A non-government resource for the Medicare community
Powered by Q1Group LLC
A non-government Medicare community resource
  • Menu
  • Home
  • Contact
  • MAPD
  • PDP
  • 2024
  • 2023
  • FAQs
  • Articles
  • Search
  • Contact
  • 2024
  • 2023
  • FAQs
  • Articles
  • Latest Medicare News
  • Search

Medicaid ’Spend Down’ and Medicare Part D

People with Medicare who are also eligible for Medicaid because of high medical expenses can get Medicare prescription drug coverage even if they are in Original Medicare or a Medicare Advantage Plan, or if they have existing prescription drug coverage.

What do people with Medicare and Medicaid need to know about Medicare prescription drug coverage?

People with Medicare and Medicaid automatically qualify (and don’t need to apply) for Extra Help paying for Medicare prescription drug coverage. This means they may pay only a small copayment when they fill prescriptions covered by their Medicare drug plan. Medicaid will still pay for some or all of a person’s health care costs that Medicare doesn’t cover.

In very limited cases, this can include prescriptions for drugs not eligible for coverage by Medicare prescription drug coverage. Except in limited cases, Medicaid can’t cover drugs for people who are enrolled, or who could be enrolled, in a Medicare drug plan.

If I get "Extra Help" paying for Medicare prescription drug costs, will the "Extra Help" affect my eligibility for Medicaid?

It’s possible that through "spend down," a person may become eligible for Medicaid, even if he or she has too much income to qualify otherwise. "Spend down," allows you to subtract medical expenses (like for prescription drugs) from your income to become Medicaid eligible. This can lower income so it’s below the maximum amount allowed by a state’s Medicaid plan.

Medicare Prescription Drug coverage and "Extra Help" reduce a person’s out-of-pocket costs for prescription drugs and therefore reduces the amount of medical expenses that can be subtracted from your income. This means the need for Medicaid may be reduced or eliminated. Even if a person with Medicare becomes eligible for Medicaid through "spend down," Medicaid can’t generally pay for the person’s prescription drugs.

The example below shows how qualifying for "Extra Help" in 2024 may affect Medicaid eligibility.

Month 1

Julie has Medicare and gets $700 a month in Social Security. Her income is too high for her to qualify for Medicaid in her state. Her state’s Medicaid income limit is $500 a month. If Julie has at least $200 a month in medical expenses, she could spend down (or reduce her income) to the state’s income limit for Medicaid.

Julie pays $150 a month out-of-pocket for prescription drugs and $75 most months for visits to her doctors for a total of $225 per month. After she has $200 in medical expenses, she qualifies for Medicaid. Medicaid pays the additional $25 of her medical expenses, leaving her with $500 for other expenses. Since Julie paid for her prescriptions after the effective date of Extra Help, her Medicare drug plan will pay her back for the prescription costs covered by the Extra Help.

Julie gets Medicaid and automatically qualifies for Extra Help paying Medicare prescription drug costs for the rest of the calendar year, even if she doesn’t qualify for Medicaid in some later months because she has lower medical expenses.

Month 2

With "Extra Help" and a Medicare drug plan, Julie pays no monthly premium, has no deductible, and pays only small copayments. Her copayments will be $1.55 for each of her 10 generic prescriptions, for a total of $15.50. She spends $75 for her doctor visits, for a total of $90.50 in medical expenses. Julie needed at least $200 in medical expenses to qualify for Medicaid through spend down. She will not receive Medicaid in Month 2, but since she keeps the Extra Help for the entire year, her prescription expenses remain low and therefore she has more income available to her. She now has $609.50 available for other expenses, $109.50 more than she had before getting the Extra Help.

Month 3

During a month where Julie’s medical expenses for items other than prescription drugs are high, she will qualify for Medicaid once she has medical expenses of at least $200. For example, Julie has another $210 in medical expenses (such as doctor visits) and $15.50 in total prescription drug copayments for a total of $225.50. She meets her spend down amount and qualifies for Medicaid. She hasn’t lost her ability to rely on the Medicaid program in months when she has higher medical expenses.

  Month 1
Month with High Medical Expenses
Month 2
Month with Low Medical Expenses
Month 3
Month with High Medical Expenses
Monthly Income $700.00 $700.00 $700.00
Julie’s Medicaid Spend down Requirement -- $200 in Medical Expenses to reach $500 in Monthly Income
Julie’s Drug Spending $150.00 $15.50 $15.50
Other Medical Expenses $75.00 $75.00 $210.00
Julie’s Total Medical Expenses $225.00 $90.50 $225.50
Meets spend down requirement and qualifies for Medicaid? Yes No Yes
Julie’s out-of-pocket spending for Medical Care $200.00 (Medicaid pays $25.00) $90.50 $200.00 (Medicaid pays $25.50)
Julie’s cash available for other expenses $500.00 $609.50 $500.00

What if a person is notified that he or she no longer qualifies for Extra Help as of January 1 next year?

Each fall, Medicare uses data from the states to decide whether a person will continue to automatically qualify for Extra Help for the coming year.

Using the example from the previous page, let’s say Medicare determines that Julie no longer automatically qualifies for Extra Help. Medicare reviews data from her state for a month where she doesn’t qualify for Medicaid (Month 2). Medicare sends her a gray letter saying she doesn’t automatically qualify and encourages her to apply for Extra Help through Social Security to see if she qualifies based on her income and resources. Even though she no longer automatically qualifies, Julie may still qualify for Extra Help if she applies.

After not qualifying (month 2), Julie can meet spend down again in a later month (month 3). Her state tells Medicare, and she gets a letter from Medicare saying she automatically qualifies for Extra Help beginning from the month she qualified for Medicaid at least until December 31 of the same year.

Also see: CMS Guide to LIS Mailings Fall 2014 for details on these and other mailings

If you receive the full Extra-Help, full LIS, or are dual eligible for Medicare and Medicaid, there are Medicare Prescription Drug plans in your state the will qualify for the $0 monthly premium. Click on your state below to see PDP plans that qualify for the $0 premium:

Tips & Disclaimers
  • Q1Medicare®, Q1Rx®, and Q1Group® are registered Service Marks of Q1Group LLC and may not be used in any advertising, publicity, or for commercial purposes without the express authorization of Q1Group.
  • The Medicare Advantage and Medicare Part D prescription drug plan data on our site comes directly from Medicare and is subject to change.
  • Medicare has neither reviewed nor endorsed the information on our site.
  • We provide our Q1Medicare.com site for educational purposes and strive to present unbiased and accurate information. However, Q1Medicare is not intended as a substitute for your lawyer, doctor, healthcare provider, financial advisor, or pharmacist. For more information on your Medicare coverage, please be sure to seek legal, medical, pharmaceutical, or financial advice from a licensed professional or telephone Medicare at 1-800-633-4227.
  • We are an independent education, research, and technology company. We are not affiliated with any Medicare plan, plan carrier, healthcare provider, or insurance company. We are not compensated for Medicare plan enrollments. We do not sell leads or share your personal information.
  • Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. Our PDPCompare.com and MACompare.com provide highlights of annual plan benefit changes.
  • The benefit information provided is a brief summary, not a complete description of benefits. For more information contact the plan.
  • Limitations, copayments, and restrictions may apply.
  • We make every effort to show all available Medicare Part D or Medicare Advantage plans in your service area. However, since our data is provided by Medicare, it is possible that this may not be a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
    Statement required by Medicare:
    "We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options."
  • When enrolling in a Medicare Advantage plan, you must continue to pay your Medicare Part B premium.
  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
  • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
  • You must be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan. Members may enroll in a Medicare Advantage plan only during specific times of the year. Contact the Medicare plan for more information.
  • If you are enrolled in a Medicare plan with Part D prescription drug coverage, you may be eligible for financial Extra Help to assist with the payment of your prescription drug premiums and drug purchases. To see if you qualify for Extra Help, call: 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week or consult www.medicare.gov; the Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or your state Medicaid Office.
  • Medicare evaluates plans based on a 5-Star rating system. Star Ratings are calculated each year and may change from one year to the next.
  • A Medicare Advantage Private Fee-for-Service plan (PFFS) is not a Medicare supplement plan. Providers who do not contract with the plan are not required to see you except in an emergency.
  • Disclaimer for Institutional Special Needs Plan (SNP): This plan is available to anyone with Medicare who meets the Skilled Nursing Facility (SNF) level of care and resides in a nursing home.
  • Disclaimer for Dual Eligible (Medicare/Medicaid) Special Needs Plan (SNP): This plan is available to anyone who has both Medical Assistance from the State and Medicare. Premiums, co-pays, co-insurance, and deductibles may vary based on the level of Extra Help you receive. Please contact the plan for further details.
  • Disclaimer for Chronic Condition Special Needs Plan (SNP): This plan is available to anyone with Medicare who has been diagnosed with the plan specific Chronic Condition.
  • Medicare MSA Plans combine a high deductible Medicare Advantage Plan and a trust or custodial savings account (as defined and/or approved by the IRS). The plan deposits money from Medicare into the account. You can use this money to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount, so you generally have to pay out-of-pocket before your coverage begins.
  • Medicare MSA Plans do not cover prescription drugs. If you join a Medicare MSA Plan, you can also join any separate (stand-alone) Medicare Part D prescription drug plan
  • There are additional restrictions to join an MSA plan, and enrollment is generally for a full calendar year unless you meet certain exceptions. Those who disenroll during the calendar year will owe a portion of the account deposit back to the plan. Contact the plan provider for additional information.
  • Medicare beneficiaries may enroll through the CMS Medicare Online Enrollment Center located at www.medicare.gov.
  • Medicare beneficiaries can file a complaint with the Centers for Medicare & Medicaid Services by calling 1-800-MEDICARE 24 hours a day/7 days or using the medicare.gov site. Beneficiaries can appoint a representative by submitting CMS Form-1696.