Medical Assistance

Revised October 28, 2007

Purpose: A person is not eligible for Categorically Needy (CN) medical coverage when they have income and or resources above the CN standards. They may become eligible for other coverage through a process called "Spenddown." This section explains spenddown for persons who are not in institutions or receiving waiver services (i.e., COPES). If a person resides in an institution at the time of application or is receiving waiver services, see WAC 388-513-1395.

WAC 388-519-0100	Eligibility for the medically needy program
WAC 388-519-0110	Spenddown of excess income for the medically needy program

Spenddown is made up of 3 elements which will be discussed in the following order:

Excess Income
Base Periods
Spenddown Expenses

WAC 388-519-0100

Effective September 1, 1998

WAC 388-519-0100 Eligibility for the medically needy program

A person who meets the following conditions is considered for medically needy (MN) coverage under the special rules in chapter 388-513 WAC.
1. A person who meets the institutional status requirements of WAC 388-513-1320; or
2. A person who receives waiver services under chapter 388-515 WAC.
MN coverage is considered under this chapter when a person:
1. Is not excluded under subsection (1) of this section; and
2. Is not eligible for categorically needy (CN) medical coverage because they have CN countable income which is above the CN income standard.
MN coverage is available for children, for persons who are pregnant or for persons who are SSI-related. MN coverage is available to an aged, blind, or disabled ineligible spouse of an SSI recipient even though that spouse's countable income is below the CN income standard. Adults with no children must be SSI related in order to be qualified for MN coverage.
A person not eligible for CN medical and who is applying for MN coverage has the right to income deductions in addition to those used to arrive at CN countable income. The following deductions are used to calculate their countable income for MN. Those deductions to income are applied to each month of the base period and determine MN countable income:
1. All health insurance premiums expected to be paid by the client during the base period are deducted from their income; and
2. For persons who are SSI-related and who are married, see the income provisions for the nonapplying spouse in WAC 388-450-0210; and
3. For persons who are not SSI-related and who are married, an income deduction is allowed for a nonapplying spouse:
  1. If the nonapplying spouse is living in the same home as the applying person; and
  2. The nonapplying spouse is receiving community and home based services under chapter 388-515 WAC; then
  3. The income deduction is equal to the one person MNIL less the nonapplying spouse's actual income.
A person who meets the above conditions is eligible for MN medical coverage if their MN countable income is at or below the medically needy income level (MNIL) in WAC 388-478-0070. They are certified as eligible for up to twelve months of MN medical coverage. Certain SSI or SSI-related clients have a special MNIL. That MNIL exception is described in WAC 388-513-1305.
A person whose MN countable income exceeds the MNIL may become eligible for MN medical coverage when they have or expect to have medical expenses. Those medical expenses or obligations may be used to offset any portion of their income which is over the MNIL.
That portion of a person's MN countable income which is over the department's MNIL standard is called "excess income."
When a person has or will have "excess income" they are not eligible for MN coverage until they have medical expenses which are equal in amount to that excess income. This is the process of meeting "spenddown."
A person who is considered for MN coverage under this chapter may not spenddown excess resources to become eligible for the MN program. Under this chapter a person is ineligible for MN coverage if their resources exceed the program standard in WAC 388-478-0070. A person who is considered for MN coverage under chapter 388-513 WAC is allowed to spenddown excess resources.
No extensions of coverage or automatic redetermination process applies to MN coverage. A client must submit an application for each eligibility period under the MN program.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

WAC 388-519-0110

Effective November 15, 2004

WAC 388-519-0110 Spenddown of excess income for the medically needy program

The person applying for MN medical coverage chooses a three month or a six month base period for spenddown calculation. The months must be consecutive calendar months unless one of the conditions in subsection (4) of this section apply.
A person's base period begins on the first day of the month of application, subject to the exceptions in subsection (4) of this section.
A separate base period may be made for a retroactive period. The retroactive base period is made up of the three calendar months immediately prior to the month of application.
A base period may vary from the terms in subsections (1), (2), or (3) of this section if:
1. A three month base period would overlap a previous eligibility period; or
2. A client is not or will not be resource eligible for the required base period; or
3. The client is not or will not be able to meet the TANF-related or SSI-related requirement for the required base period; or
4. The client is or will be eligible for categorically needy (CN) coverage for part of the required base period; or
5. The client was not otherwise eligible for MN coverage for each of the months of the retroactive base period.
The amount of a person's "spenddown" is calculated by the department. The MN countable income from each month of the base period is compared to the MNIL. The excess income from each of the months in the base period is added together to determine the "spenddown" for the base period.
If income varies and a person's MN countable income falls below the MNIL for one or more months, the difference is used to offset the excess income in other months of the base period. If this results in a spenddown amount of zero dollars and cents, see WAC 388-519-0100 (5).
Once a person's spenddown amount is known, their qualifying medical expenses are subtracted from that spenddown amount to determine the date of eligibility. The following medical expenses are used to meet spenddown:
1. First, Medicare and other health insurance deductibles, coinsurance charges, enrollment fees, or copayments;
2. Second, medical expenses which would not be covered by the MN program;
3. Third, hospital expenses paid by the person during the base period;
4. Fourth, hospital expenses, regardless of age, owed by the applying person;
5. Fifth, other medical expenses, potentially payable by the MN program, which have been paid by the applying person during the base period; and
6. Sixth, other medical expenses, potentially payable by the MN program which are owed by the applying person.
If a person meets the spenddown obligation at the time of application, they are eligible for MN medical coverage for the remainder of the base period. The beginning date of eligibility would be determined as described in WAC 388-416-0020.
If a person's spenddown amount is not met at the time of application, they are not eligible until they present evidence of additional expenses which meets the spenddown amount.
To be counted toward spenddown, medical expenses must:
1. Not have been used to meet a previous spenddown; and
2. Not be the confirmed responsibility of a third party. The entire expense will be counted unless the third party confirms its coverage within:
  1. Forty-five days of the date of the service; or
  2. Thirty days after the base period ends; and
3. Meet one of the following conditions:
  1. Be an unpaid liability at the beginning of the base period and be for services for:
    1. The applying person; or
    2. A family member legally or blood-related and living in the same household as the applying person.
  2. Be for medical services either paid or unpaid and incurred during the base period; or
  3. Be for medical services paid for or unpaid and incurred during a previous base period if that client payment was made necessary due to delays in the certification for that base period.
An exception to the provisions in subsection (10) of this section exists. Medical expenses the person owes are applied to spenddown even if they were paid by or are subject to payment by a publicly administered program during the base period. To qualify, the program cannot be federally funded or make the payments of a person's medical expenses from federally matched funds. The expenses do not qualify if they were paid by the program before the first day of the base period.
The following medical expenses which the person owes are applied to spenddown. Each dollar of an expense or obligation may count once against a spenddown cycle that leads to eligibility for MN coverage:
1. Charges for services which would have been covered by the department's medical programs as described in WAC 388-501-0060 and WAC 388-501-0065, less any confirmed third party payments which apply to the charges; and
2. Charges for some items or services not typically covered by the department's medical programs, less any third party payments which apply to the charges. The allowable items or services must have been provided or prescribed by a licensed health care provider; and
3. Medical insurance and Medicare copayments or coinsurance (premiums are income deductions under WAC 388-519-0100 (4); and
4. Medical insurance deductibles including those Medicare deductibles for a first hospitalization in sixty days.
Medical expenses may be used more than once if:
1. The person did not meet their total spenddown amount and did not become eligible in that previous base period; and
2. The medical expense was applied to that unsuccessful spenddown and remains an unpaid bill.
To be considered toward spenddown, written proof of medical expenses must be presented to the department. The deadline for presenting medical expense information is thirty days after the base period ends unless good cause for delay can be documented.
Once a person meets their spenddown and they are issued a medical identification card for MN coverage, newly identified expenses cannot be considered toward that spenddown. Once the application is approved and coverage begins the beginning date of the certification period cannot be changed due to a clients failure to identify or list medical expenses.

This is a reprint of the official rule as published by the Office of the Code Reviser. If there are previous versions of this rule, they can be found using the Legislative Search page.

CLARIFYING INFORMATION

Medically Needy Program

The Medically Needy (MN) program provides Medicaid benefits for aged, blind, or disabled persons, pregnant women, children, and certain refugees with income above Categorically Needy (CN) standards. Those standards are defined in the standards chapter of this manual. There is no TANF-related MN program for adults who have no children.
A person who is eligible for MN without spenddown (WAC 388-519-0100(5)) could be eligible for 3 months of retroactive coverage and 12 months of ongoing coverage.
There may be a difference between CN countable income and MN countable income. This results from the extra income deductions which apply to MN (WAC 388-519-0100(4)). Decisions regarding CN eligibility and MN eligibility should be based on the appropriate calculation of countable income.
When a client's income goes down, CN coverage is authorized for any month in the base period in which CN countable income and resources are equal to or less than the CN standards. This is necessary to provide the household with the broader scope of care available with the CN benefit.
The spenddown for persons in institutions or served by waiver programs (chapter 388-515 WAC) is determined according to WAC 388-513-1395. This is covered in Long Term Care and the Home and Community Services manual.

Medical Expenses and Spenddown

Incurred Medical Expenses

Before medical expenses can be used to reduce or meet spenddown, the client must have incurred the legal obligation. This means that the client must have received the medical service or product and have a legal obligation for the cost.

The medical expenses used to meet spenddown are the clients’ obligation and cannot be billed to Medicaid.
Medical expenses subject to payment by particular public program funds (other than Medicaid) may be used to reduce a person's spenddown. They can be verified and anticipated by the agency providing the services. The Medical Assistance Administration (MAA) has negotiated agreements with these agencies which allow both the use and the anticipation of expenses:
1. Lifelong AIDS Alliance;
2. Kidney Centers in various communities to administer the Kidney Disease Program;
3. The King County Mental Health Division to insure continuity of mental health services; and
4. The state Department of Health AIDS/HIV Early Intervention Program (360-236-3426).
Medical expenses paid by other state, county, and local public programs (using no federal funds) may be used to reduce a household's spenddown as the expenses occur and are individually verified. Examples of such programs include, but are not limited to:
1. Project Share,
2. ITA payments,
3. State and county sponsored health department services for pregnant women,
4. State and county sponsored services for persons living with AIDS,
5. State and local mental health providers.
Medical insurance premiums (including Medicare Part C premiums) are always treated as income deductions and are not applied to Spenddown with the exception of Medicare Part A & B premiums.

The Department allows insurance premiums as an income deduction. When the client meets spenddown, the department determines if it is cost effective to pay the premiums to ensure the coverage continues. If it is cost effective and the client meets spenddown, the Department pays the premium. If the client does not meet spenddown, the department does not pay the premiums.

EXAMPLE

The client’s spenddown is $600 and the insurance premium is $100 a month. Since the base period is 6-months, the client meets spenddown and becomes eligible for Medicaid. The department determines if it is cost effective to pay the insurance premium. If it is, then the department begins paying the insurance premiums.

NOTE:

In the above example, if the department didn’t use the insurance premium since the department had been paying it in the previous base period, then the client will not meet spenddown. If the client does not meet spenddown, the department does not pay the insurance premium. Then the worker allows the monthly premiums for the base period which makes the client eligible for benefits. Once eligible, the department begins paying the premiums.

Medicare premiums are paid by the department. It takes approximately two months before the department begins paying when there has been at least a 30 day break in the client's medical benefits. For questions related to insurance or Medicare premium payments, contact the MAA - Coordination of Benefits section at 1-(360) 725-1216 or e-mail at Medicareabcd@dshs.wa.gov.

Hospital or other medical-service-provider bills, which have been written-off for business purposes (i.e., a client cannot produce a current bill or a statement of non-payment from the medical service provider), payments on the interest owed on a medical bill, and Medicare expenses that will be paid by MAA are not used to reduce spenddown.
An application for MN should not be denied until 30 days after the base period has expired. It may take this long for the client to gather medical bills. In addition, if a client protests a denial of MN and can show good cause for a delay beyond 30 days, the CSO should resolve the matter, reopen the application and consider the information during the pre-hearing process.
It can take private health care plans six months or more to make determinations of coverage for a medical service. Consider third party coverage carefully, however, a client's eligibility should not be unduly delayed awaiting third party information. If a bill is recent, it is reasonable for the worker to assume that the payment information will not be timely - and to consider the entire amount toward spenddown.
Medical expenses transferred to a credit card may be counted toward spenddown since they remain medical obligations which are owed by the client. Unlike health insurance companies, credit card companies are not "responsible" third parties. Insurance companies are third parties with a distinct obligation to pay for medical services.

WORKER RESPONSIBILITIES

Base Periods

Determine spenddown amounts for optional base periods (3 months and 6 months and for the retroactive base period of 3 months) and explain the advantages and disadvantages of each to the client.
1. If possible, talk to the client to determine their circumstances. Upcoming hospitalizations or other major expenses may make a difference in selecting a base period.
2. A 3 month base period may be to the client's benefit if spenddown is high.
3. A 6 month base period may be to the client's advantage if spenddown is low or expenses are high. Once spenddown is met, certification could be longer.

EXAMPLE

A client has $30.00 per month in excess income.

Spenddown in this example would be $90 for a 3 month base period and $180 for a 6 month base period.

If the client has $250 in qualifying medical expenses, a 6 month base period would be beneficial to the client since they would have a longer period of eligibility.

If the same client has no qualifying medical expenses at the time of application and anticipates no large medical needs, a 3 month base period may be in the client's best interests. This would enhance the client's opportunity to meet spenddown and obtain coverage.

Advise the client that the months chosen for the base period and the length of the base period cannot be changed once spenddown has been met and MN benefits have been authorized (i.e., when a Medical ID card has been issued).

Department of Health AID/HIV Early Intervention Program

For clients enrolled in the state Department of Health AIDS/HIV Early Intervention Program, coordinate spenddown cases with the program to ensure that continuous and unbroken coverage occurs whenever possible (360-236-3426 voice and FAX 360-664-2216).

Medicare Premiums

Use Medicare premiums to reduce or meet spenddown for the first two months of the base period for:

New applications; or
Re-applications when there is a break of medical coverage for more than 30 days.

Transportation Costs

Allow the cost of transportation for medical services for the period the client does not have Medicaid coverage as follows:

For a personal vehicle, allow:
1. The current state reimbursement rate for the mileage used to obtain medical services; and
2. Parking fees.
Other transportation, the actual fare or fee.
Lodging costs for medical services cannot be used to reduce spenddown.

When Clients May be Billed for Medical Expenses

When spenddown is met and benefits authorized, notify the medical service providers affected by spenddown. Those whose bills remain the responsibility of the client may continue to pursue collection for those bills.
Those provider bills which will be covered by the Medical ID Card need to be billed to the Medicaid program and the provider must cease billing the client for those covered services.

How Spenddown is Determined for the Medicare Drug Discount Card

Low-income clients may be eligible for the Medicare Discount Drug Card in 2004 and 2005. They will get a credit of $600 each year. Treat any portion that is used to pay for prescription drugs as a medical expense incurred by the client.
1. The incurred medical expense is the amount the client would have had to pay if they did not have the Drug Discount Card. The full amount should be on the receipt for the prescription.
2. If the pre-discount price of a prescription drug is not available:
  1. Use receipts for prescriptions that the client purchased before enrolling for the Drug Discount Card; or
  2. If you cannot determine the actual pre-discount price, use $48.17 per prescription as a substitute for the actual pre-discount price. This amount represents the national average cost per prescription.
3. Treat an annual discount card enrollment fee paid by the client as an incurred medical expense and use the amount toward spenddown.

EXAMPLE

Client has the new Medicare $600 Drug Discount Card. Client applies for Medicaid and has a $700 spenddown. The client used the Discount Card and received a discount of $18.82 and used $106.68 of the $600 credit. Use the $106.68 paid by the Drug Card plus the $18.82 discount toward the $700 spenddown (a total of $125.50).

EXAMPLE

Client has the new Medicare $600 Drug Discount Card. The client has a $700 spenddown. The client purchases 4 prescriptions over a several day period. The client has receipts for three of the four prescriptions for a total of $255 and a $45 discount. For the three prescriptions $300 is used toward spenddown. The client has not been able to provide verification for the cost of the fourth prescription and the worker has not been able to get this information. Use $48.17 for this prescription. Use the total of $348.17 toward spenddown.

EXAMPLE

Client has a Drug Discount card and has a spenddown of $1428. The client received a 25 percent discount using the Drug Discount Card for five prescriptions. The client’s out-of-pocket expense was $1,072 and the discount was $357. Use a total of $1,429 towards spenddown. Since the client has met the spenddown amount, the client is eligible for Medically Needy benefits.

ACES PROCEDURES

See Medical - Spenddown Processing - Enter Spenddown Medical Expenses

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