Medicaid Spend-Down & Medically Needy Programs: Where They’re Available and How They Work

For many people, income or assets are just a little too high to qualify for regular Medicaid, but medical bills are still overwhelming. That is often where Medicaid spend-down or medically needy programs come in.

This guide from HowToGetAssistance.org explains how these programs typically work, which states offer them, who may qualify, and how to move forward through official state channels. This site is not a government agency and does not take applications; instead, it’s here to help you understand your options.

What Is a Medicaid Spend-Down or Medically Needy Program?

In plain English, a Medicaid spend-down (also often called a medically needy program) lets some people with too much income for regular Medicaid still qualify after they account for their medical expenses.

Think of it this way:

• Regular Medicaid: Your income must be below a specific limit to qualify.
• Medically needy/Spend-down Medicaid: Your “countable income” can be higher, but you can subtract certain unpaid or paid medical bills.
  • If your remaining “countable” amount is low enough, you can qualify for Medicaid coverage for that month or spend-down period.

You do not pay this “spend-down amount” to Medicaid as a fee. Instead, you pay (or owe) it to your healthcare providers or show that you are responsible for those bills.

Where Are Medically Needy / Spend-Down Programs Available?

Not every state offers a medically needy program. Some offer it only for certain groups (for example, children and pregnant people but not seniors), and rules can change.

Below is a general overview of how states usually fall into categories. Because state policies change, you should always verify current rules with your state Medicaid agency or local benefits office.

Common Types of State Approaches

Because the exact list of states and categories can shift, the safest way to check is:

1. Call your state Medicaid agency (often under the Department of Human Services, Health, or Social Services).
2. Ask specifically:
   • “Does our state have a Medicaid medically needy or spend-down program?”
   • “If yes, which groups can qualify (adults, seniors, people with disabilities, children, pregnant people)?”
3. Confirm how income and medical bills are counted in your state.

If you are unsure which office to call, you can:

• Dial 211 and ask for help reaching your state Medicaid office, or
• Contact your county social services or human services department and ask where to apply for Medicaid.

Who Typically Qualifies for a Medically Needy Program?

Eligibility rules vary by state, but there are common patterns.

General Requirements

You will usually need to:

• Meet non-financial Medicaid rules, such as:

  • Being a resident of the state
  • Being a U.S. citizen or certain qualified non-citizen (with some exceptions)
  • Belonging to an eligible category, such as:
    • Children
    • Pregnant people
    • Seniors (often 65+)
    • People with disabilities
    • Sometimes parents/caretaker relatives

• Have income that is:

  • Too high for regular Medicaid, but
  • Can be brought down to the medically needy income level when your medical expenses are counted.

• In some states, meet asset/resource limits, especially for:

  • Seniors
  • People with disabilities
  • Long-term care coverage (nursing homes, certain home and community-based services)

What Is a “Medically Needy Income Level”?

States that offer this program set a medically needy income level (MNIL), often lower than regular Medicaid limits. The difference between your countable income and this level is your spend-down amount.

Example (simplified):

• Your monthly income: $1,200
• State’s medically needy income level: $600
• Your spend-down: $1,200 – $600 = $600

You typically must show $600 in allowed medical expenses within a specific time period (often 1–6 months). Once you do, you may be eligible for Medicaid for the rest of that period.

What Counts Toward a Spend-Down?

The exact list depends on your state, but commonly countable expenses include:

• Doctor visits
• Hospital stays
• Outpatient surgery or procedures
• Prescription drugs
• Medical equipment and supplies (wheelchairs, walkers, diabetic supplies, etc.)
• Therapies (physical, occupational, speech, etc.) when medically necessary
• Dental and vision care (when considered medical expenses by the state)
• Health insurance premiums (including Medicare Part B or Medigap in many states)
• Unpaid old medical bills, sometimes from before you applied (rules differ by state)
• Transportation costs to medical appointments, if allowed

Each state decides:

• Which medical expenses are allowed
• Whether past bills can be used, and how far back
• How often the spend-down period resets (every month, 3 months, 6 months, etc.)

You can confirm these details by asking your local Medicaid office:

• “What types of medical bills can I use for spend-down?”
• “Can I use old unpaid bills, and how far back?”

How a Spend-Down Works in Practice

The process can feel confusing at first, but it usually follows a general pattern.

1. You Apply for Medicaid

You typically start with a regular Medicaid application through:

• The state’s official benefits website,
• Your local county or district social services office, or
• An official phone number listed by your state Medicaid agency.

You should clearly mention that you have high medical bills or that you want to be evaluated for medically needy or spend-down Medicaid if your income is too high for standard eligibility.

2. The State Reviews Your Financial Eligibility

The agency will usually:

• Look at your income (wages, Social Security, pensions, etc.)
• Review assets/resources if they apply in your category (for example, bank accounts for seniors or disability-related coverage)
• Compare your income to:
  • The regular Medicaid income limit, and if you are over,
  • The medically needy income level (MNIL) if a spend-down program exists

If regular Medicaid is denied but you fit a medically needy category, they may tell you:

• Your spend-down amount
• Your spend-down period (e.g., monthly, 3-month, or 6-month period)
• What bills can be used to meet it

3. You Submit Medical Bills to Meet the Spend-Down

To get coverage under the medically needy program, you typically must show you have enough allowed medical expenses to meet or exceed your spend-down amount for the period.

You might:

• Send copies of bills to your Medicaid caseworker or local office,
• Ask your providers to send bills directly to Medicaid, or
• Follow state-specific instructions for reporting expenses online or by mail.

Once your expenses reach the required amount:

• You can become eligible for Medicaid for the rest of that spend-down period.
• After that period ends, the process often resets, and you may have to meet the spend-down again for the next period.

4. What Medicaid Covers Once You Meet the Spend-Down

After your spend-down is met and coverage is turned on for that period:

• Medicaid usually pays for covered services going forward within that period, under your state’s Medicaid rules.
• The bills that were used to meet the spend-down are usually still your responsibility (you may owe those to the provider), unless your state has specific exceptions.

Always ask your caseworker or local Medicaid office:

• When your coverage begins and ends for the spend-down period
• Which expenses will be paid by Medicaid and which remain your responsibility

Documents to Gather for a Spend-Down/Medically Needy Application

Being organized can reduce delays. Typical documents include:

Identity & Residency

• Photo ID (driver’s license, state ID, or other)
• Social Security number (or proof that you’ve applied)
• Proof of citizenship or qualified immigration status, if required
• Proof of state residency, such as a lease, utility bill, or mail with your address

Income & Resources

• Pay stubs from recent months
• Social Security or pension benefit letters
• Unemployment or workers’ compensation records
• Bank statements
• Information about life insurance, retirement accounts, and other assets (especially for seniors and disability-related cases)

Medical Expenses (for Spend-Down)

Collect detailed records of:

• Unpaid hospital or doctor bills
• Receipts for prescriptions and co-pays
• Statements from insurance showing your share of costs
• Insurance premium bills (Medicare Part B, Medigap, employer coverage, etc.)
• Bills for durable medical equipment and supplies

Make sure each bill or receipt shows:

• Your name
• The date of the service or purchase
• The provider’s name
• The amount charged and, if applicable, how much you paid vs. how much remains unpaid

How and Where to Apply for Medically Needy / Spend-Down Medicaid

Because this is a state-run program, you must apply through official state or county offices, not through HowToGetAssistance.org.

Common Application Paths

1. Online
   Many states have an official benefits portal where you can submit a Medicaid application and upload documents.

2. In Person
   You can usually apply at your local county Department of Social Services, Human Services, or Health and Human Services office.

3. By Mail or Fax
   Some states let you download or pick up a paper application, fill it out, and return it by mail or fax.

4. By Phone
   Some states take applications by phone through an official Medicaid hotline or call center.

When you apply, you can say something like:

What Happens After You Apply

Although timelines differ by state, typical steps include:

1. Application processing
   The agency reviews your forms and documents. If something is missing, they may send you a notice asking for more information by a certain deadline.

2. Eligibility decision
   You should receive an approval or denial letter (or both, e.g., denied for regular Medicaid but approved for medically needy with a spend-down).

3. Spend-down instructions
   If you are medically needy-eligible, the notice usually tells you:

   • Your spend-down amount
   • The time period it covers
   • How to submit medical bills

4. Coverage start date
   In many states, medically needy coverage begins:

   • Once your spend-down is met, and
   • Sometimes can be backdated to the first day of the spend-down period if bills qualify.
     The exact rule varies; confirm with your caseworker.

Common Reasons for Delays or Denials

Understanding common issues can help you avoid them.

Frequent Problems

• Incomplete application
  Missing signatures, unanswered questions, or skipped pages.

• Missing documents
  Not providing proof of income, residency, or citizenship/eligible immigration status when requested.

• Unclear medical bills
  Bills that don’t show your name, dates, or amounts clearly.

• Submitting non-allowable expenses
  Some items may not count toward the spend-down in your state, such as:

  • Over-the-counter items without a prescription (in some states)
  • Non-medical transportation
  • Cosmetic procedures

• Not meeting the spend-down in time
  You may not gain coverage for a period if you don’t submit enough qualifying expenses within that period.

If you receive a denial or partial approval, read the notice carefully. It usually explains:

• The reason for the decision
• The deadline and instructions for appeal

Appeals and Fair Hearings

If you think a decision was made in error—for example, your income was calculated incorrectly or certain bills were not counted—you usually have the right to:

• Request an appeal or fair hearing with your state’s Medicaid agency.

Key points:

• There is almost always a deadline (for example, 30 or 60 days from the date on the notice).
• You can generally:
  • Submit additional documents, and
  • Explain your situation at a hearing (sometimes by phone, sometimes in person, depending on the state).

You can ask:

• Your caseworker about how to file an appeal
• A local legal aid office or disability rights organization for guidance, if available in your area

If Your State Does Not Offer a Medically Needy Program

If your state doesn’t have a medically needy/spend-down option, there may still be other ways to get some help.

Possible Alternatives

• Marketplace health plans (Healthcare.gov or your state’s Marketplace)
  You may be able to get premium tax credits or cost-sharing reductions if your income fits the guidelines.

• Medicare Savings Programs (for people on Medicare)
  These programs, run by state Medicaid agencies, can help pay for Medicare premiums and sometimes deductibles and co-pays.

• State Pharmacy Assistance Programs
  Some states have separate programs that help with prescription drug costs, especially for seniors or people with disabilities.

• Hospital financial assistance / charity care
  Many hospitals and nonprofit clinics have financial assistance policies that reduce or forgive bills for low- and moderate-income patients.

• Community health centers and free/low-cost clinics
  Federally Qualified Health Centers and similar clinics often offer sliding-fee scales based on income.

You can ask at your local hospital billing office, community health center, or county health department about available programs.

How to Make Sure You’re Using Official Medicaid Channels (and Avoid Scams)

Because Medicaid involves sensitive personal and financial information, it’s important to be sure you’re dealing with official sources.

Tips to Verify an Official Channel

• Look for:
  • A .gov website address for state information (for example, state health or human services pages).
  • Clearly labeled state or county offices such as:
    • “Department of Human Services”
    • “Department of Social Services”
    • “Health and Human Services”
• Confirm phone numbers through:
  • The state’s main government website, or
  • Calling a local county office listed in the government pages of your phone directory.

Warning Signs of Possible Scams

Be cautious if you are:

• Asked to pay a fee to apply for Medicaid.
  • Official Medicaid applications are free (though some states may have small premiums or cost-sharing once you are enrolled, depending on the program).
• Pressured to give:
  • Bank account login information
  • Full credit card details
    just to “check eligibility.”
• Contacted through:
  • Unsolicited texts, social media messages, or emails claiming guaranteed approval in exchange for money.

If something seems suspicious, contact your state Medicaid agency or county social services office directly using contact information you locate independently (not through the suspicious message) and ask them to verify.

Key Takeaways and Next Steps

• Medically needy / Medicaid spend-down programs help people whose income is too high for regular Medicaid but who have significant medical expenses.
• Not every state offers this option, and many states have different rules for who qualifies and which bills count.
• To move forward:
  1. Contact your state Medicaid agency or local county social services office.
  2. Ask if there is a medically needy or spend-down Medicaid program in your state and whether you may fit the category.
  3. Gather income documents, proof of residency, and detailed medical bills and receipts.
  4. Follow the instructions from your official agency on how to apply and how to submit bills for your spend-down period.

HowToGetAssistance.org cannot process applications, but by understanding how these programs typically work, you can approach your state’s official offices more prepared and better able to advocate for yourself or your family.