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Cumulative Spend-Down 7.7.2

Alternatively, the cumulative spend-down for the budget period can be calculated. When total medical expenses exceed the cumulative spend-down deductible, all future covered medical expenses are paid by MA.

Example 1

Retroactive Eligibility

Mr. Brown applies for Medicaid in September and is found to be over-income. He has a $200 per month spend-down deductible. Over the three-month retroactive period (June - August), Mr. Brown has a cumulative spend-down deductible of $600. In June, Mr. Brown was hospitalized and incurred $30,000 in medical expenses. In July, his medical expenses totaled $1,000, and in August, they totaled $100. Mr. Brown has not paid the $30,000 hospital bill, but he has paid his July and August expenses in full. Using the cumulative method, Mr. Brown meets his spend-down deductible in June. Thus, all but $600 of his June hospital bill will be paid, and Mr. Brown will be reimbursed for all of his July and August expenditures. Mr. Brown will remain liable for $600 of his June hospital bill.

If the month-by-month method had been used in this case, Mr. Brown would have been eligible in June and July, but not in August. All but $200 of his $30,000 hospital bill would be paid by Medicaid. Mr. Brown would be reimbursed $800 ($1,000 minus his $200 spend-down deductible) for his July expenses and would not receive any reimbursement for his August expenditures since his August expenditures did not exceed his spend-down deductible.

In this case, Mr. Brown should be given the choice of methodologies since it is not clear which is better for him. Using the cumulative method, he is eligible for all three months and receives more in direct reimbursements but remains liable for $600 in hospital bills. Using the month-by-month method, he receives less reimbursement but owes the hospital just $200 rather than $600. Assuming he intends to pay his outstanding hospital liability, his total out-of-pocket costs are less using the month-by-month method ($200 in June, $200 in July, and $100 in August). If he does not intend to pay his outstanding hospital bill, he might prefer the larger direct reimbursement.

Example 2

Prospective Eligibility

Ms. Taylor applies for Medicaid in August. She is found to be over-income for Medicaid. Her spend-down deductible is $100 per month. Ms. Taylor wants to be considered for prospective eligibility only. Ms. Taylor expects to have medical expenses of $250 per month. Using the month-by-month method, Ms. Taylor will qualify for Medicaid each month her medical expenses exceed $100, and Medicaid will pay all covered expenses incurred in those months above the $100 spend-down deductible.