Medicaid Spend Down Washington State

Washington Does Not Require a Miller Trust — Here Is What It Uses Instead

If your parent's income is too high for Medicaid long-term care, the immediate question is how to qualify. In many states, the answer is a Qualified Income Trust (Miller Trust) — a legal instrument that diverts income above the limit into a trust, making the applicant appear to meet the threshold. Families hire attorneys, pay legal fees, and navigate trust administration for the duration of care.

Washington does not use Miller Trusts. Instead, it offers a Medically Needy spend-down path that works differently — and for many families, more simply.

How the Medically Needy Spend-Down Works

Washington's long-term care Medicaid (Apple Health) uses the Special Income Level (SIL) as its primary income threshold. In 2026, the SIL is $2,982 per month for a single applicant, set at 300% of the Federal Benefit Rate.

If your parent's gross monthly income is below $2,982, they meet the income test directly.

If their income exceeds $2,982, they are not disqualified. Instead, they enter the Medically Needy pathway under WAC 182-513-1395. Here is how it works:

1. The state establishes a baseline: The Medically Needy Income Level (MNIL) is $994 per month in 2026.

2. The "excess" is calculated: Your parent's gross monthly income minus $994 equals the excess. If your parent receives $3,500 per month in Social Security and pension income, the excess is $2,506.

3. The excess becomes a deductible: Your parent must incur medical and care expenses equal to that excess amount each month before Medicaid coverage kicks in. These expenses can include nursing home costs, prescription copays, medical equipment, and other qualifying medical bills.

4. Once the deductible is met, Medicaid covers the rest. The spend-down resets each month.

In practice, this means a parent in a nursing home with a monthly cost of $10,000+ will easily exceed the deductible. The spend-down is not a barrier for someone already receiving expensive care — it is primarily a mechanism that determines how much of their income goes to the facility before Medicaid pays the remainder.

The Asset Limits Still Apply

The Medically Needy pathway addresses income, but the asset test is separate and strict:

Single applicant: Countable resources cannot exceed $2,000.

Married couple (one spouse applying): The applicant spouse is limited to $2,000 in countable resources. In 2026, the community spouse (the one not applying) can retain 100% of the couple's joint countable assets up to $72,529. If combined countable resources exceed $145,058, the community spouse can retain 50% of the assets, up to the federal maximum of $162,660.

What counts as a resource: Checking and savings accounts, stocks, bonds, mutual funds, cryptocurrency, additional vehicles, non-residential real estate, and — in Washington — traditional IRAs and 401(k) plans.

What does not count: Personal belongings, household furnishings, one primary automobile, irrevocable burial trusts, and the primary home.

The Home Exemption

Washington maintains one of the most generous primary home exemptions in the country. A homeowner can retain their primary residence with up to $1,130,000 in equity (2026 limit) and still qualify for Medicaid long-term care — provided the applicant or their spouse resides in the home.

The home is also protected if a minor child, a blind child, or a disabled child lives there. Without one of these qualifying occupants, the home remains exempt during the applicant's lifetime but becomes subject to estate recovery after death.

This exemption is critical for families worried about losing the family home to Medicaid. The home is not counted against the $2,000 asset limit as long as the equity stays below the threshold and an eligible person lives there.

What "Spending Down" Actually Looks Like

For families who need to reduce countable assets below $2,000, the spend-down is not about hiding money or giving it away (gifts within the five-year lookback period trigger penalty periods). It is about converting countable assets into exempt assets or paying for qualifying expenses:

• Paying off the mortgage on the primary home (converts a countable bank balance into exempt home equity)
• Prepaying funeral and burial expenses through an irrevocable burial trust
• Buying a newer primary vehicle (one vehicle is exempt regardless of value)
• Making home modifications for accessibility (ramps, grab bars, stair lifts)
• Paying existing debts — medical bills, credit cards, property taxes
• Paying for care directly during the application period

What you cannot do: give assets to family members or make other uncompensated transfers without risking a transfer penalty. DSHS reviews 60 months of financial records and may impose a transfer penalty for an uncompensated transfer.

The Five-Year Lookback

Under WAC 182-513-1363, DSHS examines all asset transfers made within the 60 months before the long-term care Medicaid application. Any transfer made for less than fair market value — gifts to children, adding a child to a bank account and then withdrawing funds, selling a house to a relative at a discount — is presumed to be a disqualifying transfer.

The penalty is calculated by dividing the total uncompensated transfers by the statewide average daily private nursing facility cost ($462 per day in 2026). A $42,000 gift triggers a 90-day penalty period during which Medicaid will not pay for care. The penalty begins when the applicant is otherwise eligible — meaning the family has already spent down to $2,000, the parent is in a facility, and they are paying the full private rate out of pocket.

The Retroactive Coverage Change

Starting January 1, 2027, Washington is shortening the retroactive Medicaid coverage window. Currently, families can receive up to 90 days of retroactive coverage for care already received before the application date. After the change, retroactive coverage shrinks to 60 days for standard programs and just 30 days for Apple Health for Adults.

This makes it even more important to file the Medicaid application as early as possible. If your parent is in the hospital and a discharge to a nursing home or home care program is likely, start the application process now — not after the transition is complete.

Spousal Income Is Exempt

One detail that surprises many families: the community spouse's income is completely exempt from the Medicaid calculation. If your father earns $4,000 per month and your mother (the applicant) receives $1,800 per month, only the $1,800 is evaluated against the SIL and spend-down thresholds. The community spouse keeps their own income without limitation.

Additionally, if the community spouse's independent income falls below the Minimum Monthly Maintenance Needs Allowance ($2,705 per month in 2026), a portion of the applicant spouse's income can be transferred to the community spouse to reach that floor.

The Hospital-to-Home Transition Guide walks through the complete Medicaid application process for Washington families — including the spend-down worksheets, asset inventory templates, and the specific DSHS forms required to apply for long-term care Medicaid while a parent is transitioning from the hospital.

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