Medicaid Burn: Spend Down What?

They called it “Spend-Down.” The Department of Human Services said this is how it works: “Some people have too much income to qualify for Medicaid. This amount is called excess income. Some of these people may qualify for Medicaid if they spend the excess income on medical bills first. This is called Spend Down”

Disability is not a lot of money, there is no need for a savings account to hold excess income. Disability teaches humility and frugality. The Social Security Administration attorney put me on permanent disability and approved my Medicaid in the autumn of 2012. I received medical benefits for about 90 days. And then in January 2013 my world radically changed…the government changed the Medicaid rules.

I ran the numbers that the DHS indicated as my deductible amount: my Spend Down deductible for medical expenses must be 75% of my disability check (that’s right 75%) before I will be reimbursed.  If it’s, say, 72%…oops, so sorry, you’re not getting any medical reimbursement and you’re out that amount to pay for your living expenses.

So, let’s imagine my SSA monthly income is on the higher end at $1000 a month. This must pay for mortgage, utilities, food, clothing, laundry soap, and, well, all other personal hygiene stuff. And now imagine my medical and prescription expenses are at the low end at $720 for the month. That is only 72%, three points below my required 75% Spend Down deductible. Do the numbers ($1000 SSA income – $720 un-reimbursable medical). That leaves me with $280 per month to pay my mortgage, utilities, and groceries. Oh, and DHS added to my income my qualifying amount of $20 a month in food assistance. $20 a month for food?!

How do I manage financially? Where is the excess income on which my Medicaid Spend Down is based? How do I choose between paying the mortgage or buying prescriptions, seeing a doctor or keeping the lights on?

What am I to do? What are any of us on disability to do?

I had relied on the charity of others and their loans while I waited for the SSA determination of my disability. I’m a single person without a husband or family. I had to spend my back up plan in the economic crash of 2009.  I’ve worked hard since I was 14, paid my taxes, paid into Social Security.

Now I am set adrift with medical expenses eating into my excess (below poverty level) income, seeking a way to not become an indigent…it’s too cold in Michigan to live under a bridge.

I’m scared. Very scared.



  • Theodore Seeber

    Have you talked to the director of the retreat house about this?

  • Clare Krishan

    I am not a financial advisor first off, but have you spoken with a citizens advice councilor?
    Without specific details of your circumstances (does your investment in your home exceed the ceiling of $14,250 in total assets?) I can’t judge if I’ve understood your predicament correctly, however this page on the NY state website has a Powerpoint presentation that may help clarify matters – I hope!
    FOR EXAMPLE___“Pam has income of $900/mo., but also spends $140/mo. on medical supplies and doctor’s visits. She would ordinarily not be eligible for Medicaid, because her income is over the limit by $88/mo. (Medicaid “disregards” the first $20 of income for people in the DAB category.. see all the Medicaid Resource and Income Disregards). However, she can “spend-down” her excess income to the Medicaid level by using the $ 88/mo. of medical expenses. Once she shows Medicaid that (s)he has $ 88/mo. of medical expenses in a given month, then h(er) Medicaid coverage will be activated for the rest of that month..”
    This example indicates that the spend down is from the top down not the bottom up the way you have described it in your post, so your example would be more like this:
    1. your hypothetical disability income = $1000
    2. your excess income limit = $188 (1000 subtract 20 subtract 792)
    or $100 more than Pam’s $88/$900 example above
    3. your hypothetical medical expenses = $720
    or $580 more than Pam’s $140/$52 reimbursement above
    4. subtract $188 from $720 = $538, hypothetical reimbursement you’re due from Medicaid
    CONCLUSION___ you’re an ineligible beneficiary required to cover your own expenses until your budget has diminished by paying down to the eligibility limit
    (unless complicated by other income flows that influence the calculation, as I said at the beginning)
    Hope this helps – pray for a good night’s sleep and a clear head in the morning, and give your local benefits office a call and ask them to talk you through your calculation to see if you understood it correctly?

  • Amanda Paige

    We have tried to get medicaid to help with mom. She gets SSI & Disability and then her food assistance keeps getting cut because she has an increase in her SSI of–get this $5. She worked full time and when she retired continued working for 10 hours a week so she could bring in extra money and then her infected toe spread to her foot and she had to have an amputation. It is really rough. And during that time I was unemployed, then underemployed, now employed and catching up.
    Good news (Or not) June is 2 years since her disability status and she qualifies early for medicare. Hang in there and will pray for you.

  • stephen

    Have you tried this. It looks as though you can get insurance for 150 a month..

    • Margaret Rose Realy

      What a beautiful program! Thank you Stephen for sharing this.

  • Darren

    Possibly file under obvious advice:

    Have you consulted with:

    1. Your own attorney; and

    2. A financial advisor specializing in such matters as disability, retirement, elder issues, etc.

    As we found during my mother’s infirmity and eventual passing, the administrative attorneys and agents are not necessarily your friend. Their interests are simply not aligned with yours. It was shocking to us how the same questions about the same laws resulted in radically different answers when it was our attorney doing the talking than the agencies…

    If your equity is high enough in your home, a Reverse Mortgage might be an option (but such equity levels are not so common as they once were).

    Best of luck.

  • gpatrick900

    That doesn’t sound correct to me. I live in a different state though. To get full Medicaid your income has to be about $700.00 dollars. If your Social Security income is $1015.50 Then Medicaid doesn’t count $15.50 Then you take 1000.00-700.00 that equals $300.00 dollars. That is your spend down. Some states do not have to do spend down. Since Michigan is taking Affordable care act. Your speed down should be a lot less in 2014 if any. Also, if you are paying Medicare part B premiums that can also be used to reduce the spend down.

  • Crystal Tadlock

    Oh it is correct. I just got my spend down and I have to cough up 3,174.00 every 6 months. My allowable expenses for each month being only 495.00!! Like Margaret said, what about my rent, food (they dropped me to only 16.00 in food assistance), toiletries, and utilities??? I am so nervous.

  • Thomas Wickens

    I’m on disability for cancer here in Illinois. My monthly income is $1129. Because I saved money from Social Security lump sum payment ( to pay for possible funeral expenses) my Spend down went from $146 a month to $1631 per month. No matter how absurd it is you can’t really protest it. They cancelled me previously then re-instated me then cancelled me again. The case worker doesn’t bother to respond to phone calls or written correspondence from myself OR the care providers. I’ve gotten to the point where IF I can get a cancellation of medicaid letter from them I’ll try to get some health insurance and charity again. The charity MAY carry me over until the first of the year then, if I’m still alive at the time, I can go to Medicare in about a year and a half.

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