Spend Down Rules for Medicaid

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Medicaid is a state- and federally-funded, state-operated health insurance program for low-income elderly and disabled individuals, pregnant women and children. Individuals who exceed the Medicaid income limit may be able to get Medicaid if they pay a spend down, which is the dollar amount of medical bills that must be paid out-of-pocket prior to Medicaid coverage beginning during a specified time period.

Supplemental Security Income (SSI)

The Social Security Administration provides SSI to low-income elderly and disabled individuals with an insufficient work history to qualify for full disability benefits. If you receive SSI, you are excluded from paying the Medicaid spend down.

Earned Income

If you have earned income, such as earnings through wages or self-employment, you are typically not responsible for paying a spend down. If your income is sufficient, you may qualify for a Medicaid for the employed program, where you pay a monthly premium for Medicaid that is based on your income. The exact name of these programs and exact policies regarding earned income and spend downs vary between state Medicaid programs.

Accrued Bills

It is your responsibility to pay your medical bills. Medicaid counts medical bills toward your spend down regardless of whether you actually pay the bills. However, if you fail to pay the service provider for your portion of the medical bills, you may be sent to a collection agency or put on restricted services.

Time Period

Medicaid spend downs may be calculated each month, every six months or over a different time period. The exact time frame varies between states.

Counted Bills

Inpatient and outpatient medical bills, medical transportation, medical supplies, over-the-counter drugs and vitamins if medically ordered, health insurance premiums, prescription drugs, co-payments and insurance deductibles may be counted toward your spend down.

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