Medicaid spend-down is the process of legitimately reducing countable assets to Ohio’s limit — $2,000 for a single long-term care applicant — so that a parent can qualify for coverage, and life insurance is one of the most commonly overlooked items on that list. Done correctly, spend-down means converting or spending assets, not giving them away.
Families across Franklin, Delaware and Licking counties run into the same wall: a parent needs nursing-level care, private funds are draining fast, and the Medicaid application stalls over resources nobody thought counted. Applications in this area are handled through the county and regional offices serving those three counties, and the paperwork is unforgiving about documentation.
This page explains what counts, what does not, which spend-down moves are permitted, and why a decades-old policy is so often the thing standing in the way.
In This Article
What Ohio Counts and What It Ignores
Long-term care Medicaid in Ohio runs through MyCare Ohio and the PASSPORT home-and-community-based waiver. For a single applicant, countable resources must be at or below $2,000 at the point of eligibility.
Certain things are excluded from that count — typically the primary home within an equity limit while a spouse or dependent lives there, one vehicle, personal belongings and household goods, and an irrevocable burial arrangement. Nearly everything else is countable: bank accounts, brokerage accounts, second properties, and the cash surrender value of life insurance. Verify the current 2026 thresholds with the Ohio Department of Medicaid, since several of them are adjusted annually.
The Life Insurance Rule Most Families Miss
Here is the rule that trips up more Columbus applications than any other. Life insurance is disregarded only when the total face value of all policies on the applicant is $1,500 or less. Above that threshold, the cash surrender value of the policies becomes a countable resource.
So a $150,000 universal life policy with $28,000 of cash value is not a sentimental keepsake in the eyes of the eligibility worker — it is $28,000 sitting on top of a $2,000 limit. Term insurance with no cash value generally does not count, but a permanent policy almost always does. This is the single most common reason a Franklin County application comes back denied when the family was certain everything was in order.
The 60-Month Look-Back and Why Gifting Backfires
Medicaid reviews transfers made in the five years before the application — a 60-month look-back — for anything given away or sold for less than fair market value. California has historically been the exception to the five-year rule; verify current 2026 treatment before relying on any state-specific variation.
Transfers caught in the look-back create a penalty period of ineligibility calculated from the value given away. This is why the instinct to “just sign the policy over to my daughter” is so dangerous. A gift of a policy with $28,000 of cash value is a $28,000 uncompensated transfer. A sale of that same policy at fair market value is not a gift at all — it is an exchange of one asset for another, and it should not generate a transfer penalty. Document the sale thoroughly either way.
Permitted Spend-Down Moves
Spend-down is not about hiding money. It is about spending it on things the rules allow, for the applicant’s benefit. Commonly used options include an irrevocable funeral trust or prepaid burial contract, paying off debt, and home repairs or accessibility work — a stair lift, a walk-in shower, a ramp, a new roof — on a home the applicant or spouse still occupies.
Others include purchasing or replacing a vehicle, a properly drafted and compensated caregiver agreement with a family member (which must be in writing, at market rates, and for services actually rendered going forward), and prepaid medical or dental work. What does not work: transfers to relatives, buying assets in someone else’s name, or quietly emptying an account into a child’s checking account weeks before applying.
| Asset | Ohio Medicaid treatment (verify 2026) | What families should do |
|---|---|---|
| Checking and savings | Countable against the $2,000 single limit | Document every withdrawal in the look-back window |
| Permanent life insurance | Cash surrender value countable if total face value exceeds $1,500 | Get a written CSV statement before applying |
| Term life insurance | Generally not countable with no cash value | Confirm whether a conversion right has value |
| Primary residence | Often excluded within an equity limit while a spouse or dependent lives there | Ask about estate recovery after death |
| One vehicle | Generally excluded | Repairs or replacement can be a valid spend-down use |
| Prepaid burial or irrevocable funeral trust | Excluded within state limits | Must be irrevocable to be excluded |
| Gift to an adult child | Uncompensated transfer inside the 60-month look-back | Avoid; creates a penalty period |
| Policy sold at fair market value | An exchange of assets, not a gift | Keep the full settlement file as documentation |
When One Spouse Stays Home
If one spouse enters care and the other remains in the Dublin or Worthington house, different math applies. The at-home spouse — the community spouse — may retain a protected share of the couple’s countable resources under the Community Spouse Resource Allowance (CSRA), plus a minimum monthly income allowance.
These figures are federal and adjust each year, so confirm the 2026 CSRA floor and ceiling with the Ohio Department of Medicaid before planning around them. The practical point: resources can be shifted between spouses to the extent the CSRA permits, and that is legitimate planning, not a transfer penalty. It is also detailed enough that it genuinely warrants an elder law attorney rather than a form off the internet.
Where a Life Settlement Fits
Selling a policy in the secondary market usually produces more than surrendering it — GAO-10-775 found sellers received roughly four to eight times cash surrender value, with settlements commonly landing between 10% and 35% of the face amount. In a spend-down context, that larger sum matters because it funds more months of private-pay care before Medicaid is needed at all.
The proceeds are still countable, so they do not make the problem disappear — they change the size and timing of it. A family that converts a policy at fair market value and then spends the proceeds on permitted items has done something very different from a family that gifted the policy away. Expect roughly 60 to 120 days for a settlement to close, which is why this decision should be made early, not the week before an application is filed.
A Filial Support Note for Ohio
Ohio has a nonsupport statute on the books — R.C. 2919.21 addresses failure to provide support — and it is sometimes described online as a “filial responsibility” law that could make adult children liable for a parent’s care bills. Enforcement in this context is uncommon, and how the statute is actually applied to long-term care debt is a question for an Ohio attorney, not a website.
Do not let fear of that statute push a family into rushed asset transfers. Those transfers are far more likely to cause a real problem — a look-back penalty — than the statute itself. Get the legal question answered properly before reacting to it.
Request a Free Policy Review
If an old policy is part of the picture, send the policy cover page for a free, no-obligation review of what the secondary market would realistically do with it. You will get a plain answer, including if the answer is that surrendering is the better route.
Pine Lake Life Solutions reviews policies with $100,000 or more in death benefit. Call (305) 209-7183.
This page is educational only and is not legal, tax or investment advice, and nothing here is an offer to purchase a policy. Medicaid rules and dollar limits change every year — confirm current figures with the Ohio Department of Medicaid and work with a licensed Ohio elder law attorney before making any move that affects eligibility.
Frequently Asked Questions
What is the asset limit for long-term care Medicaid in Ohio?
For a single applicant it is $2,000 in countable resources under MyCare Ohio and the PASSPORT waiver. A married couple with one spouse at home has a separate, larger protected allowance. Confirm the current 2026 figures with the Ohio Department of Medicaid, since several adjust annually.
Does my mother’s life insurance count against that limit?
If the combined face value of her policies is more than $1,500, the cash surrender value is treated as a countable resource. Term policies with no cash value generally are not counted. Request a written cash surrender value statement from the carrier before filing anything.
Can I just transfer the policy to myself to fix the problem?
No — that is exactly the move that creates a penalty. Giving a policy with cash value to a child is an uncompensated transfer inside the 60-month look-back and produces a period of ineligibility. Selling it at fair market value is a sale, not a gift, and is treated differently.
How far back does Ohio look at transfers?
The federal look-back is 60 months from the application date for assets transferred for less than fair market value. Every large withdrawal in that window may need an explanation and a receipt. Start assembling statements early, because reconstructing five years of records under deadline is miserable.
Where do Columbus families actually file?
Applications for residents of Franklin, Delaware and Licking counties are handled through the county and regional offices serving those areas. Confirm the current intake process and required documents with the office covering your parent’s address before you submit anything.
Is a caregiver agreement with a family member allowed?
It can be, if it is a genuine written contract at fair market rates for services actually provided going forward, with payments documented. Backdated or informal arrangements are routinely treated as gifts. Have an Ohio elder law attorney draft it rather than adapting a template.
Does selling a policy speed up or delay a Medicaid application?
It typically takes 60 to 120 days to close, so it should be started well before an application, not during one. The proceeds remain countable until properly spent down, so plan the sequence with an attorney. The advantage is that a settlement generally produces more cash than surrendering the same policy.
Can adult children in Ohio be billed for a parent’s nursing care?
Ohio has a nonsupport statute at R.C. 2919.21 that is sometimes discussed in this context, but enforcement for long-term care costs is uncommon and how it applies is a legal question. Ask an Ohio attorney rather than acting on internet summaries. Do not let fear of it drive rushed asset transfers.
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Related Reading
- Cash Surrender Value Life Insurance
- Life Settlement Vs Surrender
- Ohio Medicaid Asset Income Limits
- Filial Responsibility Law Ohio
- Sell Life Insurance Policy Columbus
- Nursing Home Costs Columbus
Pine Lake Life Solutions does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.