Spend Down Explained

If an individual has a monthly income that surpasses the limit needed to qualify for Medicaid, s/he may be eligible for a Spend Down. Also known as Excess Income or Surplus Income, the Spend Down program allows a Medicare recipient to qualify for Medicaid if s/he spends the excess income on medical bills. The program is intended for, and most beneficial to, those with high medical bills.

If you were denied Medicaid because your monthly income is $100 more than the limit for eligibility, then your monthly Spend Down is $100. The most common Spend Down time period is six months, which means you must multiply your monthly excess income of $100 by six.

In our example, your Spend Down amount would be $600 for the time period. You can think of a Spend Down like a deductible, meaning you must meet the $600 Spend Down amount on medical services before Medicaid will cover medical bills again.

It’s important to note that Medicaid will not pay for bills used to reach the Spend Down amount. You will cover those bills. Once the Spend Down has been reached, then Medicare will cover all future bills during the eligible period. When your specific time period comes to an end, then your Spend Down will start over once again.