What it is:

Spenddown is the amount of medical expense you must incur within a specified period of time to qualify for Medically Needy benefits. Spenddown is required only if your income exceeds program limits.

You must incur medical expenses equal to the excess amount (spenddown) before medical benefits may be authorized. Spenddown is like an insurance deductible.

The amount of your spenddown is computed using a base period, consisting of three or six consecutive calendar months. Once your spenddown is met, you may get benefits for all or part of the base period.

Spenddown example: (Effective January 1, 2013)

A single woman, age 67, receives $812 per month in Social Security benefits each month and has $1,000 in savings. Her resources are below the resource limit, but her income is above the Medically Needy (MN) income limits. She is eligible for MN when she meets the spenddown.

SSA benefits $812.00
General Disregard -20.00
Less MN income limit      -710.00
Excess income 82.00

This woman could choose between a three-month or six-month base period, based on her amount of spenddown and amount of medical bills she expects. She will have to incur either $246.00 ($82.00 x 3 months) or $492.00 ($82.00 x 6 months) in medical expenses before she is eligible for the Medically Needy Program.