Medical Assistance for Families with Children and Adults

2.2.3.6 Medical Spenddown

A spenddown is a cost-sharing approach that allows Medical Assistance (MA) eligibility for people whose income is greater than the applicable limit. Federal rules refer to this population as “medically needy.”

People can become income eligible for MA by “spending down” their excess income to the appropriate income limit. The excess income is reduced by deducting certain health care expenses.

Parents, caretaker relatives, pregnant women and children who are not eligible for MA because they are over the income limit and who have medical expenses may be eligible for MA with a spenddown. Federal law does not permit stepparents or people using an adults without children basis of eligibility to be eligible for MA with a spenddown. If there is no biological or adoptive parent in the home, a stepparent may be eligible for MA with a spenddown  under the caretaker relative basis of eligibility.

Retroactive Eligibility for MA for Families and Children with a Medical Spenddown

A person may qualify for MA for Families and Children with a Medical Spenddown up to three months before the month of application.

MA for Families and Children with a Medical Spenddown and Other Insurance Affordability Programs

A person may be eligible for MA for Families and Children with a Medical Spenddown in the same month they are or were eligible for or enrolled in MinnesotaCare, Advanced Premium Tax Credits (APTC) or qualified health plan (QHP) without subsidy. Eligibility for or enrollment in MinnesotaCare, APTC, or QHP without subsidy is not a barrier to eligibility for MA for Families and Children with a Medical Spenddown.

Spenddown Criteria

People may be eligible for MA with a spenddown if they:

  • meet all other MA eligibility criteria;

  • meet the applicable asset limit;

  • have a parent, caretaker relative, pregnant woman or child basis of eligibility;

  • have income that exceeds the applicable MA income standard; and

  • have medical expenses equal to or greater than their spenddown.

People with an age 65 or older, blind or disabled basis of eligibility must meet different criteria than those described on this page. See MA for People Who Are Age 65 or Older and People Who Are Blind or Have a Disability (MA-ABD) Medical Spenddown for more information.

Spenddown Types and Health Care Expenses

The policies for spenddown types, eligible health care expenses and spenddown adjustments are the same for MA for Families and Children with a Medical Spenddown and MA-ABD with a Medical Spenddown. See the following policies for details:

  1. MA-ABD Medical Spenddowns

  2. MA-ABD Spenddown Types

  3. MA-ABD Health Care Expenses

Non-Financial Eligibility for MA for Families and Children with a Medical Spenddown

People enrolled in MA for Families and Children with a Medical Spenddown must meet the same responsibilities and post-eligibility requirements as enrollees in MA for Families with Children and Adults (FCA) without a spenddown:

Bases of Eligibility

This policy applies to medical spenddowns for the following people:

  • Biological, natural or adoptive parent

  • Caretaker relative

  • Pregnant woman

  • Child age birth through 20

Household Composition

Household composition and household size affects asset and income limits. People who live together and have the following relationships are considered in the household composition determination for MA for Families and Children with a Medical Spenddown.

The following people are included in the household size of an adult applicant, age 21 and older:

  • Applicant

  • Spouse

  • Children under age 21, biological, adoptive and step-children

    • Emancipated minors are not included. An emancipated minor is a person under the age of 18 who is or was married, is on active-duty in the uniformed services, or declared emancipated by a court.

  • Unborn child or children of the applicant or spouse

The following people are included in the household size of a child applicant, under age 21:

  • Applicant

  • Parents of applicant, including biological, natural, and adoptive parents

  • Siblings under age 21, including biological, adoptive, half and step-siblings

    • Emancipated minors are not included

  • Spouse

  • Children of the child applicant

  • Unborn child or children of the applicant, spouse or children

The following people are included in the household size of an emancipated minor:

  • Applicant

  • Spouse

  • Children of the child applicant

  • Unborn child or children of the applicant or spouse

Financial Eligibility for MA for Families and Children with a Medical Spenddown

Asset Limit

Assets are items of value that people own like bank accounts, stocks and bonds, cars and real estate. See Appendix A Types of Assets for definitions of the different types of assets.

  • Children and pregnant women eligible for MA with a spenddown have no asset limit.

  • Parents and caretaker relatives eligible for MA with a spenddown have the following asset limits:

    • $10,000 asset limit for a household of one

    • $20,000 for a household of two or more

Categories of Assets

Assets fall into two categories, excluded and countable.

  • Excluded assets: Certain types and amounts of assets are excluded and do not count against a person’s asset limit. Any assets that are not specifically excluded are countable.

  • Countable assets: Countable assets are evaluated for availability and may count towards the person’s asset limit.

    • Available assets: count against the asset limit

    • Unavailable assets: do not count against the asset limit

Income received in a given month is not an asset in that month. If retained beyond the month of receipt, income becomes an asset.

Excluded Assets

Excluded assets are not counted against the asset limit when establishing eligibility. Excluded assets for MA with a spenddown for a parent or caretaker relative include:

  • Adoption Assistance

  • Agent Orange Settlement Fund payments

  • Alaska Native Claims Settlement Act (ANCSA) payments

  • Blood Product Settlement payments

  • Bureau of Indian Affairs (BIA) student financial aid

  • Burial assets

  • Cobell v. Salazar Class Action Settlement (also known as Claims Resolution Act of 2010)

  • Corporation for National and Community Service (CNCS) payments

  • Crime victim payments

  • Disaster assistance, federal declaration

  • Disaster assistance, state declaration

  • Filipino Veterans Equity Compensation (FVEC) payments

  • First $200,000 of household self-employment assets ( net value of assets of a trade of business needed for a client to earn income). This includes self employment assets that are temporarily not being used due to the self-employed person's illness or disability.

  • Foster Care payments

  • Gifts to children with life threatening conditions

  • Homestead property

  • Household goods and personal effects

  • I-35W Bridge Collapse payment

  • Individual Development Accounts (IDA)

  • Interest income from Indian trust land or restricted lands

  • James Zadroga 9/11 Health and Compensation Act of 2010

  • Japanese-American and Aleutian Restitution payments

  • Jensen Settlement Agreement Payment

  • Low Income Home Energy Assistance Program (LIHEAP) payments

  • Minnesota Housing Finance Agency (MHFA) home improvement loan

  • Nazi Persecution payment

  • Personal property

  • Public assistance appeal payments

  • Radiation Exposure Compensation Act payments

  • Real property

  • Relocation Assistance Payments, federal

  • Relocation Assistance Payments, state and local

  • Retirement plans

  • Ricky Ray Hemophilia Relief Act payments

  • Student financial aid

  • Tax refund

  • Term life insurance

  • Trade or business asset

  • Tribal Land Settlements or Judgements

  • Third Party Trusts

  • Vehicles -used for employment or seeking employment, one per household member of legal driving age

  • Veterans’ Benefits for Educational Assistance

  • Veterans’ Children with Certain Birth Defects payments

  • Vietnamese Commando Compensation Act payments

  • Workers’ compensation settlement

Countable Assets

Assets not specifically excluded are considered countable assets. Countable assets must be evaluated for availability to determine if their value counts toward the person’s asset limit.  Countable assets that are available count towards the person’s asset limit, unavailable assets do not.

  • Assets are unavailable if a person is unable to access or use them for self-support and cannot liquidate them. They include:

  • Countable assets are not explicitly excluded from being counted against the asset limit and are available to the person.

    • Annuities

    • Continuing Care Retirement Community (CCRC) entrance fee

    • Cash Surrender Value (CSV)

    • Certificate of Deposit (CDs)

    • Home Equity

    • Interest

    • Liquid assets

    • Money market account

    • Non-homestead real property

    • Non-term life insurance policy

    • Promissory notes

    • Qualified Tuition Program (QTP), also referred to as a Section 529 Plan

    • Self-employment assets over the maximum excluded net value of $200,000 per household

    • Trusts

    • Vehicles - in excess of one per household member of legal driving age

Reducing Assets

Parents and relative caretakers who are applying for MA and have excess countable assets in the month of application must reduce those assets to be within their asset limit by the end of the processing period to be eligible.

Some acceptable ways to reduce assets for applicants who have excess assets in the application month include, but are not limited to, paying bills or other obligations such as health care expenses or purchasing assets that do not count toward the asset limit.  

Applicants who are requesting MA for Long-Term Care (LTC) services may be subject to a transfer penalty if they reduce assets by giving them away without receiving adequate compensation. See MA-LTC Uncompensated Transfers for more information.

Applicants must verify that they have reduced excess countable assets by providing bank statements or other documents that show current asset amounts, but are not required to provide receipts.

Eligibility can begin back to the first day of the month of application if the applicant reduces excess assets within the applicable processing period.

Applicants who are requesting retroactive coverage and need to reduce assets have different rules from applicants not requesting retroactive coverage. Applicants requesting retroactive eligibility can only reduce assets by paying medical expenses or retroactively designate burial funds.

Income

Income is cash or in-kind benefits available to a person. Income is divided into two major categories, earned and unearned:

  • Earned income is cash or in-kind benefits received in return for work or services, including employment and self-employment.

  • Unearned income is cash or in-kind benefits received without being required to perform any work or service, including spousal maintenance, child support, annuities, pensions, etc.

Income is either counted or not counted. Income is not counted if it is unavailable or if it is excluded by law. Whether income is counted depends on the type of income. Income is counted in the month it is received. See Appendix B Types of Income for descriptions of each type of income.

Counted Income

  • AmeriCorps State or National living allowances and other payments

  • AmeriCorps-National Civilian Community Corps (AmeriCorps NCCC) living allowances and other payments

  • Amount over $2,000 interest income from Indian trust land or other restricted Indian lands

  • Amount over $2,000 of cash payments from tax-exempt organizations for a child with a life-threatening condition

  • Annuity payments

  • Blood and blood plasma sales

  • Child support income

  • Clergy housing allowances

  • Commissions

  • Compensation from an employer's vacation donation program, if paid and taxed in the same manner as the employee's usual pay

  • Conservation and Youth Service Corps wages

  • Court-ordered dependent care expense payments

  • Disability payments that are part of the employer’s benefit package

  • Experience Works wages

  • Extended income support payments through the Trade Adjustment Reform Act of 2002 (TAA)

  • Gifts

  • Higher Education Innovative Projects wages

  • Honoraria

  • Hostile fire, imminent danger and combat pay

  • Income from self-employment

  • Income that is withheld to repay a legal debt or obligation

  • Income withheld to repay a legal debt or obligation

  • In-kind income if the person has the option to receive cash instead of in-kind income

  • Interest  and dividends received as payments

  • Jury duty pay

  • Lump sum income

  • National and Community Service Models wages

  • Net self-employment income

  • Non-Title IV of HEA and non-BIA grants, scholarships, fellowships and other non-loan financial aid that requires teaching, research, or other work in order to receive the aid for graduate students

  • Non-Title IV of HEA and non-BIA grants, scholarships, fellowships and other non-loan financial aid that does not require work to receive the aid for graduate students, after deducting allowable student expenses

  • Non-Title IV of HEA and non-BIA student loans for graduate students, after deducting allowable student expenses

  • Picket duty pay

  • Public and private pensions

  • Railroad Retirement Board (RRB) benefits

  • Refugee Resettlement Program grants

  • Regular cash gift income or cash gift income that exceeds $30 per three months

  • Retirement, Survivor’s and Disability Insurance (RSDI), except for specific exclusions

  • Royalties

  • Senior Aids Program wages

  • Serve America wages

  • Severance pay

  • Sick pay based on accrued leave time

  • Spousal maintenance income

  • Tips

  • Tribal per capita payments from gaming revenue (casino profits)

  • Trust disbursements

  • Unemployment insurance

  • Vacation pay

  • Value of in-kind gifts from tax-exempt organizations for a child with a life-threatening condition when those gifts are converted to cash

  • Veteran’s Administration benefits

  • Vocational Rehabilitation current living expense payments

  • Voluntary Resettlement Agency Matching Grant Program grants

  • Wages

  • Workers’ Compensation

  • Workforce Investment Act (WIA) earned income of a child under age 18 or 18 years old and expected to graduate by age 19, who is not a student, beyond six months per year

Excluded Income

  • Agent Orange Settlement Fund payments

  • All income of refugee unaccompanied minors

  • American Indian tribal land settlements and judgment funds that are held in trust by the Secretary of the Interior or distributed per capita pursuant to a plan prepared by the Secretary of the Interior

  • AmeriCorps Vista payments

  • Assets converted to cash

  • Bills paid by a third party

  • Blood Product Settlement payments

  • Bureau of Indian Affairs (BIA) student financial aid for undergraduate and graduate students

  • Child Care and Development Block Grant Act payments

  • Class action settlement agreement in Jensen et al v. Minnesota Department of Human Services, et al.

  • Clinical trial participation payments

  • Cobell Settlement for American Indians

  • Community fundraiser income not under the control of the applicant, enrollee or a responsible relative

  • Consumer Support Grant (CSG) payments

  • Corporation for National and Community Service (CNCS) payments

  • Costs necessary to secure the payments of unearned income, such as attorney's fees and medical fees

  • Court-ordered medical support

  • Coverdell Education Savings Account (ESA) payments used for educational expenses

  • Crime victim payments

  • Disaster assistance

  • Family Support Grant (FSG) payments

  • Federal Relocation Assistance

  • Filipino Veterans Equity Compensation (FVEC) fund payments

  • First $2,000 interest income from Indian trust land or other restricted Indian lands

  • First $2,000 of cash payments from tax-exempt organizations for a child with a life-threatening condition

  • First $10,000 of court-ordered Workers Compensation settlements

  • Foster Care Assistance

  • Gifts of cash for tuition or education

  • Gifts of cash to purchase a prosthetic device not covered by health care or other insurance

  • Housing and Urban Development (HUD) subsidies

  • Inaccessible income such as unpaid court ordered child support

  • Income excluded by the Social Security Administration to determine Supplemental Security Income (SSI) eligibility

  • Income used by the Social Security Administration to determine SSI eligibility

  • Income withheld to repay a prior overpayment of benefits made by the same income source

  • Individual Development Accounts (IDA)

  • In-kind income if the person does not have the option to receive cash

  • Insurance payments not payable or available to the applicant

  • Interest and dividends accrued and combined with counted assets, within the asset limit

  • Irregular cash gift income of less than $30 per three months

  • IV-E and State-Subsidized Adoption Assistance

  • James Zadroga 9/11 Health and Compensation Act of 2010

  • Japanese and Aleutian Restitution payments

  • Loans – principal portion of loan payments

  • Low Income Home Energy Assistance Program (LIHEAP) payments

  • Military salary reductions

  • Mille Lacs Band of Ojibwa Elder Supplement Assistance Program

  • Money received and spend to cover someone else’s expenses

  • Nazi Persecution payments

  • Non-Title IV of HEA and non-BIA grants, scholarships, fellowships and other non-loan financial aid that requires teaching, research, or other work to receive the aid for undergraduate students

  • Non-Title IV of HEA and non-BIA grants, scholarships, fellowships and other non-loan financial aid that does not require work to receive the aid for undergraduate students

  • Non-Title IV of HEA and non-BIA student loans for undergraduate students

  • Payments used to reimburse a custodial parent for health insurance premiums

  • Per capita distributions of all funds held in trust by the Secretary of the Interior to members of an Indian tribe

  • Program participation incentive payments

  • Public Assistance Payments, such as general assistance (GA), Minnesota Supplemental Aid (MSA), Minnesota Family Investment Program (MFIP), Refugee Cash Assistance (RCA), Diversionary Work Program benefits (DWP), Work Benefit Program benefits (WB)

  • Radiation Exposure Compensation Act payments

  • Refunds of security and utility deposits

  • Reimbursements for employment and training, medical expenses and property

  • Relative Custody Assistance

  • Retirement, Survivor’s and Disability Insurance (RSDI) for children under age 18 under the TEFRA option or receiving home and community based waiver services

  • Ricky Ray Hemophilia Relief Act payments

  • Student financial aid expenses for tuition, mandatory fees, course and lab fees, books, supplies and equipment required for course work, child care costs incurred while at school or in transit, transportation to and from school

  • Student financial aid from a Title IV of the Higher Education Act of 1965 program for undergraduate and graduate students

  • SSI

  • Tax credits, rebates and refunds

  • Training expenses under the Trade Adjustment Reform Act of 2002

  • Veterans’ Children with Certain Birth Defects payments

  • Veterans’ Affairs (VA) education assistance

  • Vietnamese Commando Compensation Act payments

  • Vocational Rehabilitation payments, except current living expense payments

  • Wages and other earned income of a child under age 18 or 18 years old and expected to graduate by age 19, who is a full or part-time student and works less than 37.5 hours per week

  • Workforce Investment Act (WIA) earned income of a child under age 18 or 18 years old and expected to graduate by age 19, who is a full or part-time student and works at least 37.5 hours per week

  • WIA earned income of a child under age 18 or 18 years old and expected to graduate by age 19, who is not a student, six months per year

  • WUV payments from the Dutch government to victims of Nazi persecution

Whose Income and Assets Counts

When calculating income and assets for a person, it is often necessary to count another person’s income or assets in that determination. This is called deeming.

Income of the following people, living with the person, is deemed and counted:

  • Spouse

  • Parents, if the applicant is under age 21 and is not emancipated, including biological, natural and adoptive parents

The assets of the spouse, who is living with the person applying for MA, are deemed and counted.

Sponsor Deeming

Adult immigrant non-citizens who have a sponsor must have the income and assets of the sponsor deemed to them for MA with a spenddown. For MA with a spenddown, sponsor deeming only occurs for applicants using the parent or relative caretaker basis of eligibility.

The following income of the sponsor is deemed to the applicant and counted:

  • Gross income

  • Cash assistance received by the sponsor

  • Net self-employment income

The net assets of the sponsor are deemed to the applicant and counted.

Sponsor Deeming Exceptions

Sponsor deeming does not apply to:

  • Pregnant women

  • Children younger than 21 years old

  • People who need placement in a facility and their placement is jeopardized by the sponsor’s failure or inability to provide support

  • Sponsored non-citizens who have 40 qualifying work quarters

A person meeting both of the following can have a 12-month deferment of sponsor deeming, with a potential 12-month extension:

  1. a battered non-citizen immigration status who is subjected to extreme cruelty and is not living with the batterer; and

  2. there is a substantial connection between the need for health care coverage and the battery. There is substantial connection between the need resulting from the battery of the non-citizen or his or her children and the need for health care coverage if any of the following conditions are met:

    • To enable them to become self-sufficient following separation from the abuser

    • To enable escape from the abuser or the community where the abuser lives, or to ensure safety from the abuser

    • Due to a loss of financial support or loss of a job due to their separation from the abuser

      • Including job loss due to work absence or reduced job performance because of the abuse or cruelty or related legal proceedings, such as child support or custody disputes

    • Due to a need to obtain medical attention or mental health counseling or they are disabled because of the battery or cruelty

    • Because of lost housing or income, or the fear of separation from the abuser jeopardizes the ability to care for their children

    • To alleviate nutritional risks or need resulting from the abuse or following the separation from the abuser

    • To provide medical care during an unwanted pregnancy resulting from the abuser’s sexual assault, or the relationship with the abuser. Or to care for any resulting children

    • To replace medical coverage or health care services they had when living with the abuser

Income Methodology

Net income is used to determine initial and ongoing eligibility for MA for Families and Children with a Medical Spenddown. Net income is equal to gross counted income minus certain disregards and deductions including:

  • Court ordered child support and arrears payments made to another household

  • Work expense deductions for children age 2-20 including:

    • First $90 of earned income of a child

    • First $90 of earned income of each person whose income is deemed to the child

  • Work expense deductions for pregnant women and infants based on household size using the following chart:

    Household Size

    Work Expense Deduction

    1

    $136

    2

    $140

    3

    $145

    4

    $149

    5

    $156

    6

    $161

    7

    $165

    8

    $170

    9

    $177

    10

    $181

    each additional person

    $5

  • Earned income disregard of 17% of a person’s gross earned income for four consecutive months

  • Dependent care deduction of dependent care expenses of household members with earned income who need dependent care while at work, in transit to or from work, or not at work but in need of dependent care to maintain employment. Expenses of up to $200 per month for each dependent under age two and $175 each month for each dependent age two and older, are deducted. The dependent care deduction is not available when childcare is provided by a parent, stepparent, sibling under age 19, or when others pay for the cost of childcare.

Income Limit

People eligible for MA for Families and Children with a Medical Spenddown must spend down to the 133% federal poverty guidelines (FPG) standard.

Post Eligibility for MA for Families and Children with a Medical Spenddown

Enrollees in MA for Families and Children with a Medical Spenddown must meet the same responsibilities and post-eligibility requirements as enrollees in MA-FCA without a spenddown. See the following for more information:

  1. MHCP Client Rights and Responsibilities

  2. MA-FCA Post-Eligibility

Renewals

Enrollees in MA for Families and Children with a Medical Spenddown must complete an annual renewal and a six-month income renewal.

Legal Citations

Code of Federal Regulations, title 42, section 435.811

Code of Federal Regulations, title 42, section 435.831

Code of Federal Regulations, title 42, section 435.840

Minnesota Statutes, section 256B.056, subdivision 3c

Minnesota Statutes, section 256B.056, subdivision 5