30.05 Income spenddowns

Spending down excess income on medical expenses. AHS determines that an individual requesting Medicaid with excess income has passed the income test upon proof that medical expenses have been paid or incurred at least equal to the difference between the countable income and the applicable income maximum for the accounting period. Allowable uses of excess income. Medical expenses of any member of the individual’s financial responsibility group, whether they are paid or incurred but not paid, may be used to meet the individual’s income spenddown requirement; references in § 30.06 to the medical expenses of the “individual” include the medical expenses of any member of the individual’s financial responsibility group. Income spenddown methodology An individual requesting Medicaid may spend their excess income down to the PIL on medical expenses following the methodology specified below to receive Medicaid as part of the medically-needy coverage group. The spenddown methodology is the same for all living arrangements, except that a one-month accounting period applies to an individual in a long-term care living arrangement and a six-month accounting period applies to an individual in a community living arrangement. Eligibility date An individual with excess income passes their income test on the first day within their accounting period that deductible medical expenses meet or exceed their spenddown requirement. Sometimes this allows for retroactive coverage. Eligibility becomes effective: (i) On the first day of the month when a spenddown requirement is met using health insurance expenses and noncovered medical expenses. (ii) Later than the first day of the month when a spenddown requirement is met using covered medical expenses. Special eligibility dates apply, as set forth in § 30.06, for an individual who meets their spenddown requirement using noncovered assistive community care services (ACCS). Medicaid pays for covered services on the first day that the individual’s medical expenses exceed the amount of their spenddown requirement. Medicaid continues until the end of the accounting period unless the individual’s situation or PIL changes. Continuing responsibility for medical expenses incurred before the eligibility date An individual remains responsible for medical expenses they incurred before the date of eligibility. When services are received from more than one provider on the day that Medicaid begins, the individual must decide which services they will be responsible for paying and which ones Medicaid will cover. Deduction sequence. Medical expenses are deducted from income in the following order: Health insurance expenses (see § 30.06(b)). Noncovered medical expenses (see § 30.06(c)). Covered medical expenses (see § 30.06(d)) that exceed limitations on amount, duration, or scope of services covered (see DVHA Rules 7201-7606). Covered medical expenses (see § 30.06(d)) that do not exceed limitations on amount, duration or scope of services covered. These must be deducted in chronological order of the date the service was received beginning with the oldest expense. Time frames for deductions Deductible medical expenses include medical expenses incurred: (i) During the current accounting period, whether paid or unpaid; (ii) Before the current accounting period and paid in the current accounting period, or (iii) Before the current accounting period, remaining unpaid, and for which continuing liability can be established (see paragraph (i) of this § 30.05 for details on how to establish continuing liability). Deductible medical expenses also include medical expenses paid during the current accounting period by a state or local program other than a program that receives Medicaid funding. Medical expenses incurred before or during the accounting period and paid for by a bona fide loan, as described in (4) below, may be deducted if the expense has not been previously used to meet a spenddown requirement and the individual establishes continuing liability for the loan (see paragraph (i) of this § 30.05 for details on how to establish continuing liability) and documents that all or part of the principal amount of the loan remains outstanding at any time during the accounting period. Only the amount of the principal outstanding during the accounting period, including payments made on the principal during the accounting period, may be deducted. For purposes of this subsection, a “bona fide loan” is an obligation documented from its outset by a written contract and a specified repayment schedule. Predictable expenses. In general, an expense is incurred on the date liability for the expense begins. However, there are four types of predictable medical expenses that may be deducted before they are incurred, if it can be reasonably assumed that the expense will continue during the accounting period: Premiums on health insurance (see § 30.06(b)); Medically necessary over-the-counter drugs and supplies (see § 30.06(c)(1)); Ongoing, noncovered personal care services (see § 30.06(c)(3)); and ACCS provided to an individual residing in a level III residential care home which is either: (i) Not enrolled as a Medicaid provider; or (ii) With an admission agreement specifying the resident’s financial status as a privately-paying resident (see § 30.06(c)(4)). Establishing continuing liability for prior medical expenses. Continuing liability for unpaid medical expenses, including liability on a bona fide loan used to pay medical expenses, incurred before the current accounting period is established when any of the following conditions is met. The liability was incurred: Within six months of the date of application or the first day of the accounting period, whichever is later. More than six months before the date of application or the first day of the accounting period, whichever is later, and there is a bill for the liability dated within 90 days of that date. More than six months before the date of application or the first day of the accounting period, whichever is later, and the service provider or lender has confirmed that the unpaid liability has not been forgiven and is not expected to be forgiven at any time within the current accounting period.