spend down

Spend down is a process that allows individuals whose income or resources exceed Medicaid eligibility limits to qualify by reducing the amount counted against them. It ensures that applicants’ significant medical expenses are considered when determining eligibility.

The requirement is authorized by the Social Security Act and implemented through federal Medicaid regulations. In Elliot v. North Carolina Dept. of Human Resources, the Court recognized two approaches: 

• Income spend down permits applicants to reduce income by subtracting incurred medical expenses, whether paid or unpaid. 
• Resource spend down allows excess assets to be offset by medical bills. 

For example, if an applicant earns $100 more than the Medicaid income limit, that amount may be applied toward prescription costs. After spending down the excess, the applicant qualifies for Medicaid coverage.

[Last reviewed in September of 2025 by the Wex Definitions Team] 

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