How Medicaid `spend-down' works in Maryland

September 01, 2002

Jackline Tessmer provides a case study in the operation of Medicaid "spend-down."

The mother of two, her sole source of income is a disability payment of $801 a month - well above the $434 limit for her to qualify for Medicaid coverage.

Her children get full Medicaid coverage; children can be covered when family income is up to three times the poverty level, or $45,072 a year for a family of three.

An adult above the income cutoff, however, can be covered if she is classified as "medically needy," says Debbie I. Chang, deputy health secretary. To qualify, income minus medical bills must meet the Medicaid eligibility income level.

In Tessmer's case, the difference between her $801 income and the $434 eligibility cutoff is $367. Since eligibility is determined for a six-month period, her spend-down amount is six times $367, or $2,202.

That means Tesser has to accumulate $2,202 in medical bills in a six-month period to get Medicaid coverage for the rest of the six months.

Other states have similar spend-down systems, although the income cutoff varies, according to Cindy Mann, senior fellow at the Kaiser Commission on Medicaid and the Uninsured.

There are about a dozen states where Jackie Tessmer's income would make her eligible for full-time Medicaid coverage.

The same spend-down rules apply to the elderly who are in nursing homes, according to Mann. However, since nursing home expenses can be predicted for the following six months, the elderly are maintained on the Medicaid rolls. They do have to file paperwork every six months reporting whether their income or assets have changed.

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