 standard again for 2026. Federal law lets states count income and assets more generously than SSI for certain groups, and 209(b) states may be stricter, so your state's figure can differ.

Under SSI rules, a resource is cash or anything a person owns and could turn into cash to live on. Assets are counted as of the first moment of each month. Money spent during a month is counted as gone from the first moment of the next month.

Which assets don't count toward the limit?

SSI rules leave several things out of the count. States that follow SSI methods use them, and a state may be more generous.

This is what federal rules exclude. It is not a list of approved ways to spend money, and federal sources do not publish one.

Does the house count for nursing home Medicaid?

The house can count in two ways. Under SSI rules, the home stays excluded while a spouse or dependent relative lives there, even if the owner moves to a nursing home. If the owner moves out with no intent to return, it can become a countable asset.

Separately, federal law sets a home equity limit for nursing home Medicaid. In 2026, a person whose equity in the home is above $752,000 is not eligible for nursing home coverage, or above a higher limit of up to $1,130,000 if the state chooses one. The limit does not apply while a spouse, a child under 21, or a blind or disabled child lawfully lives in the home. Federal law also requires a process to waive the limit in cases of demonstrated hardship, and it says a state's more generous counting methods cannot be used to skip this limit.

A 2025 law (Public Law 119-21) changes the optional higher limit starting January 1, 2028. From then, for a home that is not on land zoned for agricultural use, a state's higher limit can be no more than $1,000,000. For liens and estate recovery, see can a nursing home take your house.

What if the applicant is married?

For a married applicant, all of the couple's assets are counted at the time of application, whichever spouse owns them. Separately, federal law has the couple's total assets figured as of the start of the first continuous stay in an institution; half of that total is the "spousal share" used in figuring what the spouse at home can keep.

The spouse at home can keep the community spouse resource allowance. In 2026 it is generally between $32,532 and $162,660, depending on the state's rules and the couple's assets; a fair hearing or a court order can set a higher amount. Assets above that count as available to the spouse in the nursing home. After the month the resident is found eligible, the at-home spouse's assets are no longer counted for the resident during that continuous stay.

Does giving money away count as spending down?

No. Federal law says a gift or a sale for less than fair market value on or after the look-back date can make a nursing home applicant ineligible for a penalty period. For transfers on or after February 8, 2006, the look-back is 60 months. The penalty does not start until the person is otherwise eligible and would be getting nursing home care on an approved application. See how the Medicaid 5-year look-back works.

Can Medicaid pay nursing home bills from before the application?

Yes, for a limited time, and that time is getting shorter. Under the current federal regulation, coverage must start no later than the third month before the month of application, if the person got covered care in those months and would have been eligible then.

For applications made on or after January 1, 2027, Public Law 119-21 (section 71112) shortens this. CMS says retroactive coverage will be limited to one month before the month of application for people in the Medicaid adult (expansion) group, and to two months before the month of application for everyone else. Federal regulations had not yet been updated for this change as of October 2026.

What happens to income after Medicaid approves the stay?

After eligibility, the resident's income, minus certain deductions, goes toward the nursing home bill each month. Certain amounts are deducted first, including the personal needs allowance and, where the rules provide one, an allowance for a spouse at home. See the Medicaid personal needs allowance by state.

Where to ask about your state's spend down rules

Your state Medicaid agency can say whether your state has a spend down, what its income standard and asset limit are, and how to apply.