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Medicaid’s Medically Needy Program Explained

Medicaid is a federally mandated program run by individual states to provide health care assistance to low-income families, children, pregnant women, seniors and individuals with disabilities. Medicaid now covers over 70 million Americans, having been expanded in many states to include coverage for certain eligibility groups that were previously ineligible for coverage.

The federal government provides additional coverage options states may provide to certain residents. One of those options is Medicaid’s medically needy program, which provides certain amounts of coverage for some groups that do not qualify for regular Medicaid coverage. The medically needy program provides Medicaid coverage for those with significant health needs who cannot normally qualify for Medicaid based on income. An individual is offered coverage once he or she exceeds the “spenddown amount”, which is dependent on that individual’s income and the state’s medically needy income standard.

Since the medically needy program is optional for states to participate in, not all states offer it. However, some states offer different spenddown programs like the medically needy program. Spenddown programs, including the medically needy program, are available in many states.

How does the program work?

The medically needy program helps individuals who qualify cover medical expenses for Medicaid-covered services. Before the program begins to cover those who are enrolled, the share of cost must be met. The share of cost, also known as the spenddown amount, is the amount of medical bills an individual must incur and pay before Medicaid begins to cover that individual’s medical expenses. It functions just like a deductible on a health insurance policy, which must be payed out-of-pocket before insurance coverage starts.

An individual’s calculated share of cost is the difference between that individual’s total family income and the medically needy income level standard for his or her state of residence. When the share of cost is determined, the individual can begin the spenddown process, which is the process of lowering an eligible party’s net income level through the payment of medical expenses. This process is complete when an individual’s income is less than or equal to the medically needy income level after allowable medical expenses have been deducted.

The definition of an allowable medical expense is different in every state, but most cover health insurance costs, as well as medical service costs. Health insurance costs typically include Medicare and health insurance premiums and co-insurance payments. Medical service costs that are usually covered are any medical transportation service, such as ambulances or taxis, and any goods and services prescribed by a doctor. Proof of medical expenses are required, and must be sent to the proper state Medicaid office.

Whom does the program cover?

Medicaid’s medically needy program covers those with significant health care needs who meet eligibility requirements. Eligibility for the program varies by state, but most states cover similar Medicaid eligibility groups. Basic Medicaid eligibility requirements and services are determined at a federal level, although states can provide additional requirements or add additional services for basic enrollment. The medically needy program covers children and pregnant women, as well as blind, disabled and elderly individuals that are not eligible for regular Medicaid coverage. Financial eligibility for the program depends on an applicant and his or her family’s financial assets. Coverage is contingent upon the individual’s share of cost being spent on qualifying medical expenses.

Under the Affordable Care Act, states were given the option to expand their Medicaid programs. Many states have chosen to expand Medicaid to include groups that were not previously eligible for coverage. While Medicaid expansion does not affect those who are 65 years or older, it lowers financial eligibility requirements for other groups. Low-income adults that were previously ineligible for Medicaid coverage or were eligible only for the medically needy program might now be eligible for fill Medicaid coverage.

What services are covered?

The services that are covered by the medically needy program depend on what coverage is offered by the state’s Medicaid program. The medically needy program is part of Medicaid, as it offers Medicaid coverage to those who are enrolled and meet their state’s medically needy income level standard through the spenddown process.

It is important to note that since the program is part of Medicaid, health care providers that do not accept Medicaid will not be able to accept payment from the medically needy program. Before making an appointment, let your provider know that you are enrolled in the medically needy program. This assures that Medicaid will cover medical expenses. Some state Medicare programs offer a retroactive coverage period. This provides an applicant coverage for the period in which eligible medical expenses were incurred in the months prior to the application being submitted.

How to Apply

Those who want to know if they qualify for the medically needy program but have not yet applied for Medicaid should submit an application for Medicaid first. Since some states have chosen to expand their Medicaid program coverage, those who were not eligible before may now be eligible for coverage. Medicaid applications can be filled out online through the health insurance Marketplace for most states. However, all states have their own Medicaid application process, including online applications. Applications can also be submitted by mail, over the phone or in person at a local Medicaid office or with a certified Marketplace Navigator.

If an applicant has been denied for Medicaid coverage, he or she might still be determined as eligible for the medically needy program. Those who are enrolled in the medically needy program must provide proof of spenddown medical expenses before Medicaid coverage begins for that month. Medicaid cards are not usually issued to those enrolled in a medically needy program. Proof of eligibility for the month can be found on the state’s Medicaid website if a Medicaid card is not issued.

Medicaid and medically needy program applications typically take about 45 days to be processed. However, certain applications may take longer to process. Disabled applicants may wait up to 90 days for a decision on their application, as the agency must verify the disability.