Maryland Medicaid Spend-Down Rules

Your parent earns $2,800 a month from Social Security and a small pension. In a state with a hard income cap, they'd need a Miller Trust to qualify for Medicaid long-term care. Maryland doesn't work that way. As a medically needy state, Maryland lets applicants with income above the eligibility threshold qualify by deducting their medical expenses — a process called "spending down."

How the Spend-Down Calculation Works

Maryland's Medically Needy Income Level (MNIL) is $350 per month for an individual ($392 for a couple). If your parent's gross monthly income exceeds this amount, the difference is their monthly deductible — the amount of medical expenses they must incur during their spend-down period.

Example: Your parent receives $2,800/month in Social Security. Their monthly deductible is $2,800 – $350 = $2,450. They must incur $2,450 in qualifying medical expenses during each spend-down period to establish Medicaid eligibility.

The spend-down period ranges from one to six months, set by the local Department of Social Services. A longer period gives more time to accumulate qualifying expenses but delays when coverage activates.

What Counts as a Qualifying Expense

The key word is "incurred" — not "paid." Your parent doesn't need to have already paid these bills. They only need to have legally incurred the liability. Qualifying expenses include:

• Nursing home or assisted living charges
• Home health and private duty care fees
• Hospital bills, physician visits, and specialist appointments
• Prescription medications and medical supplies
• Dental, vision, and hearing services
• Physical therapy, occupational therapy, speech therapy
• Outstanding medical debt from before the application period
• Medical bills paid on your parent's behalf by a third party (including adult children)

For someone entering a nursing home at $12,000+ per month, the spend-down is often met immediately — the nursing home bill alone exceeds the deductible.

The Five-Year Look-Back

Maryland reviews all financial transactions from the 60 months (five years) before the Medicaid application date. Any asset transfers, gifts, or property sales made for less than fair market value trigger a penalty period of Medicaid ineligibility.

The penalty duration is calculated by dividing the total uncompensated transfer amount by the state's penalty divisor — $12,927 per month ($425/day) as of July 2026. There is no maximum penalty period.

Common triggers: gifting money to grandchildren, transferring a house to a child, selling property to a family member below market value. The penalty begins on the date the applicant applies for Medicaid and is otherwise eligible.

Regular Medicaid (for basic health coverage, not long-term care) does not have a look-back period.

What Makes Maryland Different

Most states use one of two approaches: an income cap (requiring a Miller Trust for high earners) or a medically needy pathway (allowing spend-down). Maryland's medically needy approach means no one is categorically excluded from long-term care Medicaid based on income alone. But the trade-off is complexity — the spend-down calculation, qualifying expense documentation, and look-back review all require careful record-keeping.

The Maryland Hospital Discharge Guide includes a Medicaid Spend-Down Tracker worksheet calibrated to Maryland's 2026 financial limits, with line-by-line guidance for documenting qualifying expenses.

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