What Is Spend Down As It Relates to Medicaid Benefits?

Medicaid provides health care coverage to qualifying low-income individuals and families. When a person does not meet Medicaid income limits, the notion of "spend down" allows her to qualify for coverage during short or long-term periods of medical need. States determine income and asset limits, other requirements and benefits. Medically needy individuals are encouraged to apply for Medicaid at a local Department of Human Services office or state equivalent.

Facts

• When your income exceeds Medicaid limits for a given month, money you pay toward medical expenses may be subtracted from your countable income. Once your countable income reaches Medicaid eligibility levels, Medicaid pays for health care costs beyond that point. Depending on state laws, eligibility may be determined monthly, every six months or longer depending on your medical needs, recurring health care costs and income. Find out whether your health care provider accepts Medicaid before seeking treatment; not all providers accept Medicaid, and you may be liable for outstanding bills.

Eligibility

• State requirements vary, but most states provide spend-down options to children, disabled individuals, elderly adults and pregnant women. Some states offer spend-down to very low-income able-bodied adults and adult caregivers of eligible children. Under the plan, applicants must save all receipts and submit proof of income, medical bills and payments. Your state plan may use prescription costs, medical equipment fees, approved over the counter medication and some transportation costs to calculate eligibility. Regardless of basic eligibility, expensive procedures or prescriptions may require prior approval.

Medicaid and Medicare

• Medicare recipients may qualify for Medicaid spend down. Once eligible, Medicaid may pay for all or part of your Medicare premiums, co-pays and coinsurance in addition to other medical expenses not covered by Medicare. Generally, Medicare recipients qualify for Medicaid if their income is at or below 100 to 200 percent of the Federal Poverty Level dependent disability and employment factors. States may have asset as well as income limits.

Long-Term Care

• Individuals requiring long-term facility or home health care may qualify for Medicaid with a spend-down program and by transferring assets that make them otherwise ineligible for benefits. However, state and federal laws limit the transfer of assets and money. State agencies may investigate asset transfers up to 60 months prior to applying for benefits and penalty periods apply for individuals found transferring resources outside of state policy. Generally, selling assets below the market value or transferring funds is grounds for investigation. Exceptions to the rule include transferring assets to an approved trust or a spouse, or in cases where not transferring would cause undo hardship.