Understanding the Medicaid Spenddown

What is a Medicaid spenddown?

It is a way of becoming eligible for Medicaid despite having too much income to be financially eligible. The amount of income a person or family has over the Medicaid financial eligibility guidelines is called excess income. Some people may qualify for Medicaid if they spend the excess income on medical bills. This is called a spenddown.

For example, a person over 65 is denied Medicaid because her monthly income is $50 more than the limit for Medicaid eligibility. If she spends $50 per month on medical bills, the rest of her medical bills will be covered by Medicaid. The spenddown in this case is the $50 she spends on medical bills.

If your monthly medical expenses usually are more than the maximum income level to qualify for Medicaid, it may be more convenient for you to send a check each month to the Department of Social Services for the amount you have to spend down. Your Medicaid coverage is sure to continue if you do this. Ask your worker about this.

Who qualifies for a spenddown?
To qualify you must be in one of the groups listed below:

  1. children under 21
  2. persons over 65
  3. blind or disabled persons
  4. families with one or both parents absent
  5. families with one or both parents dead, disabled, or out of work

How does a spenddown work?
When you have accumulated medical bills (paid or unpaid) greater than your excess income, you will receive Medicaid for that month. If you have been hospitalized recently, you may qualify for Medicaid for up to 6 months. If you have been hospitalized within the past 6 months, be sure to tell your worker.

What medical bills can be counted towards a spenddown?

  1. Your own medical bills.
  2. A husband’s bills for a wife’s spenddown and a wife’s bills for a husband’s spenddown.
  3. Parents’ bills for their children’s spenddown.
  4. Medical bills of a child living with you.
  5. Medical bills of a child who does not live with you, but whose medical bills you help pay for.
  6. Past unpaid medical bills (sometimes up to 6 years old) for yourself or any of the people named above.
  7. The part of any medical bill not covered by Medicare or private insurance.

It is important to make sure that your doctor or other medical provider accepts Medicaid payments. Medicaid will only pay bills from a doctor, pharmacist, or other provider who accepts Medicaid payments. But medical bills from a provider who does not accept Medicaid may be used to spend down your excess income.

 What types of medical expenses count towards a spenddown?
Numerous types, including:

  1. Paid and unpaid medical bills from previous months.
  2. Transportation expenses to obtain needed medical services (in most cases).
  3. Medical expenses or payments to therapists, day treatment and drug and alcohol programs, nurses, personal care attendants, and home health aides (as required by a physician).
  4. Prescription drug bills.
  5. Payments made toward surgical supplies, medical equipment, prosthetic devices, hearing aids, and eye glasses (as ordered by a physician).

 Are there others that count?
Yes. The following medical expenses also count towards a spenddown even though Medicaid will not pay for them:

  1. Chiropractor’s services (and other non-covered services).
  2. Medical services from providers who do not participate in the Medicaid program.
  3. Some over-the-counter drugs and medical supplies, such as bandages and dressings, if they have been ordered by a doctor or are medically necessary.

Bills for cosmetics and other non-medical items do not count.

How do you know if you qualify for a spenddown?
If your Medicaid application has been rejected and you are in one of the groups listed above as being eligible for a spenddown, the decision letter should tell you if you qualify for a spenddown and how much the spenddown for medical expenses needs to be.

If you disagree with the Medicaid office’s decision, call us immediately. We will review the decision with you over the telephone. If the decision appears to be wrong, we will tell you how to challenge it.

√   You may be eligible for Medicaid by spending down a portion of your income.

√   Keep copies of your medical bills so that you can show that you have met your spenddown limit.

√   Call Legal Aid if you have problems with your spenddown.