What Is Medically Needy Share of Cost?

Medically Needy Share of Cost is a component of the Medicaid program that assists individuals with significant medical expenses whose income exceeds standard limits for traditional Medicaid. This mechanism functions similarly to a deductible in a private health insurance plan. It helps those who, despite having some income, face high healthcare costs that would otherwise prevent them from affording necessary medical care. This program ensures medical assistance remains accessible to those with high healthcare needs.

Understanding Medically Needy Medicaid Eligibility

The Medically Needy Medicaid program, also known as a “spend-down” or “excess income program,” allows individuals to qualify for Medicaid even if their income initially exceeds standard eligibility thresholds. This program is available to specific groups, including those aged 65 or older, blind, or disabled. Pregnant women and children are also eligible.

Eligibility begins when an individual’s countable income surpasses the standard Medicaid limit, but their high medical expenses show a need for assistance. States establish a financial benchmark called the Medically Needy Income Level (MNIL). This MNIL is often considerably lower than the federal poverty level.

Beyond income, states impose asset limits for Medically Needy eligibility, which dictate the maximum value of countable resources an applicant can possess. Some assets, such as a primary residence or one vehicle, are exempt, while others like bank accounts, stocks, and bonds are counted. These asset limits vary by state and impact an individual’s ability to qualify for the program. Both income and asset criteria determine if an individual must engage in the share of cost process.

How the Share of Cost is Calculated

The Medically Needy Share of Cost is calculated by comparing an individual’s income to their state’s Medically Needy Income Level (MNIL). This share of cost is the amount of medical expenses an individual must incur before Medicaid coverage begins. It is the difference between the applicant’s countable income and the MNIL for their household size.

For example, if an individual’s countable monthly income is $1,000 and the state’s MNIL for a single person is $300, their monthly share of cost would be $700. This $700 is not a direct payment to the state; instead, it is the threshold of medical expenses that must be met. Reducing one’s countable income to the MNIL by incurring medical expenses is known as “spend-down.”

Allowable deductions for living expenses and other factors may reduce an individual’s gross income to their countable income. Incurred medical expenses can be used to “spend down” this excess income. Once these expenses reach the calculated share of cost, the individual becomes eligible for Medicaid coverage for that period.

Fulfilling the Share of Cost Requirement

Meeting the Share of Cost requirement means incurring a specific amount of medical expenses, rather than making a direct payment to the state Medicaid agency. This functions like a deductible in a private insurance plan, where the individual is responsible for certain costs before coverage begins. Once the share of cost is met, Medicaid covers the remaining eligible medical expenses for that period.

Many medical expenses count towards this requirement, including:
Doctor visits
Prescription medications
Hospital stays
Nursing home care
Health insurance premiums
Co-payments and deductibles
Transportation costs to medical appointments
Necessary medical supplies or equipment

Both paid and unpaid medical bills can be used to meet the share of cost, including old medical bills.

The concept of “incurring” expenses means the individual must demonstrate that the medical service or item was received and billed, even if not yet paid. Individuals must keep detailed records, such as receipts and bills, to prove they have met their share of cost. Once the required amount of medical expenses is incurred, Medicaid coverage becomes active for the rest of the defined period, which typically ranges from one to six months depending on state rules. The process then resets for the next period.

State-Specific Implementation

While the general framework of Medically Needy Share of Cost is federal, its implementation varies significantly across states. Each state sets its own Medically Needy Income Levels (MNILs), leading to considerable differences in eligibility thresholds. MNILs may also vary based on household size and regional cost of living.

States also determine their own asset limits, influencing how much an individual can possess in countable resources and still qualify for the program. The types of medical expenses allowed to count towards the share of cost can differ, as can the designated “spend-down” period, which ranges from one to six months. Some states offer alternative methods for fulfilling the share of cost, such as a “pay-in spend-down” option, where individuals pay their share directly to the state instead of incurring medical bills.

Given these variations, individuals should consult their state’s Medicaid agency or local Department of Social Services for details on eligibility requirements, calculation methods, and accepted documentation. Understanding these state-specific nuances helps in navigating the Medically Needy Share of Cost program and accessing healthcare benefits.