Medicaid Spend-Down Explained: Qualifying When Your Income Is Over the Limit
If your income is a little too high for Medicaid but your medical bills are large, a spend-down (also called medically needy coverage) may close the gap. You "spend down" the income above the limit on medical expenses, and once you have, Medicaid covers the rest of the period.
How the math works
The state sets a medically needy income level, usually far below the regular limit. The difference between your income and that level is your spend-down amount for the period (one to six months depending on the state). Once you have incurred, not necessarily paid, medical bills equal to that amount, coverage begins for the rest of the period. It resets each period.
Which expenses count
- Doctor, hospital and prescription bills, paid or unpaid
- Health insurance premiums including Medicare Part B
- Medical transportation
- Old medical debt in some states
- Nursing home and in-home care costs
Which states offer it
About 32 states and DC have a medically needy program. Several large states do not, including Texas, Alabama, Mississippi and Missouri; in those states the spend-down concept applies only to long-term care through a Miller trust. Check your state's eligibility page on this site or ask the agency directly.
Spend-down of assets is different
People often use "spend down" to mean reducing savings below the asset limit for nursing home Medicaid. That is a separate strategy: paying off debt, prepaying a funeral, making home repairs or buying exempt items. Giving money away does not work because of the 60-month look-back period.
What to do next
- Ask your state agency whether it has a medically needy program and what the income level is.
- Collect every medical bill from the current period, paid or not.
- Submit bills with your application; coverage starts once the spend-down is met.
- For long-term care, talk to an elder law attorney before moving any assets.