Medicaid Spend-Down in New York: Excess Income, Pay-In, and Pooled Trust Options

By Albert Goodwin, Esq., Medicaid planning and estate attorney, New York City. Last reviewed January 2025. Dollar figures below are effective January 1, 2025 and change every January.

New York calls its spend-down program the Excess Income program. New York City's Human Resources Administration (HRA) calls the same thing the Surplus Income program. The rule is the same under either name: if your income is above the Medicaid level, you can still receive Medicaid in any month in which you incur or pay medical bills equal to the amount by which your income is over the limit. The program is set out in Social Services Law § 366 and 18 NYCRR 360-4.8, and the annual figures are published by the New York State Department of Health in a General Information System (GIS) message each year.

Most of what you will read on state and federal websites stops there. This page covers the choices a New Yorker with excess income actually has to make: billing in monthly, billing in for six months, paying the surplus to the district, or moving the surplus into a pooled income trust. Each of those has a different cost and a different result, and the wrong choice can mean paying hundreds of dollars a month that you did not need to pay.

Who Can Use Spend-Down in New York

New York divides Medicaid applicants into two groups. The group matters because it decides whether spend-down is available to you at all.

• Non-MAGI (Aged, Blind, Disabled): People age 65 and older, people certified blind, and people certified disabled under the Social Security standard. This group applies through the local social services district (HRA in the five boroughs, the county Department of Social Services elsewhere). The Excess Income program is built for this group. These applicants also face a resource test.
• MAGI (Modified Adjusted Gross Income): Children, pregnant individuals, parents and caretaker relatives of children under 21, and adults 19 to 64 who are not disabled. This group applies through NY State of Health, the state marketplace. NY State of Health does not process spend-down. An applicant in this group whose income is over the MAGI limit is ordinarily routed to the Essential Plan, Child Health Plus, or a subsidized Qualified Health Plan instead. Pregnant individuals and children under 21 can in some situations request an excess income budget through the local district, but that is the exception and you should confirm it with the district before relying on it.

The practical result: if you are under 65, not disabled, and over income, spend-down is almost never your path to coverage in New York. If you are 65 or older or have a disability, it is one of several paths, and the rest of this page is about choosing among them.

2025 Income and Resource Limits (Non-MAGI)

For the Aged, Blind, and Disabled group, the 2025 Medicaid levels in New York are:

• Income: $1,800 per month for a single person; $2,433 per month for a couple.
• Resources: $32,396 for a single person; $43,781 for a couple.

For comparison, the 2024 figures were $1,732 and $2,351 for income and $31,175 and $42,312 for resources. Any page that quotes those numbers without a year is out of date. The Department of Health posts the current year's figures at health.ny.gov under Medicaid Income and Resource Levels.

Resources that count include bank accounts, brokerage accounts, cash value of life insurance above $1,500 face value, and real property other than your home. The home you live in (up to an equity limit set each year), one vehicle, a burial plot, and an irrevocable prepaid funeral agreement are excluded. Retirement accounts in periodic payout status are treated as income rather than a resource. Spend-down addresses excess income only. If you are also over the resource limit, you need a separate plan, which may involve exempt transfers, an irrevocable trust, or a spousal refusal if you are married.

How Excess Income Is Calculated

Excess income is not simply gross income minus $1,800. The district first applies disregards. For a non-MAGI applicant the main ones are the $20 general income disregard and a deduction for health insurance premiums you pay, including the Medicare Part B premium. The 2025 standard Part B premium is $185.00.

Example. A 72-year-old Queens widow receives $2,200 per month in Social Security. Her Part B premium of $185 is deducted at the source, so her net check is $2,015. Her Medicaid budget looks like this:

• Gross Social Security: $2,200
• Less Part B premium: $185
• Less general disregard: $20
• Countable income: $1,995
• Less 2025 Medicaid level: $1,800
• Excess income: $195 per month

She is not eligible for Medicaid as of right. She becomes eligible in any month in which she shows the district $195 in qualifying medical expenses, or in which she handles the $195 in one of the other ways described below.

Community Spend-Down vs. Nursing Home Budgeting

Spend-down as described on this page is a community Medicaid concept. It applies to people living at home, in an assisted living program, or in an adult home, including people receiving home care through a Managed Long Term Care (MLTC) plan.

A nursing home resident is budgeted differently. Medicaid allows the resident to keep a personal needs allowance ($50 per month in 2025) and, if married, a community spouse income allowance for the spouse at home. The rest of the resident's income is the Net Available Monthly Income (NAMI), which is paid to the nursing home each month toward the cost of care. There is no bill-in and no pooled trust for a nursing home resident's income. Nursing home applicants also face a 60-month look-back on asset transfers under Social Services Law § 366(5), with a penalty period for uncompensated transfers. Community Medicaid currently has no look-back; the 30-month community look-back enacted in the 2020 state budget has been postponed repeatedly and had not taken effect as of this review. Check the current status before making transfers.

Option 1: Monthly Bill-In

The simplest way to meet excess income is to submit medical bills each month equal to your excess amount. Once the district accepts the bills, you have outpatient Medicaid coverage for that month: doctors, prescriptions, home care, medical equipment, and the like. Coverage under the monthly method does not include inpatient hospital care.

Bills that count include:

• Paid or unpaid bills for medically necessary services for you, your spouse, or a dependent child in your household
• Health insurance premiums, Medicare deductibles, copayments, and coinsurance
• Prescription drugs, including EPIC copayments, and over-the-counter items prescribed or recommended by a physician
• Dental, vision, hearing, podiatry, and chiropractic bills, including services Medicaid itself does not cover
• Medical supplies and equipment, and transportation to medical appointments
• Bills paid on your behalf by a family member or friend, with a receipt or canceled check
• Old unpaid bills you still owe, provided they have not already been credited against a prior month

If your bills in a month exceed your excess income, the surplus carries forward. In the example above, a $600 dental bill in March would meet the $195 excess for March and leave $405 to apply against April and part of May.

The weakness of monthly bill-in is that coverage depends on having bills. Someone whose only regular expense is a Medicare supplement premium may meet the spend-down every month without trouble. Someone with irregular expenses will have months of coverage and months without, and a gap month can disrupt home care services through an MLTC plan.

Option 2: Six-Month Bill-In for Full Coverage

New York allows you to present bills equal to six months of excess income at once. If you do, you receive full Medicaid coverage, including inpatient hospital care, for the entire six-month period. For the Queens widow above, six months of excess is $1,170. A single hospital bill, a dental implant invoice, or an accumulation of unpaid bills from the past can satisfy that figure.

This method is most useful for someone facing a known hospitalization or surgery, because it is the only bill-in route to inpatient coverage. It also reduces paperwork from twelve submissions a year to two. The tradeoff is that you need enough bills in hand at the start of the period.

Option 3: The Pay-In Program

Instead of showing bills, you can pay your excess income directly to the district. HRA and most counties accept a check or money order for the monthly excess, and coverage for that month begins when the payment is credited. You may also prepay for several months at a time. In the example, the widow could write a $195 check to HRA each month and have Medicaid without collecting a single receipt.

Pay-In is predictable and simple, which is why districts favor it. Its drawback is cost: you give up $195 a month, $2,340 a year, that you never see again. For someone with excess income of $40 that is a fair trade for the convenience. For someone with excess income of $1,000 or more, which is common for retirees with a pension and Social Security, Pay-In becomes expensive, and a pooled income trust usually makes more sense.

Option 4: Pooled Income Trust

A pooled income trust, also called a supplemental needs trust of the pooled type, is authorized by 42 U.S.C. § 1396p(d)(4)(C) and Social Services Law § 366(2)(b)(2)(iii). It is run by a nonprofit organization. You join the trust, deposit your excess income into your sub-account each month, and the trust pays your living expenses from that account: rent or mortgage, utilities, phone, groceries, insurance premiums, and other bills for your benefit. Because the deposited income is no longer counted by Medicaid, your countable income drops to the Medicaid level and you qualify without any spend-down.

The difference from Pay-In is where the money goes. With Pay-In the excess goes to the government. With a pooled trust the excess still pays your own bills, less the trust's fees.

Points you should know before choosing a pooled trust:

• Disability is required at any age. A person over 65 can join a pooled trust in New York, but must still be certified disabled. The district refers the question to the State Disability Review Team if there is no Social Security disability determination on file. Most people in their 70s and 80s who need home care meet the standard, but the paperwork takes time and should be started early.
• Fees. Nonprofit trusts charge a one-time enrollment fee and a monthly administrative fee, typically a percentage of the deposit with a minimum. If your excess income is small, fees may eat most of it, and Pay-In or bill-in may be cheaper.
• The trust pays vendors, not you. You submit bills and the trust pays them directly. You cannot take cash out. Rent paid by the trust is treated as a third-party payment and does not reduce your Medicaid budget.
• Remainder. At death, money left in your sub-account is retained by the trust for its charitable purposes or used to reimburse Medicaid, depending on the trust's terms. Nothing passes to your heirs.
• Timing. Income deposited late or in the wrong amount in a given month can cost you coverage for that month. The trust's deposit deadlines matter.

A pooled income trust is the standard solution for New Yorkers receiving MLTC home care who have excess income of several hundred dollars or more. It is different from a first-party or third-party special needs trust used to hold assets for a disabled person; a pooled income trust handles monthly income only.

Retroactive Coverage: Three Months Back

Medicaid can cover bills from up to three months before the month you apply. For a spend-down applicant, this means you may submit bills for each of those three retroactive months. If the bills for a given month equal that month's excess income, Medicaid can pay the remaining bills for that month. This matters for someone who applies from a hospital bed or after a fall, when the largest bills were incurred before anyone thought about Medicaid. Ask for the retroactive period on the application; it is not automatic.

Procedure: HRA in New York City vs. County DSS

In the five boroughs, excess income cases are handled by HRA's Surplus Income Program. After your case is accepted with a surplus, HRA sends a notice stating the monthly amount. You submit bills or Pay-In checks to the Surplus Income Program unit by mail, in person at a Medicaid office, or through the channels HRA lists on the notice. Once bills for a month are accepted, HRA activates coverage for that month in the eMedNY system, and providers can bill Medicaid.

Outside the city, the county Department of Social Services administers the program. Procedure varies by county. Some have a dedicated excess income worker; some accept bills only by mail. In every case, keep copies of everything you submit and note the date.

Documents the district accepts:

• Itemized bills or statements showing the patient's name, the provider, the date of service, the service, and the amount owed or paid
• Pharmacy printouts for the period
• Explanation of Benefits forms from Medicare or a Medigap insurer showing your patient responsibility
• Premium statements for health, dental, or long-term care insurance
• Receipts or canceled checks when a third party paid

Common reasons bills are rejected:

• The bill was already used to meet a prior month's excess
• The bill was paid by insurance, Medicare, or Medicaid, leaving no patient responsibility
• The service was for a person outside the Medicaid household
• No date of service or no patient name on the document
• The item is not medical (for example, a gym membership without a prescription)
• The bill is for a period before the retroactive window and was not an unpaid balance still owed

Two Scenarios From Practice

The names and details below are changed. They describe situations we see regularly, not results we promise.

A Brooklyn man in his late 70s with a pension and Social Security totaling about $3,400 a month needed daily home care after a stroke. His excess income was roughly $1,400. Paying that to HRA each month was out of the question for his family. He joined a pooled income trust, deposited the excess monthly, and the trust paid his co-op maintenance and Con Edison bills. Medicaid approved his MLTC enrollment. The planning work was in documenting his disability for the district and in timing the first deposit so the trust was in place before the application was decided.

A Manhattan woman in her 80s had excess income of about $60. Her Medigap premium alone exceeded that figure. We advised against a pooled trust because the minimum monthly fee would have cost more than her surplus. She meets her spend-down by submitting the premium statement each month, and her coverage has no gaps.

Frequently Asked Questions

Can I use old medical bills for Medicaid spend-down in New York?

Yes, if you still owe them and they have not already been credited to a prior month. Unpaid bills from before you applied can be applied to your current excess income. Paid bills generally must fall within the current month or the three-month retroactive period.

What is Pay-In Medicaid in New York?

Pay-In is the option of paying your monthly excess income directly to HRA or the county DSS instead of submitting bills. Coverage begins for the month once the payment is credited. You can prepay several months.

Pooled trust or spend-down: which is better?

It depends on the size of your excess income and whether you can be certified disabled. For a small surplus, bill-in or Pay-In is cheaper than trust fees. For a surplus of several hundred dollars or more, a pooled income trust lets the money pay your own bills rather than going to the government, and it provides uninterrupted coverage for home care.

Does spend-down cover a hospital stay?

Monthly bill-in gives outpatient coverage only. To receive inpatient coverage you must meet six months of excess income at once, or eliminate the excess through Pay-In or a pooled trust.

Do I have to spend down my savings too?

The Excess Income program deals with income. If your resources exceed $32,396 (single) or $43,781 (couple) in 2025, you must separately reduce or restructure them. See our page on advanced New York estate planning techniques for the tools involved.

Does Medicaid take my house if I use spend-down?

Spend-down itself has no effect on your home. Medicaid estate recovery under Social Services Law § 369 may apply after death to the estate of a recipient who was 55 or older, subject to exceptions for a surviving spouse or a disabled child. Planning for the home is a separate question we address in a consultation.

How We Can Help

We prepare non-MAGI Medicaid applications for clients in Manhattan, Brooklyn, Queens, and the surrounding counties, calculate the excess income budget before the district does, and advise on bill-in, Pay-In, or a pooled income trust based on the numbers. Where a pooled trust is the right choice, we handle the disability documentation, the trust enrollment, and the coordination with the MLTC plan. Where resources are also over the limit, we build the asset side of the plan at the same time so the application is approved once rather than denied and refiled.

The Law Offices of Albert Goodwin has offices in New York City, Brooklyn, and Queens. Call 212-233-1233 or email [email protected] to schedule a consultation.

Sources: Social Services Law §§ 366, 369; 18 NYCRR 360-4.8; 42 U.S.C. § 1396p(d)(4)(C); New York State Department of Health, Medicaid Income and Resource Levels (annual GIS message); NYC Human Resources Administration, Surplus Income Program materials. This page is general information about New York law and is not legal advice for your situation.