Income too high for Medicaid? ‘Spend down’ to qualify

NERDWALLET

More than 1.4 million people have lost Medicaid coverage in 2023 because they no longer meet the eligibility requirements, according to August tracking data from KFF, a health policy nonprofit.

After a pause on disenrollments during the COVID-19 public health emergency, beneficiaries now must prove that they still meet the income limits for Medicaid. People whose income has gone up risk losing their coverage.

What some beneficiaries might not realize is that even if their income seems too high for Medicaid, they might be able to spend down some income to qualify. For certain beneficiaries, spending on medical bills, including Medicare premiums, can be subtracted from their income when applying for Medicaid.

A spend-down is like a

The U.S. Medicare Handbook is photographed in Washington. Making more than the maximum income level for Medicaid isn’t necessarily a deal breaker. After a long pause during the COVID-19 public health emergency, states have resumed checking whether Medicaid beneficiaries’ income meets the eligibility requirements.

health insurance deductible, according to Catrice Simpson, a supervisory social service representative for the Washington, D.C., Department of Health Care Finance. “It is the amount you must show proof of meeting or exceeding before the insurance plan starts to pay, in this case it’s before Medicaid starts to pay,” Simpson wrote in an email.

For example, someone with income $200 above their state’s limit for Medicaid

might become eligible if they have at least $200 in qualifying medical bills.

People who qualify as “medically needy,” such as those with certain disabilities, children or people age 65 and older, are eligible to spend down income to qualify for Medicaid.

Rules for who counts as medically needy vary by state. For example, in Washington, D.C., parents or caretakers of children under 21 years old, pregnant people and people living in nursing homes can also spend down to become eligible for Medicaid.

Spending down to meet the income requirements for Medicaid means that Medicaid can cover some of your medical bills. But it won’t cover the bills you used to qualify.

For example, if you pay $300 out of pocket for a doctor’s visit and subtract that amount from your income, Medicaid won’t reimburse you for it later. But additional bills you didn’t use for the spend-down could be covered by Medicaid.

If you have both Medicaid and another kind of coverage, they can work together to pay for your care. For example, if you have both Medicare and Medicaid, Medicare pays for services first, and then Medicaid pays for additional costs that Medicare didn’t cover, such as certain copays, coinsurance and deductibles.