What is spend-down?

A spend down is a way to qualify for Medicaid when income is above the state's limit. Medicare.gov says some states let you spend down the income above the limit by paying non-covered medical expenses and cost sharing, such as Medicare premiums and deductibles, until your income is low enough to qualify. You must still meet the state's resource limit. Ask your state Medicaid office.

Medicaid.gov explains that states may run a medically needy program for people with significant health needs whose income is too high for other Medicaid groups. People spend down by incurring expenses for medical and remedial care until their income falls to the state's medically needy limit, and Medicaid then covers services beyond that amount. Thirty-six states and the District of Columbia use spend down programs.

Families often pay for nursing home care privately until the person's money runs low, and then apply for Medicaid. The Alzheimer's Association says Medicaid pays for long-term care for people who have used up most of their own money, and advises asking a care community what happens if a private-pay resident runs out of funds. See an elder law attorney before moving in, since transfer rules apply.

The rules depend on the state. Medicaid.gov says states choose whether to offer a medically needy spend down program, and states that use stricter eligibility rules, called 209(b) states, must allow spend down for people who are older, blind or disabled. Medicare.gov adds that you generally must meet your state's resource limit first. An elder law attorney or your state Medicaid office can explain local rules.

No. Spend down is a Medicaid rule, but Medicare costs can count toward it. Medicare.gov says that in states with a spend down, paying non-covered medical expenses and Medicare cost sharing, such as premiums and deductibles, can lower your countable income until you qualify for Medicaid. People with both Medicare and full Medicaid are called dually eligible; Medicare pays first and Medicaid pays last.