What Expenses Qualify for Medicaid Spend Down?
Understanding which expenses qualify for Medicaid spend down is key to helping individuals meet eligibility requirements. Spend down refers to reducing countable income or assets by paying for approved medical and related costs. These costs vary by state, but many share common categories that allow applicants to qualify for Medicaid coverage after exceeding income thresholds.
Medicaid Spend Down in Simple Terms
A Medicaid spend down is like meeting a deductible. If your income is over the Medicaid limit, you can still become eligible by spending the excess on qualified medical expenses. For example, if your monthly income is $2,800 but your state limit is $2,500, you must spend $300 on eligible health-related costs before Medicaid coverage begins.
Let’s say you paid $300 toward your prescription medications and doctor co-pays this month—congratulations, you’ve met your spend down and Medicaid can now kick in.
Common Expenses That Count Toward Spend Down
Here are some of the most accepted categories of spend down expenses. Always check with your state’s Medicaid office as guidelines differ.
1. Medical Equipment and Health Supplies
Spend down can include eyeglasses, dentures, hearing aids, wheelchairs, prosthetics, and medical supplies like bandages and diabetic kits—as long as these are medically necessary and prescribed.
2. Prepaid Funeral and Burial Costs
You may prepay for funeral arrangements through an irrevocable burial trust. This includes expenses such as cremation services, caskets, or burial plots. States may cap the allowed amount and require contracts to be non-refundable.
3. Paying Off Outstanding Debts
Medical or non-medical debts such as credit cards, car loans, or mortgages may qualify. Full or partial payments are permitted, and in some states, future obligations can be prepaid.
4. Nursing Home or Assisted Living Costs
Paying for care in a nursing facility, assisted living center, or for in-home care aides and personal attendants typically counts. These costs are usually substantial and can rapidly meet the spend down amount.
5. Health Insurance Premiums
Premiums for health, dental, vision, or long-term care insurance are generally allowed. These can be paid monthly and deducted from income for eligibility purposes.
6. Accessibility Home Modifications
You can count modifications needed for health and safety—ramps, railings, widened doorways, bathroom modifications. General home renovations don’t qualify unless medically required.
7. Unpaid Medical Bills and Copayments
Whether already paid or still due, medical bills can be applied toward spend down. This includes insurance deductibles, co-pays, therapy sessions, and diagnostic services.
8. Chiropractic Services
When ordered by a physician, chiropractic care is acceptable in many states. Treatment must address a medically verified condition, such as chronic pain or spinal issues.
9. Medicaid-Compliant Annuities
In some states, transferring funds into a Medicaid-compliant annuity converts assets into income and helps preserve resources for a spouse. Conditions include state beneficiary designation and non-transferability.
10. Life Care Agreements
These are formal agreements that pay family caregivers for providing ongoing care. The agreement must be legally binding and reasonably priced. Payments must be for care already rendered, not future services.
11. Transportation for Medical Services
Transportation costs to and from medical appointments are allowable. This includes taxis, ride-share services, bus fares, and sometimes expenses for maintaining a vehicle used for healthcare access.
Key Rules to Keep in Mind
- State-Specific Rules Apply: Some states are more flexible than others. Always consult local Medicaid offices for a full list of eligible expenses.
- Gifting Can Trigger Penalties: Medicaid has a 60-month look-back period. Giving away assets can lead to disqualification.
- Keep Documentation: Receipts, invoices, and contracts are essential. You must prove each expense to avoid delays.
FAQs
How do I qualify for a Medicaid spend down?
You qualify when your income or assets exceed Medicaid limits, but you have significant health expenses. Once you spend enough to fall within your state’s threshold, Medicaid benefits apply.
What types of income count?
Most forms of income count, including Social Security, pensions, wages, and investment income.
Can regular bills count?
No. Rent, groceries, and utilities are not allowed. Spend down only applies to medical or medically related expenses.
What happens if I don’t spend enough?
You won’t qualify for Medicaid during the period. Work with a Medicaid caseworker to stay on track.
How long do I have to meet the spend down?
Most states require you to meet the spend down within a month or over a fixed period (often 1 to 6 months).
Final Note
Navigating Medicaid spend down can be complex, but understanding what qualifies helps patients get the coverage they need. If you’re unsure, speak to your local Medicaid office or consult with experts who specialize in Medicaid planning.
