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:

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:

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:

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

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

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.

Categories of Assets

Assets fall into two categories, excluded and countable.

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:

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.

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:

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

Excluded Income

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:

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:

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

Sponsor Deeming Exceptions

Sponsor deeming does not apply to:

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:

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:

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