What are Medicaid Spend Down Programs?

Person calculates for medicaid spend down program, or medically needy program

06 Aug What are Medicaid Spend Down Programs?

Posted at 08:00h in Medicaid by Triage Cancer

Medicaid is a federal program that provides health insurance coverage to qualified individuals, such as individuals or families with lower incomes. Medicaid is administered at the state level and states can apply to the federal government for waivers, to customize their programs. For example, some states have Medicaid spend down programs, also called “Medically Needy” programs. These programs help individuals with many healthcare needs get Medicaid, even if their income is too high to normally qualify.

How to Qualify for Medicaid?

In all states, Medicaid is available to people with a low income, low resources, and who meet a specific category of eligibility. Those categories are different in each state, but usually include:

Children
Pregnant women
Seniors, and
People with disabilities who are receiving Supplemental Security Income (SSI).

Resources are things like money in a bank account or retirement account, like a 401k plan.

These different categories of eligibility are like different doors into the Medicaid program. Some doors require that you have a low income and resource level, while the Medicaid expansion door only requires that you have a low income.

States may have different rules on what income level you must have to get in certain doors. For example, if you have a disability, you may need to have an income level below 100% of the federal poverty level (FPL). If you are a child, your family income may need to be below 250% of the FPL.

States may also have their own special doors to get into Medicaid, such as the spend down program.

What are Medicaid Spend Down Programs?

Through Medicaid spend down programs, individuals whose income is above the Medicaid limit can become eligible for Medicaid by “spending down” their income on certain medical expenses.

Who qualifies for spend down programs varies from state to state, but may include people over the age of 65, people with disabilities, or people with other high medical needs.

Individuals must spend down enough income each month to continue to qualify for Medicaid. Individuals who cannot spend down enough income may lose coverage for each month that income was too high.

How Do Medicaid Spend Down Programs Work?

To give you an example of how Medicaid spend down programs work, let’s look at Evan.

Evan lives in Washington, where the Medicaid income limit for an individual is $943 per month. His current monthly income from Social Security benefits is $1,100.

But, Washington has a Medicaid spend down program. Washington will ignore $20 a month from Evan’s income, called a “general income disregard,” so his monthly income drops to $1,080.

Evan will need to spend down $137 a month on medical expenses to qualify for Medicaid.

$1,100 (Monthly Income) – $20 (General Income Disregard) – $943 (Medicaid Income Limit) = $137 (Monthly Spend Down Amount)

The cost of insurance premiums and prescription drugs count towards his spend down amount. So, if Evan pays $100 out-of-pocket for a visit to the doctor, and $50 out-of-pocket for a prescription, he will reach the spend down requirement.

$100 (doctor visit) – $50 (prescription) = $150 (Health Care Costs)

Evan could be eligible for Medicaid coverage because his healthcare expenses lower his monthly income to $930. That is below Washington state’s income limit of $943.

$1,100 (Monthly Income) – $20 (General Income Disregard) – $150 (Health Care Costs) = $930 (Income Considered for Medicaid)

This means that Evan will have access to full Medicaid coverage for any medical care that he receives during that month.

Also, some states, like Washington State, will let individuals spend down their income over a few months. This can be helpful if someone has health care expenses that are not always the same each month.

What Health Care Expenses Qualify Towards the Spend Down?

Individuals can count certain medical bills and medical-related expenses towards the spend down. Each state has different rules about what expenses count towards the spend down.

Usually, states will count payments towards health insurance premiums, deductibles, co-payments, and co-insurance, and necessary medical costs. Necessary medical costs include payments for medical equipment, dental care, and transportation to medical appointments.

Some states will also include any medical expenses for other people in your households. States may limit the number of expenses or the number of health care visits that count towards the spend down.

It is important to keep receipts and ask for copies of proof of payment from every provider. Without proof of what money is spent on, individuals may be denied access to the spend down program.

How Do I Know If I Qualify?

Medicaid spend down programs vary by state. States may not have the program or may have different eligibility rules. Each state may have a different application process. To find more about your state’s Medicaid program, please visit Triage Cancer’s State Resources.

For more information about Medicaid, visit Triage Cancer’s Medicaid Resources.

About Triage Cancer

Triage Cancer is a national, nonprofit providing free education to people diagnosed with cancer, caregivers, and health care professionals on cancer-related legal and practical issues. Through events, materials, and resources, Triage Cancer is dedicated to helping people move beyond diagnosis.

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