Medicaid Spend Down programs make Medicaid enrollment possible for otherwise income-ineligible applicants. Spend Down programs may also be referred to as Medically Needy programs in some states.
Regardless of the name, these programs serve Americans with serious health conditions and household incomes just above standard eligibility cutoffs. They create opportunities for these individuals to meet eligibility criteria by “spending down” their income to the required level each month.
Once the eligibility point has been reached, patients can rely on Medicaid resources for the remainder of their cost and coverage needs. Enrolling in the Medically Needy Medicaid program can help Americans with extensive medical and health care needs avoid bankruptcy. It also prevents them from going without critically needed care due to cost or lack of resources. Medicaid is a federally authorized program that is administered at the state level. Consequently, the exact rules, policies and limits governing the program can vary from state to state.
In many respects, the Medically Needy program works very much like common insurance deductibles. Enrollees must spend a preset dollar amount of their income on qualified health care expenses each month. Once that minimum amount has been expended, they become eligible for Medicaid funds, services and supports. Medically Needy enrollees’ share of cost each month is equal to the difference between their income and the applicable maximum income eligibility cutoff.
For instance, if an enrollee has a monthly income of $800 and the income eligibility limit in his or her state is $600, his or her monthly “spend down” amount will be $200. The enrollee must spend that $200 on eligible medical and health care expenses before Medicaid will cover the cost of any products, services or care.
Once Medically Needy enrollees’ share of monthly costs have been spent, any further qualifying care or expenses they incur will be covered by Medicaid. Some states offer enrollees the option to pay their full spend-down amount upfront to the state Medicaid authority at the beginning of the month. Those enrollees then receive all of their care for the month through Medicaid. Where available, that option can significantly streamline the time, energy and paperwork involved in program participation.
A wide variety of medical and health care related expenses can be counted toward Medically Needy enrollees’ share of monthly costs. Common examples of qualifying expenses include:
Items or services paid for by enrollees’ health insurance or other assistance programs may not count toward monthly Medicaid Spend Down amounts, depending on the program or the state.
Related Article: Health Insurance
The total amount that any given enrollee will spend on care each month varies. In addition to their Spend Down amounts, participants may also be required to cover the costs of any products and services they need or are prescribed that Medicaid is not authorized to cover. For example, not all states offer Medically Needy dental care to all enrollees. Some enrollees may need to cover their own dental care expenses.
Enrollment for this program is only open to Americans living in participating states. Currently, 36 states and the District of Columbia offer some form of Medically Needy program. In states where Medically Needy Medicaid is available, applicants must:
Prospective Medically Needy enrollees may receive assistance from other state and federal support programs without impacting or decreasing their eligibility. Enrollees who experience positive changes in income may be subject to increase Spend Down amounts. Enrollees whose incomes drop may become eligible for full Medicaid and be transitioned out of the program.
Americans can apply for the Medically Needy Medicaid program through their local Medicaid authorities. Depending on their states of residence, applicants may be able to submit their requests online, in person, over the phone or by mail. Specific application processes vary widely and not all states offer Medicaid Spend Down programs.
When applicants complete the application process, they should be prepared to provide standard identification and residency documents such as Department of Motor Vehicles-issued IDS, birth certificates, marriage certificates and voter registration cards. Medically Needy program applicants will also need to supply an array of financial information. This may include pay stubs, bank statements, award or enrollment letters from other assistance programs and documentation of pensions and other forms of income. In addition, applicants with private health insurance may need to document the benefits and expenses of those programs during the enrollment process.
Enrollees who wish to pay their deductibles directly to state authorities will need to supply bank account information. Those who wish to put their deductibles toward pre-existing medical bills may need to furnish copies of those bills to authorities for verification.
Like standard Medicaid enrollment, Medicaid Spend Down programs are based on household income. In some cases, this can significantly complicate the eligibility determination process. This is particularly true in elderly households where one spouse is receiving long-term care in a nursing facility, is under a waiver program or involved in qualifying home-care situations. To avoid causing either spouse to lose care due to overwhelming combined costs, federal regulations allow Medically Needy Medicaid programs to take steps to prevent “spousal impoverishment.”
Most commonly, this entails removing some household assets or portions of income from eligibility calculations. This can potentially:
Related Article: Medicaid Eligibility