(888) 335-8996

Speak with a Licensed Insurance Agent

Search
Close this search box.

Medicaid Spend-Down Program for Medicare Beneficiaries

Summary: Some Medicare beneficiaries need assistance with paying their healthcare costs, but their income is too high to qualify for Medicaid. The Medicaid Spend-Down Program offers Medicare beneficiaries an opportunity to qualify for Medicaid based on their medical expenses in proportion to their usable income. In this article, we’ll explain how this program works and how you can apply. Estimated Read Time: 7 min

Find Medicare Plans in 3 Easy Steps

Let us help you navigate your Medicare journey

Table of Contents:

  1. What is a Medicaid Spend-Down Program?
  2. How Does the Medicaid Spend-Down Program Work?
  3. What Expenses Qualify for the Medicaid Spend-Down Program?
  4. Income and Asset Limits to Qualify for the Medicaid Spend-Down Program
  5. Medicare Beneficiaries Who Qualify for the Spend-Down Program Get Extra Help
  6. Which States Offer the Medicaid Spend-Down Program to Seniors in 2024?
  7. Medicaid Buy-In Program
  8. How to Learn More About the Medicaid Spend-Down Program in Your State

Sometimes, people on Medicare also need Medicaid but their incomes are over their state’s limit. However, a Medicaid spend-down program is available in some states for aged, blind, and disabled individuals not eligible for Medicaid. The program bases eligibility on medical expenses in proportion to usable income. Below, we’ll explain how the Medicaid Spend-Down Program works, how to qualify, and which states offer this program.

What is a Medicaid Spend-Down Program?

A Medicaid Spend-Down Program provides a means for an individual to qualify for Medicaid even if they exceed the income or resource limit set by their state. This program is available to people who have high medical expenses in proportion to their income and assets but do not qualify for Medicaid.

The Medicaid Spend-Down Program is also known as the Medically Needy Pathway or Medicaid Excess Income Program. States are not required to offer a spend-down program and, as Medicaid is state-specific, the limits and rules in each state differ. States may also have state-specific names for this program, so if you’re having trouble figuring out if your state offers such a program, contact your state’s Medicaid office.

How Does the Medicaid Spend-Down Program Work?

To qualify for the Medicaid Spend-Down Program, you must “spend down” your income by paying medical expenses until you meet your state’s specified Medically Needy Income Limit (Depending on your state, this limit may have a different name). Once you meet the Medically Needy Income Limit within a spend down period, you will become eligible for Medicaid coverage for the remainder of the spend down period. Let’s look at an example.

George lives in Maine and his monthly income is $500. The Medically Needy Income Limit (MNIL) for Maine is $315, and Maine has a spend down period of 6 months.

$500 (George’s income) – $315 (MNIL for Maine) = $185 (spend down amount) x 6 (spend down period) = $1,110

So, George would need to spend $1,100 on medical expenses to qualify for Medicaid. He would then be able to have Medicaid coverage for the remainder of the six-month spend down period.

You will need to re-qualify for the Spend-Down Program each spend down period. So, in the above example, George would need to spend another $1,110 in medical expenses after the six-month period is up to re-qualify.

Find Medicare Plans in 3 Easy Steps

Let us help you navigate your Medicare journey

For states that have one-month spend down periods, you will need to qualify every month. Because of this, you may not qualify for Medicaid every spend down period.

Some states require beneficiaries to be in the spend-down program for more than one period before they can qualify for inpatient hospital coverage from Medicaid. Additionally, spend-down programs in certain states allow for Medicaid coverage of nursing facility stays or home health services.

“When you qualify for Medicaid through the Spend-Down Program, Medicaid will be secondary to Medicare,” Ashlee Zareczny, compliance manager for Medicare FAQ explains, “this means Medicare will pay first, and Medicaid will pay its share of whatever costs are left.”

What Expenses Qualify for the Medicaid Spend-Down Program?

Individuals qualify for the spend-down program on a per-period basis. Just because you didn’t qualify for the spend-down program previously doesn’t mean you can’t during the following period.

When applying for the Medicaid Spend-Down Program, you must submit proof of medical expenses which can include receipts and medical bills. All states that participate in a Spend-Down Program must allow Medicare payments (such as deductibles and premiums) and other health insurance premiums as spend-down expenses.

States can then decide which other expenses they’ll allow for spending down your income. Common health care-related expenses states allow for spending down your income include prescription drugs, paid and unpaid medical bills, and medical supplies. When you contact your state Medicaid office to apply for the Spend-Down Program, ask them for a full list of allowed medical expenses.

Income and Asset Limits to Qualify for the Medicaid Spend-Down Program

As mentioned above, each state that offers a Spend-Down Program will have income and asset limits to qualify. These limits vary by state and are subject to change each year.

Income limits for Medicaid Spend-Down Programs are generally low, which means most individuals will need to have a significant amount of medical expenses to qualify. For example, the income limit for the Medically Needy Program in North Carolina is $242. So, if you have a monthly income of $1,534, you will need to have $1,292 in medical expenses to qualify.

Find Medicare Plans in 3 Easy Steps

Let us help you navigate your Medicare journey

What Assets are Exempt from Medicaid Spend-Down?

To qualify for Medicaid, you must not exceed the asset limit established by your state. Regarding the Medicaid Spend-Down Program, some states use the same asset limit as their other Medicaid programs, while others have an asset limit specific to the Spend-Down Program.

Countable assets don’t include your primary home, car, or personal belongings. Unless, for example, the dollar value of the home is very high. Yet, Medicaid usually deems most money as countable assets.

The countable funds could be in a savings account or retirement planning account. They can also include investments such as stocks, bonds, and mutual funds.

Additionally, if you have a second home, it may be a countable asset that you would be able to sell for the money needed to cover your medical expenses. Ultimately, the state determines what assets count and determine your eligibility for a spend-down program.

Medicare Beneficiaries Who Qualify for the Spend-Down Program Get Extra Help

Medicare beneficiaries who qualify Medicaid through the Spend-Down Program are automatically eligible for Extra Help with their prescription drug costs.

If you qualify for Medicaid through the Spend-Down Program in the first six months of the year, you are eligible for Extra Help for the remainder of the year. If you qualify during the last six months of the year, you will be eligible for Extra Help for the rest of the current year and the entire following year.

Individuals who become eligible for Extra Help through the Medicaid Spend-Down Program do not have to worry about losing their Extra Help if they do not qualify for every spend down period.

Suppose that you qualify for Medicaid through the Spend-Down Program in January and sign up for Extra Help. However, because of your reduced prescription costs, you do not spend enough in February to qualify for Medicaid. You will still keep your Extra Help through the end of the year.

Find Medicare Plans in 3 Easy Steps

Let us help you navigate your Medicare journey

Which States Offer the Medicaid Spend-Down Program to Seniors in 2024?

Not all states offer the Medicaid Spend-Down Program, and states that choose to offer this program can choose which Medicaid coverage groups to offer this program to.

States that offer the Medicaid Spend-Down Program to seniors as of 2024:

 Arkansas  California  Connecticut  District of Columbia
 Florida  Georgia  Hawaii  Illinois
 Iowa  Kansas  Kentucky  Louisiana
 Maine  Maryland  Massachusetts  Michigan
 Minnesota  Missouri  Montana  Nebraska
 New Hampshire  New Jersey  New York  North Carolina
 North Dakota  Pennsylvania  Rhode Island  Utah
 Vermont  Virginia  Washington  West Virginia
 Wisconsin

Each state has its own rules regarding the Medicaid Spend-Down Program, such as the duration of the Spend Down period and income/resource limits.

If your state does not offer the Medicaid Spend-Down Program to seniors, you can contact your state Medicaid office to find out if they have any alternatives. For example, your state may not have a Medically Needy Pathway (Medicaid Spend-Down Program), but it may offer a Medicaid Buy-In program.

Medicaid Buy-In Program

For disabled individuals under 65  who are working, some states offer a program called the Medicaid Buy-In program. This program offers Medicaid benefits to workers with disabilities who do not meet the income or resource limits to qualify for Medicaid.

If you fit these criteria and are working at least one hour per month but your income or assets don’t let you qualify for Medicaid, it’s worth looking into the availability of this program in your state. Not all states offer the Medicaid Buy-In Program, and some states may charge premiums to those who qualify.

Contact your local Medicaid office to learn more about eligibility. Be sure to mention whether you’re receiving SSDI or SSI when they use your earned income to determine your eligibility.

How to Learn More About the Medicaid Spend-Down Program in Your State

We understand that navigating Medicare or Medicaid alone can be time-consuming, so coordinating both is likely to feel overwhelming. The state-specific nature of Medicaid necessitates additional research. Finding that your income can’t keep up with your medical expenses is an all-too-common experience.

Find Medicare Plans in 3 Easy Steps

Let us help you navigate your Medicare journey

Fortunately, we’re here to help you make sense of your coverage. If you find that you don’t qualify for Medicaid but you’re having trouble paying your medical bills, contact your State Medicaid Agency to see if a spend-down program is available to you and whether you’re eligible.

If you still don’t qualify due to your income or assets, we can help you find comprehensive coverage that fits your budget and safeguards your resources. When you’re ready, call the number above or fill out our online rate form to see which plans are available near you.

Sources

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Medicaid’s Medically Needy (MN) Pathway to Eligibility: Income & Asset Limits, American Council on Aging. Accessed April 2024.
    2024 https://www.medicaidplanningassistance.org/medically-needy-pathway/
  2. Medicaid Spenddown & Extra Help, Centers for Medicare & Medicaid Services. Accessed April 2024.
    https://www.cms.gov/Outreach-and-Education/Outreach/Partnerships/downloads/11249-P.pdf
Jagger Esch

Jagger Esch

Medicare Educator
Jagger Esch is the Medicare Educator for MedicareFAQ and the founder, president, and CEO of Elite Insurance Partners and MedicareFAQ.com. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. He is featured in many publications as well as writes regularly for other expert columns regarding Medicare.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

Comment

Your email address will not be published. Required fields are marked *

string(3) "Yes"

5.0 Satisfaction Rating

It’s free and no obligation!

Find the Most Affordable Medicare Plans in your Area

X