How do individuals qualify for Medicaid under Medically Needy or Spend Down provisions?
Medically needy programs serve individuals whose income exceeds a state’s regular Medicaid eligibility levels but who could be eligible if they can incur health care related expenses that, when subtracted from their income, reduce their income below a level specified by the state. This is known as “spending down” excess income or spend down. A state’s medically needy income standard is limited to no more than 133 1/3 percent of the state’s AFDC cash assistance payment in effect in June 1996. However, states can set a medically needy limit that is below the maximum allowed. States determine an individual’s spend down liability based on what is known as a “budget period.” A budget period is a specified number of months for which the individual’s income is compared to the state’s medically needy income standard. States can establish a budget period of anywhere from one to six months. The amount of the required spend down is equal to the difference between countable income and the state’s
