Medicaid Spend-Down: Which Bills to Send and When Coverage Starts

Send the medical bills you owe or have paid for yourself, your spouse and your children until they add up to the spend-down amount on your notice. Health insurance and Medicare premiums, copays and old unpaid bills count too. Coverage starts on the day your bills reach that amount (the first of that month in some states) and lasts to the end of your budget period, which your state sets at one to six months. Today, gather your bills and premium statements from the three months before you applied through now, and send copies to the office named on your notice. In California, show your Medi-Cal card at each visit instead, and the provider records your Share of Cost.

The bills you use to meet the spend-down stay yours to pay; Medicaid pays for covered care after that point. A spend-down works like a deductible that starts over each budget period.

How the spend-down amount is figured

Spend-down comes from Medicaid's medically needy option, which covers people who would qualify for Medicaid except that their income is over the limit. The agency subtracts your state's medically needy income level from your countable income, and the difference is your spend-down. With $600 of countable income and a $400 limit, a one-month period gives you $200 to meet each month; a six-month period gives you $1,200 to meet once for all six months.

States choose whether to offer the medically needy option. States with stricter rules for older and disabled people, called 209(b) states, must let anyone 65 or older, blind or disabled spend down even without it. Names vary: New York says excess income or surplus income, and California says Share of Cost. Your state sets the budget period anywhere from one to six months, and it can set different periods for different groups.

Which bills count

Medical care, paid or unpaid: doctor, hospital, clinic, dental, pharmacy, therapy, medical supplies and equipment, including necessary care your state's Medicaid plan leaves out.
Insurance costs: health insurance and Medicare premiums, deductibles, copays and coinsurance.
Your family's bills: bills for your spouse and the children you are financially responsible for count toward your amount.
Recent bills: everything from the three months before the month you applied counts, paid or unpaid.
Old bills: a payment you make during the current period on an old bill counts, however old the care. Old unpaid bills you still owe count up to your state's age limit, if it sets one.
Your share only: when Medicare or an insurer pays part, only the part you owe counts. Send the insurer's explanation of benefits with the bill.

Each bill counts once.

Send your bills today

Find four things on your notice: the spend-down amount, the budget period dates, your case number and the office or worker who takes bills.
Gather bills, pharmacy receipts, premium statements and insurance explanations of benefits. Each should show who got the care, who gave it, the date of service, the cost and the date of the bill. If a bill has not arrived, a visit summary can document the date of service, which is what counts.
Add them up and send them once they reach your amount. In states that start coverage on the exact day, such as New York and Illinois, book appointments and fill prescriptions early in the month.
Send copies. Use the address or fax number on your notice, write your name and case number on each page, and say which month or months you want covered.
Keep proof of what you sent: a fax confirmation, a certified mail receipt or a dated list from the worker.
If no notice comes within two weeks, call the worker and ask for your coverage dates.

Cover note to send with your bills

Case number: ____. My spend-down is $____ for ____ (month or months). Enclosed are ____ bills totaling $____ for ____ (names). Please apply them to ____ (month or months) and send me a notice with the date my spend-down was met and my coverage dates. If you leave out any bill, tell me in writing which one and why.

When coverage starts and ends

States that use partial-month coverage start Medicaid on the exact day your bills reach the spend-down amount; states that use full-month coverage start it on the first day of that month. From that date, use doctors and pharmacies that take Medicaid, so Medicaid pays the bills. When the period ends, you meet a new spend-down for the next one.

Paying the state instead (pay-in)

Some states let you pay your spend-down to the Medicaid agency, or pay the gap between your bills and the amount. Your bills count first. New York and Illinois both offer pay-in; pay only for a month you need care.

How it works in New York, Illinois, Virginia and California

New York calls it the Excess Income program. Bills equal to your monthly excess income open Medicaid for the rest of that month. Bills equal to six months of excess income get you six months of coverage, including hospital care. Unpaid bills count however old, as long as the provider can still take legal action to collect them, and bills for your spouse and children under 21 count. Bring or mail bills to your local department of social services, or use the Pay-In Program for a month you need care.

Illinois uses a monthly spenddown. Unpaid bills count no matter how long ago you got the care, as long as the bill is dated within the last six months, so ask the provider for a fresh statement. Your bills go to the earliest month unless you tell the caseworker to use them for a later, full month. People on spenddown who are aged, blind or disabled and live in the community can qualify for Pay-in Spenddown. HFS mails the enrollment form. Pay by money order, cashier's check, Visa or MasterCard; coverage starts on the first day of the month you paid for.

Virginia gives a six-month spenddown period to people not receiving long-term care, with coverage from the date the spenddown is met to the end of the period; then you submit a new application. If you also have limited Medicaid, such as a Medicare Savings Program, Virginia re-checks you at your annual renewal instead. People receiving long-term services and supports get one-month periods, with coverage from the first of the month.

California calls it Share of Cost and sets it one month at a time. Show your Medi-Cal card (BIC) at each visit: the provider records what you paid or promised to pay in the point-of-service system, and Medi-Cal pays once the month's amount is met. You owe it only in months you get care. Send your county Eligibility Worker proof of bills from providers who do not take Medi-Cal, services Medi-Cal does not cover if a licensed provider says you need them, and old unpaid bills up to four years old. Bills for family members in your Medi-Cal household, such as a spouse or minor child, count. Income limits are in Medi-Cal income limits for 2026.

Where it splits

If you have one large bill, it can meet several months or a whole period. Tell the worker which months to apply it to; an unpaid balance left over carries into later periods while you stay on spend-down. In California, give the county the unpaid bill as an old bill for this and later months while you still owe it, or set up a monthly payment plan with the provider so each payment meets one month.

If you need care now and have no bills, use pay-in where your state offers it, or book the visit: its bill counts toward your amount.

If you live in a nursing home or get Medicaid home care, coverage can start on the first day of the budget period, and the state can count your projected nursing home costs. See Medicaid home care and waiver programs.

If you have Medicare, your Part B premium counts toward the spend-down every month. Apply for a Medicare Savings Program too: your state pays your Part B premium if you qualify.

If the agency refuses a bill

You have the right to a fair hearing on how much you must spend down, which bills count and your coverage dates. Request it by the deadline on the notice. Federal rules let states set that deadline at up to 90 days from the date the notice is mailed; Illinois gives 60 days. If the notice ends or cuts your coverage, request the hearing before the date the change takes effect, and coverage stays on until the hearing decision. If you lose, the state can bill you for care it paid during the wait. Meanwhile, resend the bill with anything the notice says was missing.

Hearing request: "I request a fair hearing on the notice dated ____, case number ____. The agency refused my bill from ____ for $____, dated ____, which I owe. I ask that it count toward my spend-down for ____ (month)."

Call your local legal aid office if the refused bill is a hospital stay or the agency closes your case while you still hold unused bills.

Today, and what comes next

Today: gather your household's bills, receipts and premium statements, total them against your spend-down, and send copies with the cover note. Next comes a notice with the date you met your spend-down and your coverage dates. From that date, use providers that take Medicaid.