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 2021, the income limit is $904/mo. of income. (after subtracting $20/mo disregard) (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 1 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 $894/mo. after deducting the cost of his Medigap policy, and is therefore fully eligible for Medicaid ($894 is less than $904).
Pam has income of $1,050/mo., after deducting the cost of her Medigap policy. She would ordinarily not be eligible for Medicaid, because her income is over the limit by $146/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 submitting $146 of medical expenses incurred in the same month. Then her Medicaid coverage will be activated for the rest of that month. It is like a monthly deductible. If she had past unpaid bills when she applied for Medicaid, these could be applied toward her spenddown. Click here.
Note that the spend-down program is not available to all New York Medicaid applicants.
Adults who are under age 65 and are not disabled, and are not caring for a minor-age child, cannot use spend-down. However, many don't need to use spend down because they are eligible for "MAGI" Medicaid or the Essential Plan under the Affordable Care Act (ACA or Obamacare), which uses higher income limits and NO ASSET TEST. See articles here and here and here re Essential Plan.
Some in the Essential Plan may still want Medicaid in order to get Medicaid long term care or "waiver" services. They may "spend down" to the regular non-MAGI limits only if they are under age 21 or a caretaker relative of a child under 21, or disabled.
See this special alert re Managed Long Term Care and Spend-Down.
42 USC 1396a(a)(17), 42 CFR 435.831, 18 NYCRR 360-4.8(c),
96-ADM-015 - Excess Income Program Clarifications/Prepayment of Client Liability (Pay-In) Program (and see Attachments posted at https://www.health.ny.gov/health_care/medicaid/publications/pub1996adm.htm)
NYS 91 ADM-11: Medical Expenses Paid/Incurred by a Public Program of the State or Its Political Subdivisions
Note that the income and resource limits in these documents have not been updated, so please use the figures above (Box 1 of the HRA Chart) and but they are otherwise current.
These sources more clearly explain:
- Past medical bills - even very old ones if they are unpaid -- can be used to meet your spend-down when you apply for Medicaid, and can be used into the future until they are "used up." EXAMPLE: Sam applies for Medicaid, and has a $1,000/ mo. spenddown. He has an old unpaid hospital bill of $90,000 he is still getting collection notices for. The hospital stay was 5 years ago. Medicaid won't pay the bill because the hospitalization was more than 3 months before the application. But Medicaid will give him credit against his spend-down for 90 months! It will only be authorized six months at a time, so every 6 months he'll need to remind Medicaid that credit is still left from that bill. After 90 months, his credit will end.
- If he had paid the bill, he would only get credit for a maximum of SIX MONTHS.
PAY-IN PROGRAM (2019-08 Fact Sheet now posted in various languages)
TIPS TO ELIMINATE THE SPEND-DOWN for SPECIAL CATEGORIES - See this Article
There are special budgeting rules for people who work (or their spouses work) even a small amount, and for people who used to receive SSI, and those who returned to the community from a nursing home or adult home, and others. See this article to see if you can benefit by these special rules.
If you can't, consider using a SUPPLEMENTAL NEEDS TRUST (SNT) TO ELIMINATE THE SPEND-DOWN - People who are "disabled" as defined for Social Security benefits -- whether under or over age 65 --may deposit their spend-down into an SNT, and request their local DSS to rebudget their income to disregard the deposited income - this eliminates the spend-down. See more here:
NYC HRA Medicaid Program Forms & Materials about Spend Down--
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.
May 5, 2014 - State issues directive that takes a step in fixing computer coding problems that delay enrollment in MLTC. NYS DOH GIS 2014 MA/10 -- 06 to 30 Conversion for MLTC Enrollees. An unexpected but serious problem with implementation of MLTC has been long delays in enrolling in an MLTC plan, even after an individual has endured the long process of applying for Medicaid. Problems are especially bad for people who apply for Medicaid and are determined to have a spend-down or "excess income." Their 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. Until their Medicaid is activated, 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, the State is trying a few steps.
First, applicants must request Eligibility CODE 06 if they are seeking MLTC. See Medicaid Alert dated July 12, 2012. THis gives them "Provisional Medicaid" eligibility so that an MLTC plan sees they have Medicaid and will enroll them.
Second, until now, the MLTC plan had to then request that HRA/DSS "convert" their eligibility to CODE 30, which is full Medicaid rather than provisional Medicaid. In NYC, MLTC plans were required to fax HRA a "conversion form and package" to activate Medicaid when the consumer has a spend-down. Download Conversion cover sheet here. Despite extensive education by HRA, many plans failed to do this.
NOW, in May 2014, this new GIS explains that as long as CODE 06 was used on the application, the code will automatically change to CODE 30 full eligibility when the MLTC plan enrolls the individual. So.. no "conversion" form should be necessary.
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 New York Legal Assistance Group.