Full Definition

Medicaid spend-down refers to the process of reducing countable assets below Texas Medicaid’s resource limit — generally $2,000 for a single applicant — so that a senior can qualify for nursing home or community Medicaid benefits.

Spend-down is not simply giving money away. Legitimate spend-down strategies include paying off debts, prepaying funeral and burial expenses, making home improvements, purchasing a vehicle, paying for legal and medical services, and making other allowed expenditures. Asset transfers made below fair market value within the 60-month look-back period can result in a penalty period of ineligibility.

For married couples, Texas Medicaid protects a portion of assets for the “community spouse” (the healthy spouse who remains at home). This is called the Community Spouse Resource Allowance (CSRA), which in Texas can be up to approximately $154,140 (2024 figures, indexed annually).

Medicaid spend-down planning is a specialized area. Families should always work with a Texas elder law attorney to design a spend-down strategy that is both effective and compliant — mistakes can result in lengthy penalty periods that delay needed care.