A spend-down is the gap between your countable income and the Medicaid income level, expressed as a monthly amount of medical expense you have to incur before Medicaid pays for the rest of that month. It is not a bill you send anyone. It is a threshold you cross with medical costs.

It applies in the Medicaid categories that look at income and assets: people 65 and older, people applying on the basis of a disability, and people who need long-term care. Working-age adults under 65 whose eligibility runs on tax income alone do not have one.

In New York: the official name is the Excess Income program, and the state calls the same thing surplus income in some notices. It resets every month, so a surplus in one month does not reduce the next, and a month you fail to meet it is a month without coverage. Many districts offer a pay-in option as an alternative to submitting bills. Old unpaid medical bills can sometimes be applied, which is the most useful thing to ask about and the least often mentioned.

Two ways to meet it. Submit bills, or pay in. Submitting bills means handing the district proof of medical costs you incurred that month, which works when you have predictable expenses like prescriptions. Paying in means sending the district the surplus amount directly, which is simpler but costs cash you may not have. Districts differ in how they handle each, and how quickly a submitted bill is credited is worth asking about before you rely on it.

For anyone needing ongoing home care, the alternative is usually better: a pooled income trust redirects the excess to your rent and groceries while Medicaid disregards it. The two are mutually exclusive in any given month, so the choice is made month by month rather than once.

Also called: excess income, surplus income, spenddown, medically needy. Full guide: Medicaid spend-down in New York.

More in Glossary of health coverage and billing terms

  • Network (in-network and out-of-network) — The set of doctors and hospitals your plan has contracted with. Outside it, you pay much more.
  • Formulary — A formulary is a plan's list of covered drugs, sorted into tiers that set your cost. What on-formulary means, how exceptions work, and New York's NYRx list.
  • Prior authorization — Prior authorization is a plan's approval before it pays for care. Who asks for it, what a denial says, where the deadlines are, and New York's appeal route.

This page explains how the system works. It is not medical advice. More.