New Hampshire Medicaid Spend-Down Rules: Protected Income, Penalty Periods, and Home Equity

Most families understand that Medicaid has income and asset limits. Fewer understand the specific mechanics of how New Hampshire handles applicants who exceed those limits — the "In and Out" medically needy spend-down, the transfer penalty calculation, and the home equity interest cap that determines whether your parent's house is protected.

The Protected Income Limit and the "In and Out" Spend-Down

New Hampshire's standard long-term care Medicaid income cap for 2026 is $2,982 per month (300% of the Federal Benefit Rate). If your parent's gross monthly income exceeds this cap, they don't automatically fail — they enter the "In and Out" medically needy pathway.

Here's how it works:

The DHHS caseworker calculates your parent's monthly spend-down amount (essentially a deductible) based on the Protected Income Limit (PIL). For 2026, the PIL is $939 per month for an individual and $1,093 for a married couple.

The calculation: Monthly Spend-Down = Gross Monthly Income minus PIL

Example: If your parent receives $3,500 per month in Social Security and pension income, their monthly spend-down is $3,500 - $939 = $2,561.

To activate Medicaid coverage for a given month, your parent (or their fiduciary) must present documented, unpaid medical bills or health insurance premiums totaling at least $2,561. Qualifying expenses include physician visits, prescription medications, hospital bills, Medicare Part B premiums, supplemental insurance premiums, and home care agency invoices.

Once the deductible is met, Medicaid covers the remaining care costs for that month.

Transfer Penalty Periods

When DHHS reviews a Medicaid application, they examine every financial transaction from the preceding 60 months (the look-back period). Any transfer of assets for less than fair market value — gifts to children, adding a child's name to a deed, selling property below market — triggers a penalty period during which Medicaid refuses to pay for nursing home or CFI waiver services.

The penalty calculation: Total value of the transferred asset divided by New Hampshire's average monthly private-pay nursing home rate of $12,275.

Example: If your parent gifted $50,000 to a grandchild three years ago, the penalty period is $50,000 / $12,275 = approximately 4.07 months of Medicaid ineligibility. During those four months, your parent is responsible for the full cost of their care.

A $150,000 gift creates a 12.2-month penalty. A $300,000 home transfer creates a 24.4-month penalty. These periods begin on the date of the Medicaid application — not the date of the transfer — which means the full financial impact hits during the care crisis.

Gifting assets specifically to qualify for Medicaid violates look-back rules, and care contracts between parents and children must be formalized as written, legally binding agreements before the care begins to avoid being flagged as uncompensated transfers.

The Home Equity Interest Cap

Your parent's primary home is exempt from Medicaid's asset count under two conditions:

1. They reside in the home (or have documented an "Intent to Return")
2. Their home equity interest does not exceed $752,000 (2026 figure)

The home equity cap is disregarded entirely if the applicant's spouse, a minor child under 21, or a disabled or blind child of any age lives in the home.

The estate recovery catch: While the home is exempt during your parent's lifetime, New Hampshire's Medicaid Estate Recovery Program can file a creditor claim against the estate after your parent dies to recoup the total dollar amount of benefits paid. The primary home is the most common recovery target.

Estate recovery cannot be executed if the deceased is survived by a spouse, a minor child under 21, or a blind or disabled child of any age.

Why This Matters for POA Planning

If your parent is heading toward Medicaid, their durable power of attorney must include "hot powers" under RSA 564-E:217 — explicit authority to make gifts, create or amend trusts, and execute asset transfers. Without these provisions, the agent cannot do any legitimate Medicaid planning once the parent loses capacity.

This is one of the most critical overlooked details in POA preparation. A standard statutory template doesn't include hot powers, and adding them after the parent loses capacity is impossible.

The New Hampshire Power of Attorney & Guardianship Kit covers the intersection of legal authority planning and Medicaid qualification, including the specific POA provisions needed for spend-down and asset protection strategies.

See more New Hampshire guides →