This is an archived document and does not contain the most current information for this topic. Use this document for reference only.
Medical Assistance for Families with Children and Adults
2.2.3.6 Medical Spenddown (Archive)
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.
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:
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:
Legally unavailable assets
Non-homestead real property with a reasonable effort to sell
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:
a battered non-citizen immigration status who is subjected to extreme cruelty and is not living with the batterer; and
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:
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