A Medicaid spend down is the process of subtracting an applicant's medical expenses from total income in order to lower the income level to the state's medically needy limit, according to Medicare. As of 2015, 33 states cover medically needy individuals, reports the U.S Department of Health and Human Services.
Medical expenses that may qualify include prescription drug costs, doctor visits and other expenses the state classifies as remedial care or medical care, advises the U.S Department of Health and Human Services. Qualifying medical expenses vary by state. Payment of the medical expenses is not required for it to count as an incurred expense. The individual must only incur the payment obligation.
Qualifying expenses are then subtracted from the applicant's income, explains the U.S Department of Health and Human Services. If the income then falls below the state's threshold to qualify as medically needy, the applicant is eligible for Medicaid coverage. Qualifying income limits vary between states, although the individual monthly income limit is $500 in most states that cover the medically needy.
Medicaid only covers expenses incurred after the patient's spend down liability is reached, notes the U.S Department of Health and Human Services. Medical expenses incurred prior to qualifying as medically needy remain the responsibility of the patient.