MEDICALLY NEEDY SPEND DOWN MEDICAID
(when your income is too high for regular Medicaid)

Overview:

If you have a lot of medical bills, but your income is too high to qualify for regular Medicaid, you may be eligible for the Medically Needy program.  Children, persons with disabilities, pregnant women, and the elderly who have family income which exceeds the established income limit for regular Medicaid may be eligible under the Medically Needy program.  The Medically Needy program allows an individual to use incurred/unpaid medical bills to spend down the difference between their income and the income limit to become eligible.   People with higher incomes qualify if they have medical bills equal to or greater than the amount by which their income exceeds the Medically Needy Income Levels (MNIL).  

Medically Needy Spend Down is the one Medicaid eligibility group that has no absolute income limit. It operates like a private insurance policy with a deductible. People qualify financially for Medically Needy Spend Down when they have medical bills large enough to meet their deductible - the amount by which their income exceeds the Medically Needy Income limit.  The resource limits for Medically Needy are also higher than those for other categories of eligibility. 

Heres an Example of How it Might Work for a Family Situation:

Jamie Brown is fourteen years old. He is hospitalized in March and the bill is $8,260. Jamie lives with his mother whose gross monthly income from employment is $4000. Jamies family seeks Medicaid to pay for his hospital bill. Jamie does not meet the SSI definition of a disabled child. Therefore, he seeks Medically Needy Spend Down-Pregnant Women, Infants and Children. The Medically Needy Income Level for two is $317.  In determining eligibility, after allowed deductions, the familys monthly countable income is $2587, which is $2270 over the $317 limit.  Since the outstanding medical bills are $8260, $2270 of that would be used to spend down to the income limit.  Medicaid would pay for the remaining $5990 of the hospital bill.  Medicaid will not pay for the $2270 in hospital bills that Jamie used to spend down to the Medically Needy Income Level. However, Jamie may be eligible for another source of free or reduced cost care to pay for the hospital costs.  

Medical Bills That can be Used to Spend Down and Become Eligible for Medicaid:  

Almost any medical bills the applicant or the applicants family still owes or which were paid in the months for which Medicaid is sought (called the "budget period") can be used to meet the Spend Down requirement--bills from doctors, pharmacies, hospitals, even travel to and from care.  Health insurance and Medicare premiums may be used.  Bills paid by health insurance or other private third party payers may not be applied to the Spend Down.  However, bills paid by state and local government programs may be used to meet the Spend Down amount.  Bills paid with borrowed money, like credit cards, may be used if the applicant still owes the money or if the money was repaid during the budget period. 

Period of Eligibility: 

Eligibility for Medically Needy Spend Down is computed on a month-by-month basis. Eligibility can be certified for up to six months depending on the size of the medical bills and the applicants spend down amount. Eligibility can also be for up to three months prior to the month of application. 

Medically Needy Spend Down will not pay medical bills that are used to reach the Spend Down income level, but it can pay other outstanding bills incurred in the three months prior to application and for care obtained once eligible for Medicaid. 

How Medically Needy Spend Down Works: 

In determining financial eligibility for Medically Needy-Pregnant women, Infants and Children countable income and resources are computed the same way they are for these categories of regular Medicaid.  The same deductions from income apply. 

Medically Needy Medicaid can help pay ongoing medical bills and it can also help pay outstanding hospital and other medical bills incurred within three months of the date of application for Medicaid.  

How to Apply: 

To apply for this program, contact your local Department of Family and Children Services (DFCS) office.  Check our Special Needs Database for the nearest Family and Children Services office.