Medicaid Spend-Down Calculator (2026): How Much Must You Spend to Qualify?

Nursing home care in the United States costs roughly $8,000 to $16,000 a month in 2026, and Medicaid — not Medicare — is what pays for most long-term nursing home stays beyond 100 days. The catch is that Medicaid for long-term care is means-tested. In most states a single applicant may keep only $2,000 of countable assets, and anything above that has to be “spent down” before benefits begin.

This calculator estimates the two numbers families ask about first: how much you must spend down to reach your state’s asset limit, and how many months of Medicaid ineligibility your gifts and below-market transfers inside the 60-month look-back period will cost you. It also flags the three quiet traps that undo most do-it-yourself plans — countable life insurance cash value, home equity over the federal cap, and income over the 300% income cap.

How to read the results: "Must spend down" is the amount of countable assets above what your state lets a long-term care applicant keep. "Penalty period" is separate — it is the months of Medicaid ineligibility created by gifts or below-market transfers made during the 60-month look-back, and it applies even if your assets are already under the limit. Most families face one or the other; unlucky ones face both.

What "Spending Down" Actually Means in 2026

Medicaid long-term care — the program that pays for nursing home care and many home and community based services — uses two financial tests. The income test caps what you can receive each month; the asset test caps what you can own. "Spend down" is the informal name for the process of reducing countable assets until they fall under the limit.

The important nuance is that spending down does not mean writing checks to the nursing home until your money is gone. It means converting countable assets into things Medicaid does not count — paying off the mortgage, repairing the roof, prepaying a funeral, buying an irrevocable funeral trust, replacing an old car, or buying exempt household goods. Money spent on your own care, at fair market value, is also fine. Money given to family is not, and that is what the look-back rule punishes.

In most states the individual asset limit for nursing home Medicaid in 2026 is $2,000. Five states stand out in the other direction: California allows $130,000, New York $33,038, Illinois $17,500, Mississippi $4,000, and Connecticut only $1,600. A married applicant whose spouse remains at home gets a much larger shelter through the Community Spouse Resource Allowance.

Watch: How Medicaid Spend-Down Works

Before you plan anything, run your own numbers above — the spend-down requirement and the penalty period are two different problems with two different fixes.

Countable vs. Exempt Assets Under Medicaid

Countable (must be spent down)	Exempt (not counted)
Checking, savings and money market accounts	Primary residence, if you or certain family members live in it
Stocks, bonds, mutual funds, CDs	One automobile of any value
IRAs and 401(k)s in about 37 states	Term life insurance and any policy with no cash value
Cash surrender value of whole, universal and indexed policies	Burial spaces, plots and irrevocable funeral trusts
A second home or vacant land	Household furnishings, clothing and personal items
Life insurance face value above the state exemption (often $1,500)	Assets in a properly drafted asset protection trust, if funded well before the look-back
Annuities not in payout status, in many states	Prepaid, irrevocable funeral and burial arrangements

How Medicaid Calculates the Penalty Period

The penalty period is not a fine. It is a delay: Medicaid simply will not pay for your long-term care for a set number of months, and your family has to cover the bill privately during that window. The math is straightforward once you know your state's divisor.

1. Add up every disqualifying transfer made during the look-back period — gifts of cash, property sold below fair market value, a house deeded to a child for a nominal amount, and money used to buy an exempt asset for someone else. Spousal transfers do not count.
2. Find your state's penalty divisor — the average monthly private-pay nursing home cost in your state, published annually and used at the rate in force on the date you apply, not the date you gave the money away.
3. Divide transfers by the divisor. A $120,000 transfer in Texas ($7,339 per month) creates about 16.4 months of ineligibility. The same $120,000 in Connecticut ($15,992 per month) creates only 7.5 months, because nursing home care there costs more per month.
4. Sequence carefully. In many states the penalty begins on the date of application, so the penalty clock does not start while you wait.
5. Check whether the penalty can be cured. If the money is returned, some states eliminate or shorten the penalty entirely. Not all states allow partial returns.

2026 Medicaid Penalty Divisors by State

State	Penalty divisor (per month)	Months from a $120,000 transfer
Alabama	$8,200	14.6
California	$14,440	8.3
Connecticut	$15,992	7.5
District of Columbia	$17,532	6.8
Florida	$10,645	11.3
Georgia	$11,122	10.8
Ohio	$8,669	13.8
Pennsylvania	$12,812	9.4
Texas	$7,339	16.4
Washington	$14,759	8.1
Wisconsin	$10,708	11.2
Wyoming	$10,114	11.9

Notice the pattern: states where private care costs less punish each transferred dollar for longer. That is why "gift early, wait out the look-back" is not portable advice — the same gift costs a Texas family more than twice the ineligibility of a Connecticut family.

2026 Spousal Impoverishment Figures

When one spouse moves into a nursing home and the other stays in the community, federal spousal impoverishment rules protect the healthy spouse from being wiped out. The 2026 figures below come from the Centers for Medicare & Medicaid Services' April 2026 informational bulletin.

2026 standard	Amount
Community spouse resource allowance (CSRA) — minimum	$32,532
Community spouse resource allowance (CSRA) — maximum	$162,660
Minimum monthly maintenance needs allowance (MMMNA)	$2,705 (Alaska $3,381.25, Hawaii $3,111.25)
Maximum monthly maintenance needs allowance	$4,066.50
Community spouse monthly housing allowance	$811.50
Federal home equity limit (minimum / maximum)	$752,000 / $1,130,000
Income cap limit (300% of the SSI federal benefit rate)	$2,982 per month

The CSRA works like this: at application, the couple's countable assets are split in half. The community spouse keeps the greater of that half-share or $32,532, but never more than $162,660. A handful of states use lower caps — South Carolina $66,480, Washington $72,529 for waiver programs, and Illinois $143,172. The applicant spouse still must be reduced to the state's individual limit, which is usually $2,000.

How Life Insurance Is Treated Under Medicaid

This is where a life insurance agency sees the same question every week: "Will my policy count against me?" The answer depends entirely on whether the policy has cash value.

Policy type	Counted?	Practical effect
Term life insurance	No	No cash value, so nothing is countable. It can stay in force.
Whole life, universal, indexed — face value of $1,500 or less	No	Most states exempt a small policy outright.
Cash-value policy above the state exemption	Yes — cash surrender value	The surrender value is countable and often the cleanest asset to spend down, because cashing in or surrendering it frees cash for exempt purchases.
Assigned to an irrevocable funeral trust	No, within state limits	A common way to move a small policy out of the countable pool while keeping the death benefit earmarked for burial.
Policy owned by an adult child	No, if transferred before the look-back	Changing ownership inside 60 months is a gift of the surrender value and creates a penalty.

Two planning points follow. First, the death benefit is not what gets counted — the cash surrender value is, which is usually far smaller. Second, a term policy is the only life insurance that is reliably invisible to the Medicaid asset test, which is why final-expense and burial planning conversations so often end in a term or small-face-permanent decision made years before the need arises. If a family needs to protect a spouse or a disabled child after the insured dies, term coverage purchased while healthy is frequently the least intrusive way to do it.

Spend-Down Scenarios at a Glance

The table below runs the same 2026 Florida formulas the calculator uses — $2,000 individual limit, $162,660 CSRA cap, $10,645 penalty divisor — across seven representative households.

Household	Countable	May keep	Spend down	Penalty
Single, $10,000 savings	$10,000	$2,000	$8,000	0 months
Single, $75,000 retirement fund	$75,000	$2,000	$73,000	0 months
Single, $250,000 in savings	$250,000	$2,000	$248,000	0 months
Single, $500,000 plus $40,000 whole life	$540,000	$2,000	$538,000	0 months
Single, $150,000 plus $90,000 gifted	$150,000	$2,000	$148,000	8.5 months
Married, $400,000 combined	$400,000	$164,660	$235,340	0 months
Married, $900,000 combined	$900,000	$164,660	$735,340	0 months

Three things jump out. A married couple keeps $164,660 where a single applicant keeps $2,000 — the single biggest variable in the whole calculation. Gifting $90,000 costs a Florida family 8.5 months of private-pay care even though their savings are modest. And at $900,000 combined, no amount of "spending down" fits inside a normal retirement — that household needs trusts, a Medicaid-compliant annuity, or a long-term care policy in place before the crisis.

Legitimate Ways to Spend Down

• Pay down the mortgage or make necessary home repairs — the house is exempt, and equity you build in it is not countable.
• Prepay funeral and burial costs through a prepaid contract or an irrevocable funeral trust.
• Buy a new vehicle (one car per household is exempt) or replace worn household furnishings and appliances.
• Pay outstanding medical bills and health insurance premiums.
• Pay for care — private-pay care at fair market value is itself a legitimate spend-down.
• Fund a Medicaid-compliant annuity for the community spouse in states that allow them.
• Set up a qualified income trust (Miller trust) if income, not assets, is the barrier.

What You Must Not Do

• Do not gift money to family in the 60 months before applying — every dollar becomes a penalty-month fraction.
• Do not sell property to a relative below fair market value. The difference counts as a transfer.
• Do not buy an exempt asset in someone else's name. Paying a child's mortgage is a gift, not a spend-down.
• Do not assume your state's rules match a neighboring state's. Penalty divisors, asset limits and CSRA caps all differ.
• Do not rely on a do-it-yourself transfer plan if a nursing home stay is within a year or two. Sequencing matters more than the transfers themselves.

Key Takeaways

• Most states let a single long-term care applicant keep only $2,000 of countable assets; California ($130,000), New York ($33,038), Illinois ($17,500), Mississippi ($4,000) and Connecticut ($1,600) are the notable exceptions.
• A married applicant's spouse can shelter up to $162,660 in 2026 under the CSRA, with a floor of $32,532 — but a few states cap it lower.
• Penalty months equal disqualifying transfers divided by your state's penalty divisor, the average monthly private-pay nursing home cost — 16.4 months in Texas versus 7.5 in Connecticut on a $120,000 transfer.
• Life insurance cash surrender value is countable; term life insurance is not. That single distinction decides a lot of eligibility cases.
• Home equity above $752,000 (up to $1,130,000 in some states) is no longer protected, and monthly income over $2,982 requires a Miller trust in income-cap states.

When Spending Down Is the Wrong Answer

Spending down is a crisis response. It converts a lifetime of savings into exempt assets and private-pay care, and it leaves nothing for the surviving spouse beyond the CSRA. Families who plan five to ten years earlier have a different menu: a long-term care policy or a hybrid life-plus-LTC policy that pays for care without triggering the asset test at all, a Medicaid-compliant annuity for the community spouse, or an asset protection trust funded before the look-back window ever opens.

If you are caring for a parent right now, start with the arithmetic: our care-fund depletion calculator shows how many months a given pool of savings covers at 2026 nursing home rates, and our long-term care policy calculator prices the hybrid alternative that pays benefits without counting against Medicaid. Regional rate detail is broken out by state in our California, Florida and New York nursing home cost guides, and burial-specific assistance is covered in our Medicaid funeral assistance guide and Medicaid final expense overview.

Frequently Asked Questions

How much money can you keep on Medicaid in 2026?

For a single applicant seeking nursing home Medicaid, most states allow $2,000 of countable assets. A married applicant whose spouse remains at home can shield far more: the couple's assets are divided in half, and the community spouse keeps the greater of that half or $32,532, capped at $162,660 in 2026. A few states set their own lower caps for the community spouse.

What is the Medicaid penalty period and how is it calculated?

The penalty period is a stretch of Medicaid ineligibility that follows gifts or below-market transfers made during the 60-month look-back. It equals the total disqualifying transfers divided by your state's penalty divisor — the average monthly private-pay nursing home cost, published annually. In Florida ($10,645 per month) a $100,000 gift costs about 9.4 months; in Texas ($7,339) the same gift costs 13.6 months.

Does life insurance count against Medicaid eligibility?

Term life insurance never counts because it has no cash value. For permanent policies, the cash surrender value is counted once the total face value exceeds your state's small-policy exemption, which is commonly $1,500. The death benefit itself is not what the agency counts. Some families move a small policy into an irrevocable funeral trust, which many states exempt entirely.

Can I just give my house to my children to qualify?

Usually not without consequences. A transfer of the home inside the 60-month look-back is a disqualifying transfer of its fair market value and creates a penalty period. It can also create a capital gains problem and, in some states, a Medicaid lien on the property if the applicant later needs care. A caregiver-child exception exists in many states, but it is narrow and fact-specific.

What happens if my income is above the limit?

Thirty-plus states set an income cap equal to 300% of the SSI federal benefit rate — $2,982 per month in 2026. If your income exceeds that, a qualified income trust, often called a Miller trust, can route the excess so that it is disregarded for eligibility purposes. The trust must be irrevocable, and the remaining funds go to the state after you die.

Will the state take my house after I die?

Estate recovery is separate from eligibility. Federal law requires states to attempt recovery of long-term care costs from the estates of recipients, and the home is often the asset that funds it. Protections exist when a spouse, a minor child, or a blind or disabled child survives you, and some states limit recovery to probate assets. Ask your state agency about its specific recovery policy before assuming the house is safe.

Is it better to buy long-term care insurance than to spend down?

If you are still insurable, yes in most cases. A long-term care policy or hybrid life-plus-LTC policy pays for care without raising your countable assets, which preserves the estate for a spouse and heirs. Spending down, by contrast, consumes savings before benefits begin and may still leave a penalty period if any transfers happened inside the look-back window.

Related Resources

• Medicaid.gov — Spousal Impoverishment Standards
• Social Security Administration — Supplemental Security Income
• Medicaid.gov — Long-Term Services and Supports
• AM Best — Insurance company ratings

Next Step: Price the Coverage That Keeps You Off Medicaid

Spending down works, but it is the most expensive route to care. The cheaper route is planning while you are still healthy enough to qualify: term life if you only need income replacement, or a life policy with a long-term care rider if care costs are the real risk. Compare no-obligation quotes from 50+ carriers in under two minutes.

Compare Free Life Insurance Quotes →

Related: see how much of an estate a state long-term care claim can reach with the Medicaid estate recovery calculator.