What Is Share of Cost and How Does It Actually Work?

“Share of Cost” (SOC) is a term used within state Medicaid programs to help individuals with significant medical needs access healthcare coverage. It applies to those considered “medically needy,” meaning their income or assets exceed standard limits for full Medicaid eligibility, but they cannot afford their medical expenses. The program allows these individuals to contribute a portion of their income towards healthcare before Medicaid benefits begin, ensuring access to care despite higher financial resources.

Understanding Share of Cost

Share of Cost functions much like a deductible in private health insurance plans, but is tailored to an individual’s financial situation within state Medicaid programs. It is sometimes called a “spend-down,” “patient pay,” or “excess income” program. Individuals whose income exceeds a certain threshold must “spend down” this excess on medical expenses before becoming eligible for full Medicaid benefits. This personalized amount differs from a uniform deductible.

For “medically needy” individuals, once medical expenses reach their Share of Cost, Medicaid coverage for covered services activates for a specific period. This helps those with high medical bills who do not meet standard Medicaid income limits access essential healthcare. The “medically needy period” can vary by state, often from one to six months. Each new period requires meeting the Share of Cost again.

How Share of Cost is Calculated

The calculation of an individual’s Share of Cost involves comparing their countable monthly income to the state’s medically needy income limit (MNIL). The MNIL is an income standard set by each state, varying by household size. The difference between countable income and the MNIL, after allowed deductions, becomes the monthly Share of Cost. For example, if countable income is $1,900 and the state’s maintenance need is $600, the Share of Cost would be $1,300.

Countable income for Medicaid eligibility includes most income sources, such as wages, Social Security, pensions, and investments. Some sources, like certain public assistance, may be excluded. States also allow deductions from gross income, such as health insurance premiums. Calculation methods, income limits, and deductions vary by state, meaning a person’s Share of Cost can change with household income or size.

What Counts Towards Share of Cost

To meet the Share of Cost, individuals can use a range of eligible medical expenses, including:

Out-of-pocket medical bills from doctor visits, prescription costs, hospital stays, and other healthcare services not covered by other insurance.
Expenses for medical supplies, such as needles or over-the-counter prescriptions.
Transportation costs to and from medical facilities, such as ambulance, bus, or taxi fares.
Health insurance premiums, including Medicare premiums.

Medical expenses do not have to be paid; unpaid bills can count towards the Share of Cost. Each bill can only be counted once, and expenses paid by Medicare or private insurance do not count. Medical expenses for other household members included in the Medicaid eligibility may also be used. Accurate records and receipts for all eligible medical expenses must be submitted to the state Medicaid agency to show the Share of Cost has been met.

After Meeting Share of Cost

Once an individual has accumulated enough eligible medical expenses to meet their Share of Cost for a given period, Medicaid benefits for covered services will activate. This means that for the remainder of that eligibility period, which is typically the rest of the month, Medicaid will cover the cost of services. The coverage often begins retroactively to the date the Share of Cost was met. For example, if the Share of Cost is met on May 10th, Medicaid coverage starts on May 10th and continues through the end of May.

Individuals notify their state Medicaid agency that their Share of Cost has been met by submitting proof of medical expenses, such as bills or receipts. This documentation can be submitted through online portals, fax, mail, or in person. After the agency processes submissions and confirms the Share of Cost is satisfied, the individual receives confirmation of coverage. Ensure medical providers accept Medicaid for services received on or after the Share of Cost is met, as Medicaid will then pay for these remaining covered expenses. On the first day of the next month, the Share of Cost process resets, requiring individuals to incur expenses again to activate coverage for the new period.