Property Spenddown

MC applicants and recipients must be informed about reducing excess property during any month, including the month of application.

Property spenddown is the process of reducing or converting excess non-exempt property by any  means in order to become eligible for MC.

Note: If the client is an institutionalized individual or if they may be institutionalized within 30 months of the date of a transfer, non-exempt property transferred for less than fair market value may result in a period of ineligibility for nursing facility level of care under Medi-Cal.

Below are a few ways to reduce non-exempt property without incurring a period of ineligibility for nursing facility level of care (a complete list can be found on the MC 007):

  • Paying medical bills or other debts
  • Purchasing (for an adequate consideration) property which would be exempt (i.e., clothing, home furnishings, burial trusts, etc.)
  • Paying for a service or benefit, provided that the value received equals the amount spent.

Spenddown in Month of Application

If property is over the limit on the first of the month through the application date and the property is brought down under the limit by the last day of the month, the applicant is eligible. If the client has met the property reserve limit at any time during the month, the MFBU meets the property requirement for the entire month.

Example 1Example 1John applies for MC on August 1. He has non-exempt property valued at $5,000. His Property Reserve Limit is $2,000. He provides proof that his property is now under the $2,000 limit as of August 29. John is eligible for the month of August.     

Example 2Example 2Sylvie applies for MC on August 28. She has non-exempt property valued at $2,150. Her Property Reserve Limit is $2,000. She provides proof that her property is now under the $2,000 limit as of August 31. Sylvie is eligible for the month of August.       

Example 3Example 3Lina and Brian apply for MC on August 15. They have non-exempt property valued at $6,000. Their Property Reserve Limit is $3,000. They provide proof that their property is now under the $3,000 limit as of September 1. They are not eligible for August, but are eligible for September.      

Important: Clients must be given an opportunity to spenddown before the case can be denied. When client is over the property limit, the Intake EW must send client the MC 007 along with the Verification Checklist (VCL) with a 10-day due date indicating the request for verification of spenddown. If client does not provide proof that property is under the resource limit by the due date, the case can be denied.

Spenddown for Retroactive MC

Property reserves must be within the property limit for one day in the month for each month retroactive aid is requested. Property spenddown does not apply to three-month retroactive applications.

ExampleExample

An applicant applies for MC on April 3, also asking for retro MC for January, February and
March. The CSV of the client's life insurance was $3,000 in January and February. In March, the client applied for a loan against the policy, bringing the CSV to $10.00 by the end of March.

The client is eligible for March retro, April and continuing, assuming all other factors are clear. He is not eligible for January and February, because his property reserve was over the limit for the entire month.

Ongoing MC Cases

For ongoing MC cases, if property reserve exceeds the limit for the entire month:

  • Case is ineligible and there is an overpayment.
  • Discontinue the case. Advise client on the NOA that they will have to spenddown the excess before MC can be restored.

Once the individual has completed the spenddown process:

  • The client must write a declaration regarding the amount and stating how the money was spent down and provide verification.
  • The EW must document clarification of the spenddown and substantiate the decision to approve or deny.

Note: Institutionalized individuals must receive adequate consideration for property that has been spentdown.

LTC Insurance Exemption

Applicants/beneficiaries are not required to spend down their “protected assets” under the provision of California Partnership-approved LTC insurance policy or certificate. “Protected assets” equal to each dollar of benefit payment paid by the LTC insurance to the LTC provider is protected against Medi-Cal “spenddown” rules. The exemption applies as long as the individual lives and regardless of whether or not the individual is currently in LTC or not.

Related Topics

Retroactive Spenddown of Excess Property on Medical Expenses (Principe Exemption)

Excess Property Applied to Medical Bills