Change of Circumstances
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Change of Circumstances

Revised March 25, 2011

A person who is eligible for Medically Needy (MN) coverage with a spenddown liability is required to report changes in their circumstances following rules in WAC 388-418-0005.  Whether the person has already met their spenddown liability or is still in pending status, we are required to consider the effect of the change on the client's eligibility.  The following are some common examples of changes in circumstance and some guidance on the action needed by the worker. 

The only eligible individual dies or becomes ineligible before the end of the base period.

In this situation you will need to shorten the base period and recalculate the spenddown amount, whether the spenddown has been met or not.


Dennis, an SSI-related client, elected a 6 month base period and had a total spenddown liability of $738 ($123 per month).  Sadly, Dennis passes away in month four of the base period.  Close the case.  If Dennis was still in pending status and had not met spenddown, recalculate the spenddown based on a four month base period and send an amended letter showing the new amount to be $492.  There may be outstanding medical bills that can be applied to the spenddown even after Dennis' death.

The household reports an increase in income

If the client reports an increase in income, we need to recalculate the spenddown amount for the remaining months in the base period.

If the client has not met spenddown and is still in pending status, send a new letter to the client indicating that their spenddown liability has increased. 

If the client has already met spenddown and the MN medical is active, terminate the MN coverage allowing advance and adequate notice, recalculate the new spenddown liability for the remaining months in the base period and send an amended spenddown letter, showing the additional amount of spenddown liability the household needs to incur. 

When calculating the additional spenddown liability amount, the client must be given a credit for the remaining months in the base period.  The example below shows how to calculate the amount of the credit.  Enter the credit amount as a paid expense type 'MU' in ACES and document that this is a workaround to give the client the benefit of the credit.


Norma receives social security disability of $720 per month.  Her spenddown liability is $156 ($26 per month) based on a six month base period from February through July. 

She met her spenddown on February 10th and is active on MN medical.  On April 5th, she reports that she started receiving a small pension in the amount of $115 per month.  Terminate medical coverage effective the end of April.

Recalculate the spenddown liability for the months of May, June and July.  Since Norma had already met her spenddown for a six month period, and she has only received coverage for a three month period, we need to allow her a credit towards the new increased liability based on the number of months left until the end of the original base period.  In this example, her spenddown amount was $26 per month so she receives a 'credit' of $78.  ($26 x 3 months).  Code the $78 as a paid expense type 'MU' in ACES online.

the household reports a decrease in income

If the client reports a decrease in income that brings their income below the CN income standard, close the medically needy assistance unit and screen in a categorically needy (CN) program.  Re-calculate the spenddown liability for the months prior to the approval for CN medical by shortening the base period.  Send an amended spenddown letter to reflect the new liability amount for this prior period.


Josie, a pregnant woman has income over 185% FPL at the time of her application for pregnancy medical.  Her baby is due in July.  In April, she reports and verifies she is no longer working and her income is now below the CN standard.  Approve Josie for CN medical effective April 1st (the first of the month in which she reported her change and she was found CN eligible).  She is now continuously eligible for CN coverage through the birth and the two months post partum period.  Recalculate the spenddown amount for the prior months and send an amended letter to advise her of the lower amount. 

the household reports a change in household composition

When the household reports a change in household composition (someone moves into or out of the home) that affects the amount of income that is deemed either to or from the individual, you must recalculate the spenddown for the balance of the base period, allowing for 10 days advance and adequate notice if this is an adverse action.


Someone moves out of the household

Katie, an SSI-related client, applies for medical coverage in December.  She is married and has a 17 year old daughter Lucy.  Her spenddown liability is $300 for a six month base period.

In February Lucy  moves out of the home.  With Lucy no longer living in the home, Katie's spenddown amount will increase as the child allowance stops.

If Katie has not yet met spenddown, recalculate the spenddown amount for March, April and May without the child allocation and send an amended spenddown letter for the new total liability amount.

If Katie has already met spenddown, terminate Medicaid coverage allowing for advance and adequate notice and generate a new letter showing the increase in additional spenddown liability.  


Someone moves into the household

Ken is 68 years old and lives alone.  He has monthly income of $857 Social Security disability and has a spenddown of $978 with a base period from June through November.  In July he reports his new wife Valerie moved into his home.  Valerie has no income and has a current disability determination.  She is applying for medical coverage for herself also. 

Recalculate medical eligibility for her and Ken.  Based upon their reported income, you determine this household is now CN eligible. 

If Ken has already met spenddown, close his MN coverage and screen in a CN medical program for both effective the first of the month in which he reported the change and in which Valerie applied for medical coverage for herself.

If Ken had not already met spenddown, authorize the CN coverage effective the first of the month in which he reported the change.  Recalculate the spenddown liability for the months prior to the CN approval and generate an amended MN spenddown letter showing the reduced liability amount.

Approve CN coverage through the end of the original MN certification period. 

In the example above, Valerie is relatable to a medical program because of her disability.  However, if Valerie is not applying for medical coverage for herself or is not SSI-related, we still need to redetermine the effect of the change on Ken's medical coverage.  Since Valerie is a non-applying spouse, we can reduce Ken's countable income by allocating income to her.  

Valerie moved into the home in July.  Recalculate eligibility for Ken effective the first of the month in which the change was reported to the department.  

If Ken has not already met spenddown, recalculate eligibility for the months of July through November.  With the spousal allocation, he would be eligible for MN with no spenddown. Certify S95 coverage through the balance of the original MN certification.  Recalculate the spenddown liability for June by shortening the base period to the month of June only.  Send an amended spenddown liability for this month.  He will need to meet the new spenddown amount before June coverage could be approved.

If spenddown has already been met and the change in circumstance does not result in CN coverage, make the change to the MN no spenddown (S95) program effective the first of the following month.  Again, certify the S95 only through the balance of the original MN certification.  

What happens if MN coverage has already been certified and the non-applying spouse now has a medical need and applies for coverage?

In many cases involving a married couple, individuals have to choose who will receive medical coverage because of the effects of income deeming.  Couples may choose the same person for each base period or may alternate who gets coverage.  However; there are some situations when MN coverage has already been certified for one spouse and the other spouse has a medical emergency where they also need coverage during the same base period.  The following example explains the steps and calculations needed to determine eligibility for the new applying spouse.  


Jim and Carla are a married SSI-related couple.  They have a 6 month base period from January through June.  They both have income and the spenddown liability when both of them apply is too high for them to meet.  However, when only one applies their spenddown liability is reduced to $100 per month ($600 for six months).  They opt to apply for MN coverage for Jim since he has a chronic ongoing health condition and he has no other coverage.  

They present medical expenses to the Department in January and they meet his spenddown liability of $600 on January 10th. 

On March 18th, Jim calls his case worker and tells them that Carla was admitted to the hospital on March 3rd and they need to apply for medical for her also.  She was in the hospital for four days and they now have a bill for $45,000 which they cannot pay. 

Terminate MN coverage for Jim effective March 31st.  Screen in a new S02 AU with both Jim and Carla as applicants with a request date of March 1st.  Shorten the base period to match the original S99 certification through the end of June. 

Recalculate the spenddown liability for the period March through June (4 months) and send them a new letter showing the increased spenddown amount which includes both Jim and Carla's income.

Since Jim has already paid for his share of the four full months remaining in his base period, credit them $400 towards the new higher spenddown liability.  (4 months x the original $100 per month liability). 

Code the $400 as a paid 'MU' expense in ACES so that it is credited towards the new spenddown amount.

Use the $45,000 hospital bill incurred on March 3rd to meet the spenddown for both.  They will be responsible for the spenddown amount but the department will be able to pay on the balance of the bill for them.

Modification Date: March 25, 2011