Medical Spenddowns

This chapter provides information for clients who live in the community and are eligible for MA with a medical spenddown.

Medical spenddowns, long-term care (LTC) spenddowns and waiver obligations are not the same types of cost sharing expense for clients. This chapter only provides information related to medical spenddowns. For information related to long-term care (LTC) spenddowns and waiver obligations for clients on Special Income Standard - Elderly Waiver (SIS-EW), see MA Payment of Long-Term Care (LTC) Services and LTC Spenddowns and Waiver Obligations.

MinnesotaCare does not allow spenddowns.

 

What is a Spenddown?

Spenddown Not Allowed.

Spenddown Criteria.

Spenddown Steps: Determining MA Eligibility with a Spenddown.

Notice Requirements.

Explanation of Medical Benefits (EOMB).

Worksheets.

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What is a Spenddown?

A spenddown is a cost-sharing An enrollee's financial responsibility for health care program coverage, such as a co-payment, premium or spenddown. approach which allows Medical Assistance (MA) eligibility for people whose net income is greater than the applicable federal poverty guideline (FPG) standard. Federal rules refer to this population as ”medically needy.”

Applicants and enrollees can become income eligible for MA by ”spending down” their excess income to the appropriate FPG standard. The excess income is reduced by deducting certain medical expenses.

l  The spenddown amount is the difference between the client’s net income and the appropriate FPG standard.

Client’s net income - FPG standard = spenddown amount.

Note:  Each member of the household may have a different spenddown amount depending on the net income and the FPG standard used to determine that member’s eligibility, although some of the same medical expenses may be used to meet each member’s spenddown.

l  On the date that the amount of incurred medical expenses equals or exceeds the enrollee's or applicant's excess net income, the individual has met the spenddown and is income eligible; this date is known as the Satisfaction Date The date on which the client has incurred medical costs that meet or exceed the medical spenddown amount. for six-month spenddowns.

l  The amount of incurred medical expenses that are the client's obligation to pay on the satisfaction date is known as the Recipient Amount The amount of medical costs an enrollee must incur and be responsible to pay on the satisfaction date before MA will begin payment of other medical expenses..

l  The incurred medical expenses used to show that a client has enough expenses to meet the spenddown are not necessarily the actual expenses that will be applied to the spenddown once eligibility has been approved and recorded in MMIS.  

n  The MMIS Claims subsystem applies medical expenses to the spenddown in the order in which they are received.

n  A provider might not request payment for a medical expense that the client submitted for the eligibility determination in time for that expense to be used toward the client’s spenddown in MMIS. Other providers could submit their expenses for payment first.  

n  Medical expenses that MMIS may reject are different for six-month and monthly spenddowns. Only medical expenses incurred prior to and on the Satisfaction Date may be rejected for six-month spenddowns, whereas, any medical expense within the eligibility month may be rejected for a monthly medical spenddown.  

Example (six-month spenddown):

Andrea applies for MA in November. Her income exceeds the six-month FPG spenddown standard for the certification period by $100. To become income eligible for MA, Andrea will need to have at least $100 in medical expenses to meet the spenddown.

Andrea submits the following medical expenses:

Date

Health Care Expense

Amount

07/12

Pharmacy

$10

11/02

Physical Therapy Visit

$40

11/03

Pharmacy

$45

11/05

Physical Therapy Visit

$50

11/06

Clinic Visit

$200

Action:

Andrea’s medical bills total $345. She has enough medical bills to become income eligible for MA by meeting the six-month spenddown of $100.

m The date that Andrea incurred enough medical bills to meet the spenddown is on the fifth of the first month of the certification period. This is her Satisfaction Date. Proof of these expenses is enough to approve eligibility using a six-month spenddown for the certification period.

m Andrea has a recipient amount of $5 on the satisfaction date. This is the amount of medical expenses she is responsible to pay. She is responsible for the following bills:

q The $40 therapy visit on the second of the month.

q The $45 pharmacy bill on the third of the month.

q $5 of the $50 physical therapy visit on the fifth of the month.

q $10 bill pharmacy bill from four months ago (M bill).

m MA will pay the following medical expenses when the medical provider submits them:

q $45 of the $50 physical therapy visit on the fifth of the month.

q The $200 clinic visit on the sixth of the month.

q Any other reimbursable medical expenses within the remainder of the certification period, unless a change is reported that changes the six-month spenddown.

Example (monthly spenddown):

Michael applies for MA in November. His income exceeds the FPG standard by $100 each month of the certification period. To become income eligible for MA, Michael will need to have at least $100 in medical expenses to meet the spenddown in at least one month of the processing period.

Michael submits the following medical expenses:

Date

Health Care Expense

Amount

07/12

Pharmacy

$10

11/02

Physical Therapy Visit

$40

11/03

Pharmacy

$45

11/05

Physical Therapy Visit

$50

11/06

Clinic Visit

$200

Action:

Michael’s medical bills total $345. He has enough medical bills to become income eligible for MA by meeting the spenddown of $100 in the first month of the certification period.

m The date that Michael incurred enough medical bills to meet the spenddown is on the fifth of the month. Proof of these expenses is enough to approve eligibility using a monthly medical spenddown for the certification period, even if no other expenses are submitted for the remaining months.

m Michael’s recipient amount for the initial month of the certification period is $90 ($100 spenddown amount minus $10 old medical expense). The $90 amount is the amount of medical expenses he is responsible to pay for that month. He may be responsible for all or parts of the following bills depending on when they are submitted for payment:

q $40 therapy visit on the second of the month.

q $45 pharmacy bill on the third of the month.

q $50 physical therapy visit on the fifth of the month.

q $90 of the $200 clinic visit on the sixth of the month.

m MA may pay the following medical expenses if the provider submits the bill to MMIS after any other provider submits bills for payment:

q $40 therapy visit on the second of the month.

q $45 pharmacy bill on the third of the month.

q $50 physical therapy visit on the fifth of the month.

q $110 of the $200 clinic visit on the sixth of the month.

After Michael’s eligibility is approved, the physical therapy bill from the fifth of the month is the first expense submitted for payment. DHS rejects this expense since it is less than $90 and no other expenses have been submitted. Then the clinic submits the $200 expense for payment. DHS rejects $40 of this expense and pays the remaining $160. DHS will now pay the other therapy and pharmacy expenses and any other MA covered expenses submitted for this month.

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Spenddown Not Allowed

The following programs or people cannot have a spenddown:

l  Medicare Savings Programs (QMB, SLMB, QWD, QI):

n  People with income in excess of the FPG standards for these programs are not eligible.

n  Income must be within the applicable standards for QMB, SLMB, QWD, or QI benefits.

Note:  People may be eligible for a Medicare Savings Program even if they are ineligible for MA due to excess income and the inability to meet a spenddown.

l  Transitional/Transition Year MA (TMA and TYMA).

n  There is no income limit for the four months of TMA eligibility, or for the first six months of TYMA eligibility.

n  The income limit for the second six months of TYMA is 185% FPG.

Note:  People whose income exceeds the limit for the second six months are no longer eligible for TYMA. Redetermine eligibility under another basis.

l  Medical Assistance (MA) for Adults without Children.

There is no spenddown provision for people enrolled in MA for adults without children with the exception of those people residing in a long-term care facility.

l  MA for Employed Persons with Disabilities (MA-EPD).

People eligible for MA-EPD pay premiums based on their income.

l  MA for Breast and Cervical Cancer (MA-BC).

There is no income limit for clients eligible for this program.

l  Minnesota Family Planning Program (MFPP).

There are no spenddown or premium provisions for the MFPP.

l  Pregnant Women with income less than 278% FPG.

If income exceeds 278% FPG pregnant women may be eligible by spending down to 133% FPG.

l  Auto Newborns.

There is no income limit for auto newborns.

l  Other enrollees who have automatic MA eligibility, such as MSA or GRH recipients.

l  MinnesotaCare.

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Spenddown Criteria

People may be eligible for MA with a spenddown if they meet all of the following criteria:

l  They have met all other MA eligibility criteria.

l  Their net income exceeds the applicable MA income standard.

l  Their incurred and ongoing medical expenses are equal to or greater than their spenddown. See Step 5 of the spenddown determination steps.

Spenddown Steps:  Determining MA Eligibility with a Spenddown

Follow these steps to determine if a client is eligible for MA with a medical spenddown.

1. When processing a certification period with spenddown eligibility, consider the factors that may change from month to month:

n  Client’s age.

n  Eligibility type.

n  Income.

n  Income standard.

n  Cost-of-living adjustment.

n  Household size.

2. Determine net income. See Income Calculation - Community.

3. Compare net income to applicable FPG standard. If the net income is:

n  Less than or equal to the applicable FPG, and the client meets all other eligibility criteria, the client is eligible for MA without a spenddown.

n  Greater than the applicable FPG, calculate the monthly or six-month spenddown amount using the applicable spenddown standard.

Example:

Beth applies for MA for her 16-year-old son Thomas. The net income used to determine Thomas' eligibility exceeds 275% FPG (the appropriate standard for a child under age 18 on MA Method A) for a household of two.

Action:

Because income exceeds the 275% FPG, Thomas is not eligible for MA without a spenddown. Determine the spenddown amount using the 133% FPG standard.

4. Evaluate health care expenses based on spenddown type.

a. Identify whose health care expenses can be used to meet the spenddown.

b. Verify health care expenses.

c. Determine the type of health care expense.

d. Determine the net health care expense.

e. Determine if health care expenses meet the spenddown amount.

m First, determine if health care expenses meet the six-month spenddown.

If net medical expenses are:

q Greater than or equal to the six-month spenddown amount, determine the satisfaction date, and the recipient amount.

q Less than the six-month spenddown amount, the client is unable to meet a six-month spenddown. Determine if the client can meet a monthly spenddown.

m If the client cannot meet the six-month spenddown, determine if health care expenses meet the monthly spenddown amount.

If net medical expenses are:

q Greater than or equal to the monthly spenddown amount in any month of the application or renewal processing period, the client is eligible for MA.

q Less than the monthly spenddown amount in all of the months of the application or renewal processing period the client is ineligible for MA.

See Spenddown Adjustments when a client reports health care expenses after the date of spenddown approval.

5. Determine the appropriate spenddown type using a certification period to the client’s benefit. Also discuss with the client other options, such as if the monthly spenddown is only met in one month and it does not appear the client will meet the spenddown again, MinnesotaCare may be a better option for the client. MA could be opened for the month the client met the spenddown, then determine eligibility for MinnesotaCare or do a referral to MinnesotaCare Operations if your county does not determine MinnesotaCare eligibility.   

6. Notify the client of the spenddown determination. See Notice Requirements.

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Notice Requirements

Spenddown cases have notice requirements in addition to those in Chapter 26 Notices.

These spenddown notice requirements are the same for applications and renewals.

l  MAXIS will send a completed income computation worksheet with the opening or denial notice. However, for monthly spenddowns the income computation will only be provided for the current month plus one.

Example:  

The notice for an approval completed in January for a certification period that includes December will display the income computation for December, January and February. The notice will not display the income computations for March through May.

l  Notify clients of their recipient amount.

l  For six-month spenddowns, add worker comments to the notice to inform the client that MA will not pay the medical expenses that were incurred before the satisfaction date and what the recipient amount is on the satisfaction date. MAXIS does not notify clients which bills were used to meet the spenddown.

l  For monthly spenddowns, add worker comments to the notice when there is a change in the spenddown amount for any of the months not shown on the approval notice.

Additional notice information can be found in:

l  Automated Monthly Spenddowns.

l  Six-Month Spenddowns.

l  Client Option Spenddowns.

l  Shortened Spenddowns.

l  Spenddown Adjustments.

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Explanation of Medical Benefits (EOMB)

An Explanation of Medical Benefits (EOMB) statement is sent to clients each month. The EOMB lists:

l  The name of the provider billing a service.

l  The date of the service.

l  How much of the cost of the service was paid by MA.

l  The amount of the service the client is responsible for because it was not paid by MA.

Clients who have a spenddown may use the EOMB to determine to whom they should pay their recipient amount.

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