How Does a Medicaid Spend-down Work?

By Grace DeRose-Wilson, Screening and Integration Coordinator at Elder Law of Michigan

Health insurance is complicated, and Medicaid is no exception. I have helped many older adults apply for Medicaid, and I have talked with many individuals who have Medicaid with a Spend-down. As with most health insurance and Michigan Department of Health and Human Services (MDHHS) benefits, there are many other regulations and exceptions that can only be determined by MDHHS. Here is a limited overview of how a Medicaid Spend-down typically works.

Individuals with a Medicaid Spend-down have a monthly deductible they must reach before Medicaid is activated.

For example, John has an $800 Medicaid Spend-down, which means that John must cover the first $800 in eligible medical expenses and thereafter Medicaid will cover the remaining eligible medical expenses. On December 1st, John receives medical care and is billed for $800. John cannot afford to pay the full $800, so he arranges a payment plan with his medical provider. John also turns in a copy of the bill to his MDHHS caseworker. If the $800 medical care bill qualifies, because he hit the deductible of $800, John’s Medicaid will be activated for the remainder of the month of December, and John can ask his medical providers to bill Medicaid for any other eligible medical services he receives during the month of December.

John is still responsible for paying the initial $800 medical bill that activated his Medicaid, but any subsequent eligible medical bills during the month his Medicaid is activated can be billed to Medicaid.

Sometimes a medical bill can activate Medicaid for multiple months. For example, Bob has a $400 Medicaid Spend-down. On May 1st Bob receives medical care and is billed for $1200. After Bob turns this medical bill in to MDHHS and they determine that it qualifies, Bob’s Medicaid will be activated for three months: May, June, and July. Bob’s Medicaid gets activated for three months because the $1200 medical bill he turned in to MDHHS in May meets his $400 deductible for three months.

Sometimes MDHHS cannot apply medical bills to a Medicaid Spend-down because the medical bill does not contain the required information.

At a bare minimum a medical bill must contain the following information:

  • The individual’s name who received the medical service,
  • The medical provider’s name,
  • The date of the medical service (must be within 90 days),
  • The other insurance that is billed. For example, if someone has Medicare, the medical bill must show that Medicare has been billed, and
  • The remaining amount of the medical bill that the individual is obligated to pay.

In closing, the idea of the Medicaid Spend-down can seem complicated. It is recommended to submit all medical bills to MDHHS in a timely manner. If the deductible is reached, and Medicaid is activated for the month, try scheduling appointments or procedures during that month.

Grace DeRose-Wilson is a Screening Integration Coordinator for MiCAFE at Elder Law of Michigan and has been a member of the Elder Law of Michigan team since November 2018. As a Screening Integration Coordinator, Grace helps Michigan seniors navigate the benefits application process, and helps raise awareness of benefits through community outreach events. As a Screening Integration Coordinator, Grace helps Michigan seniors navigate the benefits application process, and helps raise awareness of benefits through community outreach events.

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