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Chapter 7 - Spend-Down

INTRODUCTION 7.1

Some individuals or groups are ineligible for MA because their countable income (after all applicable disregards) exceeds the applicable MA standard. However, they can become eligible for MA by "spending down" their excess income on eligible medical expenses. An individual (or group) that is over- income for MA, but who is otherwise eligible, can qualify for MA if allowable medical expenses exceed their spend-down "deductible." The spend-down deductible is calculated by subtracting the Medically Needy Income Level (MNIL) from the individual's (or group's) income. The MNIL is set at 50% percent of the Federal Poverty Level, except that the MNIL for one person is set at 95% of the MNIL for two persons; see Exhibit VI-3: "MA Income Standards."

After the individual or group incurs allowable medical expenses equal to their spend-down deductible, the individual or group is eligible for all MA services. The expenses used to meet the spend-down deductible are not eligible for Medicaid payment or reimbursement.

In short, the spend-down provisions described in this chapter ensure that individuals with incomes above the MA income limits who incur large medical expenses qualify for assistance in meeting their medical expenses. It is used primarily by:

 elderly and disabled persons who are slightly over-income,  persons who have accumulated a large amount of outstanding medical debt,  persons with a catastrophic or chronic illness (such as renal failure), and  persons needing an expensive medical procedure in one month.

There are no spend-down provisions for QMB or SLIMB. However, individuals with incomes in excess of these eligibility limits may qualify for full Medicaid coverage, including coverage of Medicare Part B premiums, if they are over-income for Medicaid and meet their spend-down deductible.

The spend-down deductible may be established for the retroactive budget period, the prospective budget period, or both. The retroactive period consists of the three months prior to the month of application. The prospective budget period consists of the six-month period beginning with the month of application. In the case of recertification, the prospective period consists of the six-month period that begins after timely and adequate notice of the spend-down deductible is sent. When determining eligibility through the spend- down process, the applicant always has the option of applying incurred medical expenses from the retroactive spend-down period toward the prospective period. However, an incurred medical expense may only be claimed once. If there are advantages and disadvantages to each choice, advise the applicant and allow the applicant to make the decision.

LEGAL AUTHORITY 7.2 AREA/TOPIC DISTRICT FEDERAL Spend-Down MA: 42 CFR 435.831