Special Medicaid Income Rules That May Eliminate Your "Spend-down" or "Surplus Income"

1.  Is the Medicaid applicant/recipient MARRIED?  If NO skip to #2.   

Spousal Impoverishment or Spousal Refusal – HRA Chart Box 3

If YES: Does Spouse also need or receive Medicaid?  If yes, Skip to #2.  (Cannot use Spousal Impoverishment budgeting or Spousal refusal)

IF NO:

•  Does the Spouse applying for or receiving Medicaid need or receive Medicaid home care – whether  in a Managed Long Term Care  plan, a waiver program such as the TBI or NHTDW waiver, or  Immediate Need personal care/CDPAP? 
• If NO, may not use Spousal Impoverishment budgeting. Consider using SPOUSAL REFUSAL [download NYC form here], and skip to STEP 3.  With Spousal Refusal, the Medicaid applicant/recipient eligibility will be based on only her own income and resources, as a SINGLE person.  The Spouse risks being sued for support by the local DSS.   The risk varies by which county the recipient lives in and based on the couple's finances and circumstances. The resources in the applying spouse's name (whether sole or joint) must be under $31,175 (2024) aside from exempt resources. 
• IF YES, Spousal Impoverishment may be beneficial.  The Spousal impoverishment resource and income allowances are in HRA Chart Box 3.  Generally,  if both spouses’ combined income, minus cost of health insurance premiums, is under $3,625, then  “Spousal Impoverishment” budgeting is favorable.   Client will have no spend-down. Even if combined income exceeds that amount, client may be able to use this budgeting and/or spousal refusal.  See this article for more info. 
• In some cases, such as where the "community spouse" has a high income above the spousal allowance, ($3,853.50 -2024) it may be better for the applicant to request budgeting as a "single person," counting only her own income and resources.  This is allowed even without  doing a spousal refusal, under GIS 12 MA/013.  See more here. (Scroll down to Section F).  This budgeting is complicated. Consult an attorney who specializes in Medicaid and Elder Law.   

Go to NEXT ROW for WHEN  and HOW to request spousal impoverishment budgeting:

• If Medicaid applicant/ recipient is already enrolled in a Managed Long Term Care plan or is in a TBI or NHTDW waiver, or receiving personal care or CDPAP through Immediate Need procedures, review this article to decide whether to request Spousal Impoverishment budgeting.  Submit the DOH  "Request for Assessment - Spousal Impoverishment" (DOH-5298 01/2023) form to your local DSS/ HRA to request spousal budgeting. 

• If individual who needs Medicaid is first APPLYING for Medicaid -

  •  if she is applying for Immediate Need Medicaid she may request Spousal Impoverishment budgeting with the application. 

  • If she is applying for Medicaid in order to enroll in an MLTC plan, she may NOT request Spousal Impoverishment budgeting initially.  She may use a "Spousal Refusal" initially, and then once enrolled in an MLTC plan, submit the DOH  "Request for Assessment - Spousal Impoverishment" (DOH-5298 01/2023) form to your local DSS/ HRA to request spousal budgeting. 

2.  Was or is the individual in a Nursing Home or Adult Home, seeking to return to the community or recently discharged to the community?     

• If YES may qualify for the Special Income Standard for People Discharged from Nursing Home or Adult Home and Enrolling in MLTC  -- HRA ChartBox  9

If NO, skip to #3.  

 Was client recently discharged from a nursing home or adult home, or is planning for discharge home, and  was enrolled in or will enroll in MLTC? If NO, Skip to #3.

1. If YES, does or will client have a housing expense (rent or mortgage)?  

2. If YES, was client in or will client have been in nursing home or adult home for 30 days+?

3. If YES, did Medicaid pay for any part of stay in nursing home or adult home?  This includes payment by an MLTC plan or by Medicaid of the Medicare coinsurance for skilled nursing facility care.    

IF answers to 2 a, b, and c are YES, then Request Special Income Standard.   See more  here.   Amounts vary by region - See HRA Chart Box 10.  

3.   Does Medicaid Applicant/Recipient or their Spouse have EARNED INCOME?  If not ⇒ go to Box 4.  IF YES, eligible for Earned Income Disregards and --

*  if under age 65 ⇒ higher income limits with MBI-WPD,

*  if received SSI in the past ⇒ 1619(b) Medicaid.  

A.   Standard Earned Income Disregard

 If Medicaid applicant/recipient or their spouse is working, and applicant is either (a) DISABLED under age 65 or (b)  age 65+, worker or spouse may use  the Earned Income Disregard:

• Deduct 1^st $65 from monthly gross earned income, then disregard half of the remainder.   
• EXAMPLE:  Darcy is single  age 67 and receives Social Security of $712/month and earns gross $2035/month.   Because over half of the earned income is disregarded, Darcy is eligible for Medicaid with no spend-down.  
  • $2,035 - $65 = $1,970 divided by 2 = $985 countable earned  income
  • $712 of unearned income
  • -   $20 unearned income disregard
  •  = $1,677 = TOTAL COUNTABLE INCOME - Eligible with no spend-down-- below 2024 Medicaid income limit of $1,732

B.   Is Medicaid applicant/recipient working and has expenses related to working because of their impairment?  If YES,  eligible for additional  Impairment Related Work Expenses, and if BLIND, for BLIND WORK EXPENSES.  SEE NLS Fact Sheet on Blind Work Expenses. 

C.  Is  individual UNDER AGE 65, disabled, and working or able to work, even a minimal amount per month? ⇒  Medicaid Buy-in for Working People With Disabilities. 

If client has earned income, or could perform even limited work activity like babysitting, dog walking, watering plants, filing, baking once a month for a friend/neighbor, and get paid for it ? 

• If YES, eligible for HIGHER INCOME and ASSET limits in Medicaid Buy-in for Working People With Disabilities.  Box 5 HRA CHART.   Income limit is 250% Federal Poverty Line.   In this program, do not have to take distributions from IRA .
• IF NO - IF AGE 65+, still can use the Earned Income Disregard above, but must use regular Medicaid limits  (HRA Chart Box 1). 

D.   1619(b) - Lost SSI due to new or increased earned income or a combination of earned and unearned income, and is still disabled?  If Yes,

1. Did client receive  an SSI check or was she  eligible for 1619(b) in at least one month of prior 12 months?
2. Medicaid use test – Did Client use Medicaid in last 12 months, or expect to use it in next 12, or would be unable to pay unexpected medical bill in next 12 months without Medicaid?
3. Are client’s unearned income & Assets under < SSI limits?  (assets $2000 for single/ $3000 couple)
4. Is earned income  under $65,436 per year (2021) or, if higher, under individualized threshold?

See Fact Sheet on 1619(b) from Neighborhood Legal Services (2021)(check here for updates and other fact sheets in their At a A Glance series).  

Also see this chart comparing 1619(b), DAC and Pickle and the SSA POMS on Special Groups of Former SSI Recipients.

4.   "Disabled Adult Child"  or DAC Medicaid

 Receiving Social Security Disability under their retired or deceased parent’s earning record, because they became disabled before age 22? 

If No, skip to #5.   

If YES:

1. 1. Is client at least 18 years old?

1. 2. Was client receiving SSI on the basis of blindness or disability?

1. 3. Lost SSI because they started receiving or had an increase in Social Security DAC benefits – after July 1987?

1. 4. Are Resources below $2,000 (the SSI limit)?

If  a – d are all YES, may be eligible for DAC Medicaid – no spend-down.  Income Limits at HRA INCOME and RESOURCE  CHART Box 14.   The numerical  codes in Box 14 are WMS ABEL codes - Living arrangement codes on Page D (1= single living alone/with others; 2 = couple living alone/with others)(income levels are only higher in congregate settings, not for those living on their own). DAC is not a higher income level; rather it's a disregard of the SS DAC income. 

See  DOH  MRG p 95. and this chart comparing 1619(b), DAC and Pickle.  See also  95 ADM-11 - Medical Assistance Eligibility for Disabled Adult Children  and 
SSA POMS on Special Groups of Former SSI Recipients.

5.  Has and lives with a dependent minor child or other relative? (<18 or <19 in school)?  If YES,  may use MAGI Medicaid. 

If client has and lives with a dependent minor child or grandchild or other relative < age 18 or < 19 if in school, even if client is age 65+ and/or < 65 and on Medicare, the client has the option to use Affordable Care Act MAGI rules, which means there is NO resource test and HIGHER income limits.  Since MAGI does not allow spend-down,  income must fall under the limit of 138% FPL, using the MAGI rules.

MAGI income limits are HRA CHART BOX 11 and  GIS 21 MA/25  Attachment III  and Attachment IV (2021) (2022 to be issued) The household sizes are tricky and are MAGI and non-MAGI have different rules explained here.

6.  Does client have breast or cervical cancer or a precancerous breast or cervical condition?

Client may be eligible for Medicaid Cancer Treatment Program (no age limit).  Client must require active treatment, not be in remission.  If client is otherwise eligible for any of the other forms of Medicaid coverage, MCTP coverage will be temporary pending screening for other coverage.

7.  Is the applicant a survivor of Nazi persecution?  Or does she receive other persecution payments?

8.   FORMER SSI RECIPIENTS - those who lose SSI they may qualify for special budgeting rules with no spend-down:

1.  1619(b)  - Lost SSI because of  new or increased earned income or a combination of earned and unearned income.   Click here for info.  

2. Disabled Adult Child -- (DAC) individuals age 18+ who lose SSI eligibility because of the receipt of Social Security Disabled Adult Child (DAC) benefits.  See more here.    

3. Disabled Widows/Widowers - Surviving Spouse benefits - Certain surviving spouses who are disabled, and who lost SSI because they became entitled to Social Security surviving spouse benefits at age 50+, are eligible for Medicaid if they would be eligible for SSI payments if they were not receiving such benefits; and if they are not entitled to Medicare Part A benefits. See DOH Medicaid Reference Guide at pp 93-94  

4. Pickle people - The Pickle Amendment protects Medicaid eligibility for all recipients of Social Security Retirement Survivors and Disability Insurance (RSDI) who were previously eligible for RSDI and SSI benefits concurrently. These recipients are individuals who would be eligible for SSI, if all RSDI Cost of Living Adjustments (COLAs) received since they were last eligible for and receiving RSDI and SSI benefits concurrently, were deducted from their countable income. The RSDI beneficiary may have lost his/her SSI benefit for reasons other than COLAs and still be considered a Pickle eligible. See DOH Medicaid Reference Guide at p. 91.

NHELP  2024 update  Screening for Medicaid Eligibility under the Pickle Amendment   - webpage also has link to 2023 update (If link not updated, go to NHELP Resource Library and search for "Pickle")

See Medicaid Extension/Continuation Chart for Comparative Information on 1619(b), Pickle and DAC   and POMS SI 01715.015 Special Groups of Former SSI Recipients:

A.    Is the person NEWLY applying for Medicaid?  If NO, skip to  (9)(B). 

If YES, NEW MEDICAID applicants may use certain PAST paid or unpaid bills to meet the spend-down, not only for the month of application  but future months, and if retroactive coverage is sought to pay recent medical bills, back to the 3rd month before the month of application.   

1.   Does  Medicaid applicant  or spouse have recent past PAID medical bills, incurred and paid within 3 calendar months before month in which Medicaid application filed?  If YES, does the total meet the spend-down? If past paid bills meet the spend-down for more than 6 months, they may only be used for eligibility for up to 6 months beginning month of application, or if retroactive eligibility sought, up to 3 months prior to the month of application.   

EXAMPLE:  Sam paid a $2000 dental bill in March and applies for Medicaid in April.  The dentist does not accept Medicaid.  Sam has a spend-down of $300/month.  Sam can use $1800 of the past bill to meet the spend-down for 6 months beginning in April ending in Sept. 30, 2019.  The remaining $200 of the past paid bill may not be carried forward. 

If the dentist accepted Medicaid, Sam could opt for retroactive coverage beginning in March.  In that case, $600 of the bill would be used to meet the spenddown for March and April.  The dentist could then bill Medicaid, and return the amount exceeding $600 to Sam.  WARNING that Medicaid coverage for dental care is limited, and Medicaid may deny payment.  See this article. May be better to use the bill to meet the spend-down for six months! 

2.   Does Medicaid applicant receive ADAP or EPIC?  ADAP is the AIDS Drug Assistance Program.  EPIC is the NYS subsidy for prescription drugs for people age 65+.   If so, bills paid by ADAP or EPIC (not just the copays paid by the client) during the 3 months before the month of filing the Medicaid application, and in the month of application,  may be used to meet the spend-down beginning in the month of application and going forward for a total of 6 months. 

See  NYS DOH ADAP Pharmacy Manual (see pp. 1-4 about Medicaid spenddown and ADAP) and

NYS 91 ADM-11: Medical Expenses Paid/Incurred by a Public Program of the State or Its Political Subdivisions

3.   Does client or spouse have past UNPAID medical bills, incurred any time in the past, that are still VIABLE (collection still being sought?)  If so, these past UNPAID bills may be used to meet the spend-down, retroactive beginning up to 3 months before month of application. Unlike PAID medical bills, UNPAID bills may be carried forward indefinitely until they are “used up.”  See an example and more here. 

See more about Spend-down rules here and  State website on spend-down or excess income program. 

B.  If person  was already accepted for Medicaid, so is now a recipient, only current medical bills may be used to meet the spend-down.  They must be incurred in the same month for which coverage is sought. They may be incurred by the applicant, spouse or dependent child.  

Does Medicaid applicant receive ADAP or EPIC?   If so, bills paid by ADAP or EPIC (not just the copays paid by the client) each month  may be used to meet the spend-down each month.  See NYS DOH ADAP Pharmacy Manual (see pp. 1-4 about Medicaid spenddown and ADAP) and 91 ADM-11: Medical Expenses Paid/Incurred by a Public Program of the State or Its Political Subdivisions  this link. 

See more about Spend-down rules here and State website on spend-down or excess income program.

Is individual age 65+?  If YES, must use a pooled income trust.

For information about pooled or individual supplemental needs trusts see: 

• How to use a pooled SNT to eliminate the Medicaid spend-down.

• Step-by-step guide to enrolling in the NYSARC Pooled SNT for Medicaid spend-down

• List of Pooled SNTs in New York State  (people age 65+ may only use a pooled trust, not a individual SNT, to deposit their excess income or spend-down

• Advocate's Outline on Supplemental Needs Trusts

• Legal Authorities Relating to Supplemental Needs Trusts