Medicaid Spend Down in New York: What You Need to Know

The Medicaid Spend-Down Program offers a path to Medicaid eligibility for individuals with income exceeding the standard limits. Due to Medicaid's strict income and asset requirements, those with significant savings and assets may find themselves ineligible without engaging in appropriate estate planning strategies. The Medicaid Spend-Down Program provides a legitimate means of reducing monthly income to meet Medicaid's eligibility criteria by permitting the deduction of medical expenses from one's income.

Under the Medicaid Spend Down Program, out-of-pocket medical costs can be subtracted from a person's monthly income, helping those with significant health care expenses become eligible for Medicaid. For example, if the Medicaid eligibility limit is $1,732 for an individual in New York State in 2024, and the person has a monthly income of $2,032, their spend-down amount would be $300 ($2,032 - $1,732). In this particular case, to qualify for Medicaid, the individual must have medical bills that are at least equal to $300, their monthly excess income amount. These medical bills can include medications, paid and unpaid medical bills, nursing home care, health-related home renovations, and transportation to medical appointments.

Medicaid Spend Down Eligibility

To be eligible for the New York Medicaid Spend-Down Program, individuals must be either 65 years or older, disabled, pregnant, or parents of children under 21. Individuals must have high health care costs relative to their income. While there is no set amount, the medical expenses must be significant enough to reduce the individual's income below the Medicaid limit. The spend-down must be met every month to maintain continuous coverage. Individuals must provide medical bills that equal or exceed their monthly excess income to qualify for Medicaid coverage for that month.

Assets must also fall below certain limits: as of 2024, $31,175 for individuals, which includes savings, investments, and life insurance policies over $1,500 in face value, but excludes primary residence, car, burial plot, and some other assets; and $42,312 for couples, with most assets owned by either spouse counting towards the limit.

Applications of Medicaid in Real Life

What happens if you have both Medicare and Medicaid? If you have Medicare, Medicare will pay first for covered services, and Medicaid will pay second. Medicaid may cover your Medicare deductibles, copayments, and coinsurance. For example, if you have a $200 doctor visit, Medicare may pay $160 (80%), and Medicaid will cover the remaining $40 (20%). Medicaid may also cover some services that Medicare doesn't, such as dental care, vision, and hearing aids. These services can also count towards meeting your spend-down amount. For instance, if you have a $500 dental bill and a $500 spend-down, the dental expense alone will qualify you for Medicaid that month.

You can also bundle expenses from multiple months to meet your spend-down and get Medicaid coverage for a longer period. If you have a large expense, like a surgery, you can use it to meet your spend-down for multiple months at once. For example, if you have a $3,000 surgery and a $500 monthly spend-down, you can qualify for Medicaid for 6 months ($3,000 ÷ $500 = 6). This can provide continuous coverage for an extended period without having to meet the spend-down each month separately.

Steps for Using Spend-Down

To calculate your spend-down amount, first determine your monthly income from all sources, including earned income from work, Social Security benefits, pensions, etc. If your income varies month-to-month, estimate an average. Then subtract the Medicaid income limit for your household size. As of 2024, the Medicaid eligibility monthly income limit is $1,732 for an individual and $2,351 for a married couple in New York State. If your monthly income is above these amounts, you must spend down the excess to qualify for Medicaid.

There are two ways to meet your spend-down each month. One option is to send a monthly check for your spend-down amount directly to your local Medicaid office. This is called "paying your spend-down" and will qualify you for Medicaid for that month. Alternatively, you can show proof of medical expenses greater than your spend-down by providing receipts or bills. If your current month's expenses exceed your spend-down, the excess will be carried over to the next month. For example, if you have $800 in medical bills with a $500 spend-down, that covers this month and $300 of next month's spend-down.

Several types of expenses can be used to meet your spend-down. These include bills for doctor visits, prescriptions, over-the-counter medications, and health insurance premiums, including copayments, deductibles, and coinsurance. Medicare expenses (such as deductibles and premiums) can be included as Medicaid spend-down expenses. Dental, vision, and hearing expenses also qualify, as do medical supplies like bandages, crutches, and blood sugar test strips and other services not covered by Medicaid. If you're enrolled in EPIC, the state prescription assistance program, your EPIC copayments can be applied to your spend-down. You can even use your Medicaid coverage for prescriptions that EPIC doesn't cover. Expenses paid by family members or friends on your behalf can also count if they provide documentation like a receipt or canceled check. This can be helpful if you can't afford your medical expenses but have support from loved ones. Even unpaid bills from previous months can be used. Medical bills don't have to be from the current month to count towards this month's spend-down, which provides flexibility in managing your expenses and spend-down obligation.

Navigating the complexities of spend-down programs can be challenging, as they vary significantly from state to state. As Medicaid planning attorneys in New York, we are well-equipped to provide expert guidance and support throughout the spend-down process. While meeting the monthly income limit is crucial, it's equally essential to ensure that your assets fall within the prescribed limits. Fortunately, there are various strategies to effectively reduce your assets and become eligible for Medicaid. By working closely with a skilled Medicaid planning lawyer, you can develop a comprehensive estate plan that aligns with your unique circumstances and goals. Should you need assistance, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].