What Is a Medicaid Spend Down? How to Get Coverage

Your income is slightly over your state's Medicaid limit. You have ongoing medical needs. But standard Medicaid won't cover you because you earn too much.

This is where Medicaid spend down helps. What is a Medicaid spend down? It's a program that lets you qualify for Medicaid by using medical expenses to reduce your countable income.

Spend down programs help people with chronic conditions, disabilities, or long-term care needs. Understanding how to qualify and use the program can reduce your costs and prevent gaps in coverage.

One simple option is prepaid funeral planning. After offers prepaid cremation plans that count as allowable spend-down expenses. You reduce countable assets while securing clear, affordable end-of-life arrangements at today’s prices.

Need more help? You can call us 24/7 at 1-844-760-0427.

‍

{{cta_blue}}

‍

What Is Medicaid Spend Down?

Medicaid spend down works like a medical deductible based on income.

Here's how it works:

Your state sets an income limit for Medicaid. If you earn more than that limit, the extra amount becomes your spend down. You submit medical bills that equal or exceed that amount. Once you meet the spend down, Medicaid coverage begins.

Example (hypothetical):

Your state's limit is $800 per month. You earn $1,050. Your spend down is $250. When you show $250 in medical expenses, Medicaid starts covering you for that budget period.

States call these programs different names:

• Medically Needy Program
• Excess Income Program
• Surplus Income Program

The concept is the same across all names.

Not all states offer medically needy spend down programs. Currently, 36 states and the District of Columbia operate spend down programs. If your state doesn't offer spend down, other Medicaid pathways may help.

Important: Spend down programs use different income rules than standard Medicaid for most people. Most Medicaid programs now use Modified Adjusted Gross Income (MAGI) to determine eligibility.

Medically needy spend down programs use older SSI-based income methodologies. This is because spend down typically serves people 65+, people with disabilities, and others exempt from MAGI-based counting rules.

Who Can Use Medicaid Spend Down?

Spend down programs are available through "medically needy" pathways in states that operate these programs. The groups who can qualify vary by state, but generally include people with significant health needs whose income is too high for standard Medicaid.

Medically needy programs typically serve:

• Individuals age 65 or older
• Children
• People with disabilities
• People who are blind
• Pregnant women
• Parents and caretakers

Additionally, states known as 209(b) states must allow spend down for individuals whose eligibility is based on blindness, disability, or age (65 and older), even if they don't have a full medically needy program.

Meeting these criteria doesn't guarantee approval. Your income must be above standard Medicaid limits but within your state's medically needy threshold.

You also need ongoing medical expenses that you can document.

What Medical Expenses Count Toward Spend Down?

Most healthcare costs count toward spend down. States allow both paid and unpaid bills, depending on local rules.

Healthcare Services That Count

These services typically qualify:

• Doctor visits and specialist appointments
• Hospital care and emergency room visits
• Prescription medications
• Dental care and cleanings
• Lab tests and X-rays
• Physical therapy and occupational therapy
• Mental health counseling
• Nursing home care
• Home health services

Medical Equipment and Supplies

You can also use costs for:

• Wheelchairs and walkers
• Hospital beds
• Oxygen equipment
• Prosthetics and orthotics
• Hearing aids
• Eyeglasses prescribed by a doctor
• Medical supplies ordered by your provider

Insurance Costs

Your insurance expenses count too. Here’s what to look for:

• Medicare Part B premiums
• Medicare Part D premiums
• Medicare deductibles and coinsurance
• Private health insurance premiums
• Medical transportation costs (in some states)

Whose Bills Can You Use?

You can apply expenses for:

• Yourself
• Your spouse
• Children under 21
• Adult children with disabilities you support financially

How To Track Medical Expenses for Spend Down

Tracking expenses throughout your budget period makes the process easier. Many people struggle because they wait until the end to gather documentation.

Create a Simple Tracking System

Set up a system as soon as you receive your spend down notice.

Use a notebook or spreadsheet with these columns:

• Date of service
• Provider name
• Type of service
• Amount billed
• Amount you paid
• Amount still owed

Update this log each time you receive a medical bill.

Keep All Documentation

Save every piece of paper related to medical care. This includes:

• Medical bills and invoices
• Receipts for payments you made
• Provider statements
• Insurance explanation of benefits (EOB) forms
• Prescription receipts
• Transportation receipts (if your state allows these)

Store everything in one folder or envelope. Label it with your budget period dates.

Submit Expenses as You Go

Don't wait until the end of your budget period. Many states let you submit expenses throughout the period.

Submitting expenses early means:

• Coverage starts sooner
• You avoid last-minute paperwork stress
• The state has time to request additional documentation if needed

Check with your state Medicaid office about ongoing submission options.

How To Submit Proof of Medical Expenses

States require documentation that proves your medical costs. The proof must show specific information.

What Documentation Must Include

Each document needs:

• Type of service provided
• Provider name and contact information
• Patient name
• Date of service
• Amount owed or amount paid

Acceptable Forms of Proof

States typically accept:

• Original medical bills
• Itemized receipts
• Provider statements on letterhead
• Cancelled checks with medical bill attached
• Credit card statements showing medical charges
• Insurance EOB forms

How To Submit Documentation

Most states offer multiple submission methods:

Online portals: Upload scanned documents or photos

Email: Send to your caseworker's address

Fax: Use the number on your spend down notice

Mail: Send copies (never originals) to your local office

In person: Drop off at your Medicaid office

Always keep copies of everything you submit. Write down submission dates and methods.

How Far Back Can Bills Go?

States set limits on how old medical bills can be. Some allow bills from the past three months. Others only accept current budget period expenses.

Check your spend down notice for your state's rules.

What Happens After You Meet Spend Down?

Once you submit enough expenses to meet your spend down amount, the state processes your documentation.

Processing Time

Most states take 1-2 weeks to review submissions. Some move faster. Processing time depends on:

• How complete your documentation is
• Your caseworker's workload
• Whether the state needs additional information

When Coverage Begins

Coverage starts on the first day of the month you met spend down. It continues through your budget period's end.

Example:

Your six-month budget period runs January through June. You meet spend down on February 15. Coverage starts February 1 and runs through June 30.

What Medicaid Covers

Once coverage begins, Medicaid pays for services according to your state's plan. This typically includes:

• Doctor visits
• Hospital care
• Prescription drugs
• Lab tests
• Medical equipment
• Long-term care (if you qualify)

You won't have copays or deductibles for covered services.

Renewing for the Next Budget Period

When your budget period ends, you must requalify. Some states simplify this process if you met spend down in the previous period.

Contact your caseworker before your period ends to start renewal.

What If You Don't Meet Spend Down?

Sometimes your medical expenses don't reach the spend down amount during your budget period.

If this happens:

• Coverage doesn't start. You remain responsible for all medical bills during that period.
• You can reapply. When the next budget period begins, you can try again with new medical expenses.
• You keep trying. Some people meet spend down some months but not others. This is normal, especially if your medical needs vary.

When Spend Down Amounts Are Too High

For some people, the required spend down is simply unrealistic. Your medical bills may never reach that level.

If this is your situation, explore other options (covered in the next section).

Understanding Income vs. Asset Spend Down

People often confuse two different types of Medicaid planning. It's important to understand the difference.

Income Spend Down (This Article's Focus)

Income spend down uses medical expenses to reduce your countable monthly income. You're essentially paying down your "extra" income through medical bills until you qualify for Medicaid.

This is a monthly process. You must meet spend down each budget period to maintain coverage.

Asset Spend Down (Different Strategy)

Asset spend down focuses on reducing countable assets to meet Medicaid's asset limits. This involves converting countable assets into exempt resources.

This is typically a one-time process done before applying for long-term care Medicaid.

Why This Matters for Planning

Some financial strategies like prepaid funeral or cremation arrangements relate to asset planning, not income spend down.

These are two separate pathways to Medicaid eligibility. Many people use both strategies at different times.

Where Prepaid Cremation Fits in Medicaid Planning

Prepaid cremation arrangements don't count toward income spend down. They serve a different purpose in Medicaid planning.

How Prepaid Cremation Relates to Assets

In many states, irrevocable prepaid funeral or cremation plans are exempt assets under Medicaid rules. This means they don't count against Medicaid's asset limits.

People choose prepaid cremation to:

• Lock in current prices and avoid inflation.
• Reduce countable assets before applying for long-term care Medicaid.
• Remove financial burden from family members.
• Ensure they have documented and funded their final wishes.

When to Consider Prepaid Cremation

Prepaid arrangements make sense if you're planning for long-term care Medicaid in the future. They're part of asset planning, not income spend down.

After offers prepaid cremation plans with low monthly payments. Plans include transparent pricing with no hidden fees. Availability and Medicaid treatment depend on your state's rules.

Families should confirm how prepaid arrangements are classified in their state before purchasing. Your elder law attorney or Medicaid caseworker can provide guidance.

Alternatives If Your State Doesn't Offer Spend Down

Not all states operate medically needy spend down programs. If yours doesn't, other Medicaid pathways may help.

Other Options to Explore

Medicaid Buy-In programs: These help working adults with disabilities get coverage even with higher income.

Miller Trusts (Qualified Income Trusts): These trusts hold excess income to help you qualify for Medicaid.

Supplemental Needs Trusts: These protect inheritances or legal settlements while maintaining Medicaid eligibility.

Spousal Impoverishment Rules: These protect assets and income for the community spouse when one spouse needs nursing home care.

209(b) States

Some states, called 209(b) states, use more restrictive eligibility criteria than the federal SSI program. However, these states must still allow spend down to income eligibility levels for people age 65+, people with disabilities, and people who are blind.

If you live in a 209(b) state, spend down may be your only pathway to Medicaid even if your state doesn't have a full medically needy program.

Getting Help

An elder law attorney can explain which options fit your situation. Your local Area Agency on Aging also provides free guidance.

Find your local agency at Eldercare Locator or call 1-800-677-1116.

Planning Ahead with Spend Down

Medicaid spend down provides a pathway to coverage when your income exceeds standard limits. Success depends on understanding the rules, tracking expenses carefully, and submitting documentation properly.

For families planning ahead about end-of-life arrangements, prepaid cremation can be part of your broader Medicaid asset planning strategy. After provides clear guidance, transparent pricing, and support when you need it.

Call 1-844-760-0427 or explore plans online.

‍

{{cta_blue}}

‍

Frequently Asked Questions

Can I Use Someone Else's Medical Bills?

Some states allow you to use someone else’s medical bills if they’re for adult children with disabilities that you financially support.

You can use expenses for yourself, your spouse, and dependent children under 21. Each state has specific rules about whose bills qualify.

Do Medicare Expenses Count?

Yes, Medicare expenses like premiums, deductibles, and coinsurance you pay out of pocket all count toward the spend down. Amounts that Medicare pays directly don't count.

Can I Use the Same Bill Twice?

No, you can’t use the same bill twice. Each medical bill can only count once toward spend down. Once you've used a bill in one budget period, you can't use it again.

How Long Does Coverage Last?

Coverage lasts from the first day of the month you meet spend down through the end of your budget period. If your budget period is six months and you meet spend down in month two, you have coverage for the remaining five months.

What Income Counts for Spend Down?

States typically count all sources of income for spend down, including wages, Social Security benefits, pensions, veterans benefits, disability payments, and investment income. Your state Medicaid agency makes the final determination about what income counts.

Can I Appeal If My Spend Down Amount Seems Wrong?

Yes. You have the right to appeal any Medicaid decision, including your spend-down amount. Your spend down notice should include appeal instructions and deadlines.

What If I Move to a Different State?

If you move to a different state, then you must reapply in your new state. That state's spend down rules, budget periods, and income limits may be different.

Do I Need to Meet Spend Down Every Month?

Whether you need to meet spend down every month or not depends on your budget period. If your budget period is six months, you only need to meet the spend down once during those six months. If your budget period is one month, you must meet it monthly to maintain continuous coverage.