Medicaid Spend-Down

Because Medicaid is a health insurance program for the poor, one must have income and assets below a certain limit to be eligible.  For a single elderly or disabled person in New York State in 2013, these limits are $800/mo. of income and $14,400 in total assets.  (The income limits for people Disabled, Age 65+, or Blind ("DAB"), people age 18-21 and their parents, grandparents or other "caretaker relatives" living with them are in BOX 3 on the HRA Medicaid Chart ). Because of the high cost of living, especially medical expenses, many people find that although they are barely scraping by, they are "too rich" to get Medicaid.  Fortunately, there is sometimes a way of getting Medicaid even if your income and/or assets are over the limit: spend-down.

The spend-down program (also called excess or surplus income) is a way for certain categories of applicants to get Medicaid even though their income or assets are over the limit, by offsetting their excess with medical expenses.  For example, imagine two potential Medicaid applicants (who we will assume both are in the DAB category and both have assets below the limit). 

• Sam has income of $700/mo., and is therefore fully eligible for Medicaid ($700 is less than $800). 

• Pam has income of $900/mo., but also spends $140/mo. on medical supplies and doctor's visits.  She would ordinarily not be eligible for Medicaid, because her income is over the limit by $88/mo. (Medicaid "disregards" the first $20 of income for people in the DAB category..  see all the Medicaid Resource and Income Disregards).   However, she can "spend-down" her excess income to the Medicaid level by using the $ 88/mo. of medical expenses.  Once she shows Medicaid that he has $ 88/mo. of medical expenses in a given month, then his Medicaid coverage will be activated for the rest of that month.  It is almost like a monthly deductible.

Note that the spend-down program is not available to all New York Medicaid applicants. 

Those who are aged 21-64 who are neither disabled nor have children under age 21 in the household (aka Single/Childless Couples or S/CC) are not eligible to use spend-down.  If their income is over the Medicaid limit, they should consider Family Health Plus, which has higher income limits.  Family Health Plus does not allow spend-down, and also is never retroactive.  It is only effective in the month after the application is accepted.  So.. if you need medical bills to be paid or reimbursed, if they were incurred in the 3 months before you applied, or while the application is pending, Medicaid is the only option.  

See this special alert re Managed Long Term Care and Spend-Down.

Selfhelp has published some training materials on how Medicaid budgeting works and the spend-down program, which you can download below:

• PowerPoint presentation on Medicaid Budgeting and Spend-Down
• Training Outline on Medicaid Budgeting and Spend-Down
• Appendix

In November, 2010, the new NYS Department of Health  responded to advocacy concerns about lack of clear information about the spenddown program.  See this article.   The new information includes:

• WEBPAGE on STATE DOH WEBSITE --  What is the MedicaidExcess Income Program? or http://nyhealth.gov/health_care/medicaid/excess_income.htm

• FACT SHEET - WHAT IS THE EXCESS INCOME PROGRAM - OHIP--0026 (rev. 11/10)

  • Spanish version - Explicacion del Surplus Income Program (8/2/2011)

These sources more clearly explain:

• how to use your past medical bills - even very old ones if they are unpaid -- to meet your spend-down now and into the future

• Using expenses paid by ADAP or EPIC in the last 3 months and currently to meet your spend-down now and for the next six months.    See also http://www.health.ny.gov/diseases/aids/resources/adap/eligibility.htm http://gmhc.org/policy/benefits/adap.html and http://gmhc.org/policy/benefits/spenddown.html and DOH website

USING SUPPLEMENTAL NEEDS TRUSTS TO ELIMINATE THE SPEND-DOWN - SEE other pages on this website:

• How to use a pooled SNT to eliminate the Medicaid spend-down.
• Step-by-step guide to enrolling in the NYSARC Pooled SNT for Medicaid spend-down
• List of Pooled SNTs in New York State
• Advocate's Outline on Supplemental Needs Trusts
• Legal Authorities Relating to Supplemental Needs Trusts

People age 18 - 65 with disabilities may be eligible for Medicaid even with higher incomes, with no spend-down, if they are working.. see information about the Medicaid Buy-In For People with Disabilities

NYC HRA Medicaid Program Forms & Materials about Spend Down--

• Submit medical bills by fax in NYC -- See the May 2009 announcement that the NYC Medicaid program now accepts submission of medical bills by fax, and download the official NYC Spend-down Fax cover sheet. 

• MAP-931 Explanation of Excess Income Program (note this is authored by NYC and does not necessarily represent advocates' interpretation of the rules)  - Better is the New NYS  DOH FACT SHEET - WHAT IS THE EXCESS INCOME PROGRAM - OHIP--0026 (rev. 11/10)

• PAY-IN PROGRAM - OPTION for paying in spend-down to Medicaid up to six months at a time --

  • MAP-931A Optional Pay-In Program

  • MAP-931B Agreement to Participate in Pay-In Program

ALERT - Tips for Managed Long Term Care Applicants who have a Medicaid Spend-down (Excess income)

• Provisional Medicaid Coverage -- When someone applies for Medicaid and is determined to have a spend-down or "excess income,"  Medicaid coverage does not become effective until they submit medical bills that meet the spend-down, according to complicated rules explained here  and on the State's website.   Many people applying for Medicaid to pay for long-term care services can't activate their Medicaid coverage until they actually begin receiving the services, because they don't have enough other medical bills that meet their spend-down.  This creates a catch-22, because they cannot start receiving MLTC services until Medicaid is activated.  If they apply and are determined eligible for Medicaid with a spend-down, but do not submit bills that meet their spend-down, the Medicaid computer is coded to show they are not eligible.  As a result, an MLTC plan could refuse to enroll them -- because they do not have active Medicaid. To address this problem, HRA recently created a new eligibility code for "provisional" Medicaid coverage for people in this situation.  This is explained in this Medicaid Alert dated July 12, 2012.   Applicants who expect to have a spend-down should attach a copy of this Alert to their application and advocate to make sure that their case is properly coded.

• MLTC's may Disenroll Member for Non-payment of Spend-down - The HRA home attendant vendors were prohibited by their contracts  from stopping home care services for someone who did not pay their spend-down.   Similarly, CHHA's are prohibited by state regulation from stopping services based on non-payment.  FN 4. MLTC programs, however, are allowed to disenroll a member for non-payment of a spend-down.  See model contract p. 15 Article V, Section D. 5(b).  While the State's policy of permitting such disenrollment is questionable given that federal law requires only that medical expenses be incurred, and not paid, to meet the spend-down (42 CFR 435.831(d)),  the State's policy and contracts now allow this disenrollment.  For this reason, enrollment in pooled or individual supplemental needs trusts is more important than ever to eliminate the spend-down and enable the enrollee to pay their living expenses with income deposited into the trust. 

ADVOCACY:  Read the May 2009 Report by the New York Health Foundation on "Streamlining New York's Excess Income Program," prepared by Manatt Health Solutions and the Consumer Workgroup Response.  

This article was authored by the Evelyn Frank Legal Resources Program of Selfhelp Community Services, Inc.