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2. Income and Institutional Cost Comparison – The projected cost of LTSS at the private pay rate in the applicable health institution – nursing facility (NF), intermediate care facility for intellectually/developmentally disabled individuals (ICF/I-DD), or long-term hospital (LTH) – is deducted from the excess income. a. If excess income is absorbed by the cost of LTSS, the person is MN eligible and the provisions related to the post-eligibility treatment of income (PETI), set forth in Part 8 of this Subchapter, are applied to determine the amount of the person's gross income that is available to be applied toward the cost of care each month. b. If excess income is not absorbed, the remaining income provides the basis for determining the LTSS MN spenddown for the projected budget period once the PETI Rules are applied. Allowable expenses are deducted in accordance with § 2.6.1(B) of this Part below. 3. Spenddown – A MN LTSS spenddown is based on the amount of excess income remaining after all required reductions are taken in the PETI process. Income protected in the PETI process is unavailable and therefore is excluded in the calculation of the spenddown. Once protected income is subtracted, the total spenddown is the amount of allowable expenses a person must incur to meet the MNIL. a. Otherwise Medicaid eligible due to a penalty. PETI does not apply when a person who is subject to penalty period for LTSS coverage is otherwise eligible for Medicaid. Therefore, during such a penalty period, in which Medicaid LTSS coverage is not available, all countable income is available for spenddown purposes. b. Verification. The State determines whether the applicant/beneficiary has sufficient allowable expenses each month – both incurred and projected – to meet this spenddown. Proof that incurred allowable expenses meet the monthly spenddown may be required as indicated in § 2.6.1 of this Part below. 4. Monthly projected spenddown period – The State uses a one (1) month budget period to determine beneficiary liability and therefore the amount of the spenddown required to maintain eligibility. a. Start date. A one (1) month budget period begins with the first (1st) calendar month during which the person receives LTSS for any part of the month, applies for Medicaid coverage for that month, and meets all other requirements for Medicaid eligibility.