Income too high for Medicaid? ‘Spend down’ to qualify

By Alex Rosenberg | NerdWallet

More than 1.4 million folks have misplaced Medicaid protection in 2023 as a result of they now not meet the eligibility necessities, in keeping with August monitoring knowledge from KFF, a well being coverage nonprofit.

After a pause on disenrollments through the COVID-19 public well being emergency, beneficiaries now should show that they nonetheless meet the earnings limits for Medicaid. People whose earnings has gone up threat dropping their protection.

What some beneficiaries won’t understand is that even when their earnings appears too excessive for Medicaid, they could be capable of spend down some earnings to qualify. For sure beneficiaries, spending on medical payments, together with Medicare premiums, may be subtracted from their earnings when making use of for Medicaid.

What is a Medicaid spend-down?

A spend-down is sort of a medical health insurance deductible, in keeping with Catrice Simpson, a supervisory social service consultant for the Washington, D.C., Department of Health Care Finance. “It is the amount you must show proof of meeting or exceeding before the insurance plan starts to pay, in this case it’s before Medicaid starts to pay,” Simpson wrote in an e-mail.

For instance, somebody with earnings $200 above their state’s restrict for Medicaid may grow to be eligible if they’ve not less than $200 in qualifying medical payments.

People who qualify as “medically needy,” resembling these with sure disabilities, youngsters or folks age 65 and older, are eligible to spend down earnings to qualify for Medicaid.

Rules for who counts as medically needy differ by state. For instance, in Washington, D.C., mother and father or caretakers of youngsters beneath 21 years outdated, pregnant folks and folks residing in nursing properties may also spend right down to grow to be eligible for Medicaid.

How does spending down have an effect on medical payments?

Spending down to satisfy the earnings necessities for Medicaid implies that Medicaid can cowl a few of your medical payments. But it received’t cowl the payments you used to qualify.

For instance, when you pay $300 out of pocket for a health care provider’s go to and subtract that quantity out of your earnings, Medicaid received’t reimburse you for it later. But extra payments you didn’t use for the spend-down could possibly be coated by Medicaid.

If you will have each Medicaid and one other form of protection, they will work collectively to pay on your care. For instance, you probably have each Medicare and Medicaid, Medicare pays for companies first, after which Medicaid pays for added prices that Medicare didn’t cowl, resembling sure copays, coinsurance and deductibles.

Benefits for Medicare beneficiaries

For folks age 65 and older and people with sure disabilities, Medicare covers most well being care, however not every part.

“There’s often the misconception that Medicare will pay for long-term care, and it will not,” says Connecticut elder regulation lawyer Daniel Tully.

Medicaid does cowl long-term care, Tully says, and could possibly be an choice for these going through excessive prices Medicare received’t cowl. Those beneficiaries may be capable of qualify by spending down or taking different property planning actions resembling establishing a Medicaid-compliant belief, Tully says.

Medicare beneficiaries who spend right down to qualify for Medicaid get a further profit: the “Extra Help” subsidy. Extra Help pays for the premiums, deductible and a lot of the out-of-pocket prices for Medicare Part D, which covers prescribed drugs. The authorities estimates that it’s value about $5,300 per 12 months.

Help for the spend-down course of

Your Medicaid company can present the small print on Medicaid eligibility guidelines, together with the spend-down course of, in your state. Find eligibility and enrollment particulars and get in touch with data by deciding on your state on

Tully describes the legal guidelines for Medicaid planning as “very complicated.” “You really want to take the time to make sure you’re being advised by a professional,” he recommends.

You can get free, customized counseling out of your State Health Insurance Assistance Program, or SHIP. SHIPs have places of work and counselors who can converse to the specifics of your state and your state of affairs in the case of Medicare, Medicaid and associated applications. Find your native SHIP workplace at

Most folks discover the spend-down overwhelming at first, Simpson wrote, however as soon as it’s defined to them, folks with medical payments often don’t hesitate to begin the method.

This article was written by NerdWallet and was initially printed by The Associated Press.

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Alex Rosenberg writes for NerdWallet. Email: [email protected]. Twitter: @AlexPRosenberg.