Medical Assistance for People Who Are Age 65 or Older and People Who Are Blind or Have a Disability

2.3.3.4.1 Medical Spenddown Types

A medical spenddown is a cost-sharing approach that allows Medical Assistance (MA) eligibility for people whose income is greater than the applicable income 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 spenddown standard. The person’s excess income is reduced by the amount of certain incurred health care expenses.

There are two medical spenddown types: a six-month spenddown and a monthly spenddown.

Six-month spenddown:

A six-month spenddown is the difference between the person’s net income for a six-month period and the applicable Federal Poverty Guidelines (FPG) for a six-month period. Each household member may have a different spenddown amount depending on their net income and the FPG standard used to determine that member’s eligibility but all household members with a spenddown must use the same spenddown type.

Household members whose eligibility is determined using a family size of one are not required to use the same spenddown type as other household members.

Allowable health care expenses are applied to the six-month spenddown in a specific order by the date the expense was incurred. The six-month spenddown must be met by the end of the application month or the date the application is processed, whichever is later.

The date on which the person has incurred medical expenses that meet or exceed the six-month spenddown is called the satisfaction date. The amount of medical expenses the enrollee is responsible to pay on the satisfaction date is called the recipient amount. MA pays for covered services beginning with the first dollar incurred above the recipient amount and for the rest of the six-month period as long as the enrollee continues to meet all eligibility requirements.

Monthly spenddown:

A monthly spenddown is the difference between the person’s net income for a one-month period and the applicable FPG standard for that month. The spenddown is determined separately for each month of a six-month period. Each household member may have a different spenddown amount depending on their net income and the FPG standard used to determine that member’s eligibility but all household members with a spenddown must use the same spenddown type.

The monthly spenddown is used when a person cannot meet a six-month spenddown or chooses a monthly spenddown. To use a monthly spenddown the person only needs to meet the spenddown in any one month of the application processing period, or any one retroactive month. There is no satisfaction date for a monthly spenddown. MA pays for covered services beginning with the first dollar incurred above the monthly spenddown amount in each month.

Client Option Spenddown

People may choose to prepay their monthly medical spenddown to the Minnesota Department of Human Services (DHS). This is called the Client Option Spenddown.
Because a person with a monthly spenddown only receives Medical Assistance for those months in which the person has medical expenses that are more than the amount of their spenddown, DHS conducts an 18-Month Reconciliation process to compare the Client Option Spenddown payments to the amount of the claims paid by MA.
DHS issues a refund for months in which the spenddown payment was more than the cost of healthcare services received in the same month. The refund is the difference between the spenddown amount and the amount of the claims paid.
The 18-Month Reconciliation process begins with the 19th month after the month the Client Option Spenddown begins and will continue for each subsequent month.
DHS will notify the enrollee of the refund. No action is required by the enrollee or the servicing agency.

Designated Provider Option

People, who do not meet their spenddown with incurred health care insurance premiums or the remedial care expense deduction, can choose to pay the balance of their monthly spenddown amount to the same provider each month. This is called the Designated Provider Option. People may choose the Designated Provider Option if they meet all of the following conditions:
- They receive one of the following types of services:
  - Personal Care Attendant (PCA) services
  - Child-welfare targeted case management services
  - One of the following home and community-based waivers:
    - Brain Injury (BI)
    - Community Alternatives for Disabled Individuals (CADI)
    - Community Alternative Care (CAC)
    - Developmental Disabilities (DD)
    - Elderly Waiver (EW)
      - Exception: EW enrollees cannot choose the designated provider option if they are enrolled in MSHO or MSC+
- They are the only members of the MA household with a spenddown.
- Their spenddown can be met with incurred health care expenses from one provider.

Enrollees can meet their spenddown using a provider other than the designated provider only in emergencies. Enrollees must report the emergency use within five days of incurring the expense to the county or tribal agency.

Spenddown Adjustments

Medical spenddowns may be adjusted when the person reports a change in income or medical expenses.

Medical Spenddowns for Minnesota Senior Health Options (MSHO) and Special Needs BasicCare (SNBC) Enrollees

People with a medical spenddown are excluded from initial enrollment in managed care, including MSHO and SNBC. However, if a person is already enrolled in MSHO or SNBC and is determined to have a medical spenddown, that person is allowed to remain enrolled in MSHO or SNBC as long as they pay their entire medical spenddown to DHS the month prior to the health care coverage month.

Exception: Enrollees who are residing in a nursing facility with a medical spenddown and have elected hospice may newly enroll in MSHO.

Disenrollment for Unpaid Spenddowns

A person enrolled in MSHO or SNBC who has not paid their monthly spenddown for 3 months or longer must be disenrolled from their MSHO or SNBC plan. This does not affect their Medical Assistance eligibility. In order to reenroll after being disenrolled for not paying a medical spenddown, the person must pay the entire amount of the past due medical spenddown(s) within 90 days to be reenrolled.

A person is not eligible to reenroll in MSHO or SNBC after being disenrolled for unpaid medical spenddowns unless all past due medical spenddowns are paid in full to DHS and the person no longer has a medical spenddown.

Legal Citations

Code of Federal Regulations, title 42, section 435.831

Minnesota Statutes, section 256B.056, subdivision 5