By Marc Gilman
(603) 493-1394 |
If you or a family member is close to needing long-term care but your assets or income sit just above New Hampshire’s Medicaid limits, you’re not automatically out of options. “Spend-down” is the general term for the process of reducing excess assets or income to the point where you qualify — but New Hampshire actually runs two different spend-down mechanisms depending on the type of Medicaid coverage involved, and mixing them up can lead to costly mistakes. This post walks through both, and how they relate to trust-based planning we’ve covered separately.
Key Takeaways
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New Hampshire’s Nursing Home Medicaid asset limit is $2,500 for a single applicant; assets above that must be spent down on legitimate, fair-market-value expenses — not given away.
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Any transfer for less than fair market value, including gifts, falls under the 60-month look-back and can trigger a penalty period.
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New Hampshire also offers a Medically Needy pathway with its own, lower Protected Income Level ($939/month single, $1,093/month couple as of 1/1/26) — a separate track from the $2,982/month Nursing Home Medicaid income cap.
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Asset spend-down and income spend-down solve different problems and use different thresholds; a Qualified Income Trust (QIT/Miller Trust) is the usual tool for income above the Nursing Home Medicaid cap, not the Medically Needy pathway.
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Careful documentation of qualifying expenses matters — undocumented or improperly categorized spending can delay or disqualify an application.
What Is Medicaid Spend-Down?
Spend-down is the process of reducing countable assets or excess income to meet New Hampshire’s Medicaid eligibility limits by applying the excess toward legitimate costs — rather than transferring it away. It comes up most often for people whose resources are only modestly above the threshold, where a full trust-based strategy may be more planning than the situation calls for.
It’s worth separating the two versions clearly, because they apply to different situations and use different numbers.
How Does Asset Spend-Down Work for Nursing Home Medicaid?
If a single applicant’s countable assets exceed New Hampshire’s $2,500 limit, those excess assets generally need to be spent down before an application will be approved. Countable assets typically include bank accounts, investments, and additional real estate; a primary residence (up to an equity limit), one vehicle, and personal belongings are usually exempt.
The key rule: spend-down means paying fair market value for legitimate goods and services, not giving assets away. Qualifying uses commonly include paying off debt, covering medical or dental expenses not covered by insurance, home repairs or accessibility modifications, prepaying funeral expenses through an Irrevocable Funeral Trust, or purchasing a Medicaid-compliant annuity. Gifts to family members — even well-intentioned ones — don’t count as spend-down. They fall under the same 60-month look-back period that applies to trust funding, and can trigger a penalty period during which Medicaid won’t pay for care.
What Is New Hampshire’s Medically Needy Pathway?
Separately, New Hampshire is one of the states that offers a Medically Needy pathway, sometimes called an income spend-down or “excess income” program. This track has its own income threshold — called the Medically Needy Income Limit (MNIL) or Protected Income Level (PIL) — set at $939/month for an individual and $1,093/month for a couple as of January 1, 2026. Under this pathway, an applicant whose income exceeds that limit can become eligible by incurring medical expenses that offset the excess, similar in concept to a deductible.
It’s important not to confuse this with the income rules for Nursing Home Medicaid specifically. Nursing Home Medicaid uses a higher income cap — $2,982/month for a single applicant in 2026 — and New Hampshire’s standard tool for income above that cap is a Qualified Income Trust (QIT), also known as a Miller Trust, which we covered in our companion post on New Hampshire Medicaid trusts. The Medically Needy pathway and the QIT solve a similar underlying problem — income above a limit — but they’re different mechanisms tied to different Medicaid categories, and which one applies depends on the specific program someone is applying for.
Why Does Documentation Matter So Much?
Both versions of spend-down live or die on paperwork. For asset spend-down, that means keeping receipts and records showing that funds went toward legitimate, fair-market-value expenses. For the Medically Needy pathway, it means tracking medical bills, statements, and proof of payment carefully enough to demonstrate the excess income was genuinely offset by qualifying costs during the spend-down period. Missing or incomplete documentation is one of the most common reasons applications stall — not because someone did anything wrong, but because they couldn’t prove it.
How Does This Relate to Trust Planning?
Spend-down and trust planning aren’t competing strategies — they’re tools for different timelines and different amounts of excess. A Medicaid Asset Protection Trust (MAPT) is generally the stronger option when someone has significant assets and years of lead time before care is likely needed, since it can shield much larger sums from the $2,500 limit entirely. Spend-down tends to fit better when the excess is modest, the need for care is closer at hand, and there isn’t the five-year runway a MAPT requires. A QIT, similarly, is the standard fix for Nursing Home Medicaid income overages, while the Medically Needy pathway serves a separate purpose tied to other Medicaid categories. For the full rundown on MAPTs, QITs, and how New Hampshire’s look-back period and estate recovery rules interact with trust planning, see our companion post, “New Hampshire Medicaid Trusts: What You Need to Know Before Applying.”
Where Does Insurance Planning Fit In?
Spend-down decisions can affect more than Medicaid eligibility — they can touch Medicare coordination, dual-eligible status, and how supplemental coverage like a Hospital Indemnity Plan (HIP) or long-term care (LTC) rider fits into the picture. Gilman Agency doesn’t calculate spend-down amounts or advise on which expenses qualify — that’s a conversation for an elder law attorney or the DHHS eligibility worker handling the case — but we do help make sure the insurance and Medicare side of the plan lines up with whatever eligibility strategy is chosen.
What To Do Next
If your assets or income are close to New Hampshire’s Medicaid limits, don’t assume spend-down means simply spending carelessly until you qualify — the wrong kind of spending can create the same look-back problems as an outright gift. Talk to an elder law attorney about which pathway applies to your situation, and reach out to Gilman Agency to make sure your Medicare and insurance coverage is coordinated with the plan.
Call (603) 493-1394 or (800) 927-9326, or email to talk through your situation. TTY: 711.
By Marc Gilman, Gilman Agency
