Which expenses reduce your countable income

A spend down is when you use your own money to pay for medical or long-term care costs, which lowers the income Medicaid counts toward your may be able to access. Not every expense you pay counts — Medicaid only recognizes certain categories. The expenses that count are almost always medical, and they must be unpaid bills or costs you owe going forward, not money you already spent.

The most common may have access to expenses are nursing home care, assisted living, home health services, hospital bills, prescription drugs, and medical equipment. Dental work, vision care, hearing aids, and therapy services also count in most states. The key rule: the expense must be for medical or long-term care, it must be a real bill you owe, and in most cases it must be something Medicaid itself would cover or something you need to become Medicaid-may be able to access in the first place.

Your state Medicaid office sets the exact list, so what counts in one state may not count in another. Some states are stricter than others about what medical expenses may have access to. Before you pay a large bill expecting it to count toward spend down, contact your state Medicaid office or your caseworker to confirm that specific expense is allowed.

Key Takeaways

  • Only medical and long-term care expenses count toward spend down — groceries, utilities, rent, and insurance premiums for your home or car do not.
  • The expense must be an unpaid bill or a cost you will owe in the future, not something you already paid for in the past.
  • Nursing home care, assisted living, home health, hospital bills, prescriptions, and medical equipment are the most widely accepted expenses across states.
  • Your state Medicaid program decides which specific expenses may have access to, so rules vary by location — always check with your caseworker before committing to a large medical bill as spend down.

Medical bills that almost always count

Hospital stays, emergency room visits, and inpatient surgery bills count in every state. These are Medicaid-covered services, so the unpaid balance reduces your countable income. The same applies to doctor visits, lab work, and imaging like X-rays or MRI scans — if you have an outstanding bill from a provider, that amount counts.

Prescription medications and over-the-counter drugs that a doctor prescribed also count. If you have a pharmacy bill or a standing prescription you need to fill, that future cost can be used for spend down. Medical equipment — wheelchairs, walkers, oxygen machines, hospital beds — counts when you have an unpaid invoice or a purchase order from a medical supplier.

Therapy services including physical therapy, occupational therapy, and speech therapy count when billed by a licensed provider. Mental health treatment and substance abuse counseling also may have access to. Dental work, including cleanings, fillings, extractions, and dentures, counts in most states, though a few states limit it to emergency dental care only.

Long-term care facility costs

Nursing home care is the most common spend-down expense because the costs are high and Medicaid covers them. If you are entering a nursing home and have a bill for the first month or months of care, that amount counts toward spend down. The facility must be a licensed nursing home — assisted living facilities are treated differently depending on your state.

Assisted living residence costs count in some states but not others. A few states treat assisted living as a covered service and allow the bill to count; many others do not cover assisted living at all, which means the bill cannot count toward spend down. Adult day care and respite care (temporary care that gives a family caregiver a break) count in states where Medicaid covers them.

Home health services — nursing care, aide services, or therapy delivered at home — count when billed by a licensed home health agency. If you have an outstanding invoice or an estimate for future home health visits, that amount can reduce your countable income. The service must be medical in nature, not housekeeping or meal preparation.

Expenses that do not count

Rent, mortgage, property taxes, homeowners insurance, and utilities do not count toward spend down, even if you are behind on payments. These are considered living expenses, not medical expenses. The same applies to car payments, car insurance, gas, and maintenance — transportation costs are not medical.

Food, groceries, and meal delivery services do not count. Clothing, personal care items like shampoo or toothpaste, and household supplies do not count. Life insurance premiums, disability insurance, and long-term care insurance premiums do not count, though some states make exceptions for health insurance premiums you pay out of pocket.

Funeral and burial expenses do not count toward spend down in most states, though a few allow them. Legal fees, accounting fees, and financial planning services do not count. Cosmetic procedures, elective surgeries not medically necessary, and experimental treatments usually do not count unless your doctor documents medical necessity and your state Medicaid program approves them in advance.

How unpaid medical bills work in spend down

When you have an unpaid medical bill, you can use it for spend down only if you actually owe it. This means the bill must be from a real provider, for a real service or product you received, and the debt must be yours — not someone else's bill that you are paying on their behalf. Medicaid will ask for proof: an invoice, a statement from the provider, or a letter showing the amount owed and the date the bill was incurred.

You cannot count a bill twice. If you have already paid part of a medical bill, only the remaining unpaid balance counts. If you negotiate a discount with a provider and they forgive part of the debt, only the amount you still owe counts. Some people set up a payment plan with a medical provider specifically to create a spend-down bill — this is allowed, but Medicaid may ask for the payment plan agreement to verify the debt is real.

Once you have used a bill for spend down, you cannot use it again. If your countable income is still too high after one bill, you move to the next bill. The bills are counted in the order you incurred them (oldest first) or in the order your state Medicaid office directs.

Future medical costs and advance planning

Some states allow you to set aside money for future medical expenses you know are coming — for example, if you are scheduled for surgery or entering a nursing home in the next month. You must have a written estimate or invoice from the provider showing the cost and the date the service will be provided. The amount set aside is not counted as income, which can help you reach Medicaid income limits before you actually receive the care.

This is different from paying the bill in advance. You are not paying the provider; you are setting the money aside in a separate account or with a representative payee, and it will be used to pay the bill when it comes due. Rules for advance planning vary significantly by state and by the type of care. Some states allow it for nursing home care but not for other services. Ask your Medicaid caseworker whether your state permits advance planning and what documentation you need.

State-by-state differences you should know

Medicaid is a joint federal-state program, which means each state sets its own rules about which expenses count. Some states have a broad list of medical expenses; others are narrow. For example, some states count dental work as a may have access to expense, while others limit it to emergency extractions only. Some states count vision care and eyeglasses; others do not.

A few states count health insurance premiums you pay out of pocket toward spend down. Most do not. Some states allow you to pay for a family member's care and count it toward your own spend down, but this is rare. A handful of states have special rules for people over 65 or people with disabilities that change which expenses may have access to.

Because the rules are different everywhere, you must contact your state Medicaid office or your caseworker before you commit to paying a large medical bill expecting it to count. Your caseworker can tell you exactly which expenses your state recognizes and can often provide a written list. If you are unsure, ask in writing and request a written response so you have proof of what was approved.

Frequently Asked Questions

Can I count medical bills from years ago?

No. Medicaid counts only unpaid bills for services you received, and only bills that are current or recent. A bill from five years ago that you never paid does not count, even if you still owe it. The bill must be from a real provider for a real service, and it must be recent enough that Medicaid can verify it. Ask your caseworker what time frame your state uses — usually it is within the last 12 months.

Does my spouse's medical bill count toward my spend down?

In most cases, no. Your spouse's medical bills count only toward your spouse's spend down, not yours. The exception is in some community spouse situations where Medicaid rules allow one spouse's medical expenses to be counted for both. This is complicated and depends on your state and your specific situation. Ask your caseworker whether your state allows this.

Can I pay a provider in advance and count it as spend down?

Paying a bill in advance usually does not count as spend down because the expense has already been paid. However, some states allow you to set aside money for a future medical expense you know is coming — for example, a scheduled nursing home admission. This requires a written estimate from the provider and approval from your Medicaid office. Paying a provider in advance without this approval will not help your spend down.

What if I disagree with my caseworker about whether an expense counts?

Ask your caseworker for the written policy or regulation that explains which expenses count in your state. If you still disagree, you have the right to request a fair hearing through your state Medicaid office. You can also contact your state's Medicaid ombudsman or a legal aid organization for help understanding the rules.

Do I have to use my medical bills for spend down, or can I choose not to?

In most states, if you have unpaid medical bills, Medicaid counts them toward your income whether you want them to or not. You do not have a choice. The bills reduce your countable income automatically, which usually helps you reach Medicaid limits faster. If you want to avoid using a bill for spend down, you would need to pay it off completely, which defeats the purpose.