Medicaid Spend-Down Program for Medicare Beneficiaries

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.

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What is a Medicaid Spend-Down Program?

A Medicaid spend-down program is available to people who aren’t eligible for Medicaid but who have high medical expenses in proportion to their income and assets. This program is also known as a medically needy pathway or excess/surplus income program.

Not every state offers a spend-down program and, as Medicaid is state-specific, the limits and rules in each state differ. When someone is eligible and applies for this program, they receive ABD Medicaid (Medicaid for the aged, blind, and disabled).

How Does the Medicaid Spend-Down Program Work?

The spend-down program allows people to have Medicaid coverage if their medical expenses reduce their income to an amount that qualifies them for Medicaid. Your state determines the income that makes someone eligible for Medicaid.

When a Medicare beneficiary gets Medicaid, it serves as secondary insurance to Medicare, picking up cost-sharing expenses. Additionally, those who qualify for the spend-down program are automatically eligible for Extra Help with their prescription drug costs.

The spend-down program involves payment by you of the difference between your income and the limit for Medicaid eligibility in your state. In some states, this means you’ll pay the difference to Medicaid directly.

Other states will require beneficiaries to submit proof of medical expenses in the form of bills or receipts. These programs are funded by trusts in some states, such as a Miller Trust.

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.

If you live in a state that doesn’t have a spend-down program, the limits for Medicaid are likely higher for those needing nursing home care than in states that do offer the program. There are other programs for which you may be eligible if you don’t qualify for a spend-down program or if your state doesn’t offer one.

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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.

The expenses that qualify, as well as all of the rules for spend-down programs, are dependent on the state. Generally, the medical expenses that qualify include past and current medical bills, costs for transportation to receive medical care, medical-related home improvements, and items such as hearing aids.

What Assets are Exempt from Medicaid Spend-Down?

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.

Medicaid Buy-In Program

For disabled individuals under 65  who are working, some states make available a program called the Medicaid Buy-In program. This program offers Medicaid benefits in exchange for a monthly premium.

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.

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.

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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.

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. You may also wish to speak to an estate planning or elder care lawyer, depending on your needs.

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 premium comparisons for plans near you.

Jagger Esch

Jagger Esch is the co-founder, president, and CEO of Elite Insurance Partners and 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.


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