Allowable medical expenses

Before medical expenses can be used to reduce or meet spenddown, the individual must have incurred the legal obligation. This means that the individual must have received the medical service or product and have a legal obligation for the cost. The medical expenses used to meet spenddown are the individual's obligation and cannot be billed to Medicaid.

For an expense to be allowed towards spenddown, the expense must have been prescribed by a licensed provider. The following charts give some guidance on expenses that can be allowed towards a spenddown liability.

Allowable medical expenses chart

Allowable practitioners chart

Expenses that have been paid using a credit card are considered a paid expense. They are allowed as a paid expense within either the retroactive base period or the current base period in which they paid the bill with the credit card. They are no longer considered an unpaid expense as the provider has been paid and the individual has received the medical item or service. Current credit card payments on a bill that was paid prior to any period of eligibility are no longer considered a valid medical expense.

Medical expenses that are still owed and have not been written off or discharged by the collection agency are allowed as a medical expense and can be considered an unpaid bill for spenddown. The agency will confirm if the debt is still valid and will not allow any interest or fees charged by the collection agency to be counted toward the spenddown. The agency allows only the amount of the original unpaid debt (the medical expense), using the original date of service for the expense when coding it into ACES.

Premiums for private medical insurance are treated as income deductions and are not applied to spenddown. The agency allows private insurance premiums (not Medicare premiums) as an income deduction and reduces income prior to comparing income to the MNIL standard. In many cases, an individual may become eligible for MN coverage without spenddown using this methodology.

When the individual meets spenddown, the agency determines if it is cost-effective to pay the premiums to ensure the coverage continues. If it is cost effective and the individual meets spenddown, the agency pays the premium. If the individual does not meet spenddown, the agency does not pay the premiums.

For more information on the Premium Payment programs through the Medicaid Purchasing Administration, see Health Insurance Premium program .

Example: spenddown

The individual’s spenddown is $600 and the insurance premium is $100 a month. Since the base period is 6-months, the individual meets spenddown and becomes eligible for Medicaid. The agency determines if it is cost effective to pay the insurance premium. If it is, then the agency begins paying the insurance premiums.

Note: In this example, if the agency didn’t use the insurance premium since the agency had been paying it in the previous base period, then the individual will not meet spenddown. If the individual does not meet spenddown, the agency does not pay the insurance premium. Then, the worker allows the monthly premiums for the base period which makes the individual eligible for coverage. Once eligible, the agency begins paying the premiums.