1. Medicaid Spend-Down in New York Evelyn Frank Legal Resources Program New York Legal Assistance Group EFLRP@nylag.org (212) 613-7310 December 6, 2013

2. 2 What is Spend-Down? Carol’s income is $1200/month – above the Medicaid limit ($800 - 2013). But she may qualify for Medicaid by incurring medical bills in an amount that equals the monthly spend- down, also known as “surplus income.” Spend-down is like an insurance “deductible,” but a deductible must usually be met only once a year. The spend-down must be met each month to have Medicaid ongoing.

3. 3 Who Can Benefit from Medicaid Spend-down? Pathway to Home Care – Carol, age 75, needs Medicaid home care, but her income is $1200/month, over the Medicaid level. Supplementing Medicare – Many seniors seek Medicaid because they think it will pay coinsurance they are charged under Medicare. This is sometimes true, but don’t assume it will work! Pathway to “Extra Help” for Part D – Joyce, age 60, has Social Security Disability of $1500/month, which is over the $1293 limit for QI-1 Medicare Savings Program and Full Extra Help, and over the $1436 limit for Partial Extra Help. She hit the doughnut hole in her Part D plan by September, and has been borrowing to pay $1000/mo for medications. She pays a Part D premium of $40/month. She is under 65 so is not eligible for EPIC.

4. 4 Spend-down requires calculation of “Income” To know the client’s Medicaid income limit, and know what rules apply for counting INCOME and RESOURCES, you must know which of TWO CATEGORIES the client fits into. To know the category, you must know clients’: AGE (under 21, age 65+, everyone in between) If under 65, is s/he disabled? Does client have Medicare?

5. Now only two Medicaid Categories Pregnant women Kids under 19 Childless adults 19-64 without Medicare Parents/caretaker relatives 19/20 yo living with parents SSI recipients Anyone with Medicare Age 65+, disabled, blind MBI-WPD MSP 5 MAGINon-MAGI

6. Why Category? Different rules are used to determine eligibility for different categories of people. You need to determine the applicant’s Category in order to know: Household Size – whose income is counted? Income Limit Resource Limit Income Disregards / Budgeting Resource Disregards / Budgeting Rules for younger people without Medicare are changing under Affordable Care Act. 6

7. Categories – Big Changes in 2014- ACA 1. Disabled, Aged 65+ and Blind (DAB) Poor enough to receive SSI (and receive Medicaid automatically) or “SSI-Related” – have higher income or resources than SSI allows but within Medicaid limits, or above income limits and use “spend down” Medicaid Buy-In for Working People with Disabilities (< 65) higher income limits Medicaid application, eligibility criteria, procedures remain the same. 2. Most everyone else is “MAGI” in 2014 MAGI = Modified Adjusted Gross Income – Using federal tax rules Includes children and their parents/grandparents or other “caretaker relatives,” pregnant women, singles and childless couples – most everyone under 65 and not receiving Medicare Also seniors > 65 who do not have Medicare (mostly immigrants) GOOD: NO asset limit & Higher Income Limits than DAB but BAD: No Spend-down allowed A few other groups are non-MAGI- Some foster kids, breast cancer, etc. 7

8. Some Have Choice of Category Category is determined for each individual. Each spouse or family member may be in a different category. EXAMPLE: Tom is 68 and has Medicare and his wife is 58 and not disabled. He is DAB; she is MAGI. Some people can choose between DAB and MAGI: Disabled < 65 but not yet receiving Medicare. Aged > 65 without Medicare (some immigrants or others who lack enough work history) > 65 with Medicare but live with and take care of a grandchild under age 18 or under age 19 and a full-time student. WHICH TO CHOOSE? May depend on type of income – whether better exemptions under one category, or using higher income limits. See next slide. 8

9. Income limits – MAGI vs. DAB 9 MAGI – Medicaid income limit is expanded to 133% of FPL. 5% of the Modified Adjusted Gross Income is, so in effect, income limit of 133% of FPL becomes 138% for Medicaid. DAB – Not based on FPL but it’s only 87% of FPL. INCOME LIMIT COMPARISON IF you have choice between DAB and MAGI, if income between DAB limit and MAGI limit, choosing MAGI might qualify you for Medicaid with no spend-down. But warning – must use correct “household size” for income limit.

10. What about Family Health Plus? It used to be that non-DAB applicants who were over the Medicaid limit might be able to qualify for Family Health Plus, an expansion program with a higher income limit. However, because of the Medicaid expansion under the Affordable Care Act, Family Health Plus will be eliminated in 2014. Those who would previously have been eligible for FHP will either get MAGI Medicaid (<138% FPL), or qualify for a Medicaid “wrap” (parents of minor kids <150% FPL) 10

11. Medicaid rules unique to “DAB” – Disabled, Aged (65+), Blind May use Spend-down & pooled trusts May use Spousal refusal Resources count – must know rules 11

12. 12 Some Financial rules only for Disabled/Aged/Blind IRA’s are not counted as a “resource” if in periodic payment status – taking distributions no tax penalty for distributions if person “disabled” even if under age 59-1/2 Even if IRS doesn’t require distributions (e.g., Roth IRAs), Medicaid does if you want principal to be exempt More than half of gross earned income of applicant or spouse is disregarded. This reduces spend-down. Health insurance premiums – Part B, Medigap, Part D are deducted from income (also true for kids < 21/parents)

13. 13 -274.90Total Deductions 1226.00NET MEDICAID INCOME -800.00Medicaid Income Level for One (2013) How to Calculate the Spend-Down for Disabled/Aged/Blind (Single) $1500.90GROSS Social Security* - 104.90Part B premium (2013) - 20.00Disregard for all DAB cases -150.00Medigap premium/ month 426.00SPEND DOWN Add in all income – pensions, IRA distributions. Holocaust Reparations excluded * Before deduction of Part B premium

14. 14 How to Calculate the Spend-Down for Disabled/Aged/Blind (Couple) $1500.90GROSS Social Security – Applicant +1000.00Gross Social Security – Spouse 2500.90GROSS INCOME -209.802 x 104.90 Part B (2013) - 20.00Disregard -DAB cases -300.00Medigap premium per mo. -529.80Total Deductions 1971.10NET MEDICAID INCOME -1175.00Medicaid Income Level for 2 (2013) 796.10SPEND DOWN

15. 15 Spousal Refusal If spouse does not need or qualify for Medicaid, client may apply alone if spouse “refuses” to make income/resources available for medical care. With Spousal Refusal, budget is the same as the Single Budget Example – Spend down is $426 (Slide 12) instead of $796.10 (slide 13) County has right to sue “refusing” spouse for support. Each county/NYC has different policy on who they sue. NYC won’t sue if assets under $74,820, income under $2,898/mo. NYC form can be used as a model – posted at http://wnylc.com/health/download/66/ http://wnylc.com/health/download/66/

16. 16 These basic budgets get more complicated if: Client or spouse works – $65 + 1/2 of remainder of gross monthly earned income is deducted – so spend down is lower “Mixed” Couple – The couple budget on slide 11 is used only if client AND spouse are BOTH Disabled, Aged 65+, or Blind (DAB category). If non-applying spouse is MAGI, then different. If client lives with and takes care of a child under 21 who is related to client, such as a grandchild, budget could be different

17. 17 How to Meet the Spend-Down

18. 18 Does a bill have to be paid to count toward the spend-down? NO A bill only needs to be incurred to count toward the spend- down. An expense is incurred on the date of the medical service, not the date of the bill. 18 NYCRR 360-4.8(c), NYS DOH MRG 241 http://www.health.ny.gov/health_care/medicaid/reference/mrg/

19. 19 Whose bills can meet the spend-down? The Medicaid recipient’s bills AND The spouse’s bills, even if spouse is not applying for Medicaid. But if the spouse does a “spousal refusal,” then you may not use his or her bills. Bills for any dependent child under 21.

20. 20 What bills can be used to meet spend-down? Any medical bills not covered by insurance – such as deductibles and coinsurance for Medicare, Part D, or other private health insurance, and Medicaid copayments. Services not covered by Medicaid that are medically necessary: Chiropractors, podiatrists, drugs a Part D plan won’t cover, bills of doctors who don’t take Medicaid Over the Counter Items – (vitamins, lotions) with a doctor’s note explaining medical necessity & receipts PAST paid or unpaid medical bills – more later EPIC or ADAP expenses – more later

21. 21 How old can bills be for meeting the spend- down? A new applicant may use past medical bills to meet their spend-down when applying for Medicaid. How old the bills may be depends on whether the bills are PAID or UNPAID. Once a new applicant’s past bills have been “used up,” s/he may only use bills incurred in the current month to meet the spend-down for that month.

22. 22 What is the “retroactive period?” Medicaid can be retroactive for up to THREE CALENDAR MONTHS before the month in which the application is filed. EXAMPLE: Mary applied in June. The retroactive period is February, March, and April, beginning on February 1st.

23. 23 Medical bills in retroactive period – what will Medicaid do? For medical services received during the retroactive period, if the bill is: PAID – Medicaid can EITHER: Reimburse the client or whoever paid the bill, IF the client was eligible for Medicaid during the retroactive period (assets within limits). Credit the bill against the Spend-down. See below re which month the credit is used for UNPAID – Medicaid can PAY the bill directly to the provider, if the provider accepts Medicaid

24. 24 Using Past Paid vs. Unpaid Medical Bills for Spend- down PAID bills can be used to meet the spend-down only if the services were provided and paid for in the retroactive period – the 3 calendar months before the month of application or during the application. UNPAID bills can be used even if they are many years old as long as they are viable, meaning provider may still sue to collect them (rule of thumb is six years old)

25. 25 PAID BILL Example Marvin paid $3500 for dental surgery in 10/2013. He comes to you 12/6/13 wanting to apply for Medicaid (or needing Extra Help). He has a $500 spend-down. HRA must receive his application by 1/31/14 if he wants to use that paid bill to meet the spend-down or if he wants it reimbursed. Don’t forget - he must either be over age 65, blind or disabled, or have a child/grandchild living with him to use spend-down

26. 26 PAID bills can meet spend-down for up to SIX months Marvin’s $3500 of bills would cover 7 months of his spend- down @ $500/month. However, a PAID bill may only cover up to six consecutive months of spend-down. Marvin’s Jan. 14 application should be approved for six months of Medicaid through June 2014. He may not carry the balance of $500 of the dental bill forward to meet spend- down for July 2014. See more spend-down materials at http://wnylc.com/health/entry/46/ http://wnylc.com/health/entry/46/

27. 27 Recent past bills Bills incurred in the retroactive period – the 3 calendar months before the month of application – may be paid or reimbursed OR be used to meet the current spend-down. It is client’s choice. Client may want to mix it up – use some bills for spend-down credit, and get some bills paid or reimbursed. This is client’s choice. It gets complicated. For more info see 96-ADM-15* and more info on spend-down at http://wnylc.com/health/entry/46/ http://wnylc.com/health/entry/46/ *Posted at http://www.health.state.ny.us/health_care/medicaid/publications/pub1996adm.htmhttp://www.health.state.ny.us/health_care/medicaid/publications/pub1996adm.htm

28. 28 Bills PAID by EPIC or ADAP may meet spend- down Bills paid by EPIC or ADAP in the 3 months before the month client applied for Medicaid, plus during the time the Medicaid application is processed, can be used to meet the spend-down for the first month of Medicaid and for up to the 1st 6 months of Medicaid. The amount EPIC or ADAP pays, not just client’s co-payment, counts toward the spend-down. 91 ADM-11, 18 NYCRR § 360-4.8(c)(1), MRG p. 239

29. 29 EPIC How-To & Example Sandy applied for Medicaid in 4/13. You wrote to EPIC asking for a printout of expenses paid by EPIC and the amount of his co-pays since Jan 2013– the 3- month period before the application, plus up date WRITE TO: EPIC, POB 15018 Albany, NY 12212 Include a HIPAA release with your letter. HIPPA release at http://wnylc.com/health/download/267/ http://wnylc.com/health/download/267/ Alternately, sometimes the pharmacy can give you a printout showing EPIC’s payments.

30. 30 EPIC Example (cont’d) EPIC’s printout shows total payments were $1871, including client EPIC copayments of $677. Spend-down is $500/mo. Since EPIC bills are PAID, they can be used to meet the spend- down for up to 6 months. The bills meet the spend-down for 3 months plus part of a 4th month. He has additional bills to meet the spend-down for the 4th month. You request to start the 4- month period in the month of application, April 2013. What if the EPIC paid bills total $4000? $500 x 6 = $3000 would be used to meet the spend-down for 6 months. $1000 is left and cannot be carried over to later months.

31. 31 Options for Using Paid Bills (if incurred in 3 mos. before Medicaid application OctNovDecJan FebMarAprMay JuneJuly Three-Month Retroactive Period – bills incurred & paid in this period Application Month PAID bills may never be carried forward past 6 months from ap- plication 6 – month Medicaid eligibility period if want only future coverage, but may still use paid bills from retroactive period to meet spend- down 6-month period if want partial retroactive coverage for Dec bills 6 – month period if want full retroactive coverage to have unpaid bills in retroactive period PAID or paid bills REIMBURSED

32. 32 Using Unpaid Bills to Meet the Spend-Down UNPAID bills are better for meeting the Spend-Down than PAID bills Unpaid bills incurred years earlier can be used to meet the spend-down, as long as they are “viable,” meaning the provider is still trying to collect them. A current collection letter or bill is enough to show this. Rule of thumb is SIX YEARS. The unpaid bills can be carried forward indefinitely, past 6 months. Marvin could have used the $3500 in dental and other bills to meet his $500 spend-down for 7 months if they were unpaid.

33. 33 Using Past Paid and Unpaid Bills 2013 – Sept Oct 13 Nov 13 Dec 13 Jan 14 Feb - June 14 July on 2014 Can use UNPAID bills from this period to meet spend- down indefinite- ly into future Three-Month Retroactive Period Application Month Can use PAID bills, including EPIC, incurred in this period to meet spend- down for 6 months beginning Oct, Nov, Dec. 13 or Jan 14. Can be REIMBURSED for PAID bills incurred in this period. Can have UNPAID bills incurred during this period PAID by Medicaid. Paid bills cannot be used to meet spend down past June 14 Only past UNPAID bills can be carried over to this period

34. 34 TIP: Using Past Bills to get Medicaid to Get Extra Help for Part D You only need to meet spend-down for ONE MONTH to get Extra Help for the ENTIRE calendar year Use unpaid past bills to meet the spend-down for ONE MONTH! If the ONE MONTH in which you meet spend-down is in July or later in year, then you get Extra Help for the rest of the CURRENT calendar year and the ENTIRE FOLLOWING CALENDAR YEAR. MayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSep MayJunJulAugSepOctNovDecJanFebMarAprMayJunJulAugSep Meet spend-down in June or earlier, get Extra Help for current year Meet spend-down in July or later, get Extra Help for current year and whole next year!

35. Logistics of Spend-Down 35

36. 36 Bringing Bills in Month-to-Month Bringing in past paid or unpaid bills at the application will get Medicaid activated for as much as 6 months at a time, if there are enough past bills. After the past bills are used up, Medicaid recipients must bring or fax proof of medical bills incurred during the current month, equal to the spend-down amount, to the local Medicaid office each month. The Medicaid office then activates Medicaid for that month only. This must be repeated monthly. BILLS MAY BE FAXED to 917-639-0645. Use fax cover form at http://wnylc.com/health/entry/55/. http://wnylc.com/health/entry/55/

37. 37 Bringing Bills in Month-to-Month If applicant does not show enough bills to meet their spend- down initially, they are only provisionally eligible until they bring medical bills that meet the spend-down, and Medicaid is activated. If Medicaid is not activated within 3-4 months, they must re-apply. SOME PROVIDERS HELP – Some Certified Home Health agencies and other providers help clients keep Medicaid activated by sending bills directly to the Medicaid office that meet the spend-down. All PCA, MLTC, dialysis and waiver clients in NYC have Medicaid activated automatically.

38. 38 Pay-In Program The Pay-In Program allows clients to pre-pay their spend-down to Medicaid for a period of One to Six months. Once paid, their Medicaid is activated for this period. They even get their money back if they end up not using Medicaid services equal to the spend-down. Forms used in NYC are posted on http://wnylc.com/health/entry/46/ http://wnylc.com/health/entry/46/ MRG p. 248 (See last slide for link)

39. 39 Who should Pay-In? The Pay-In Program is best for people who either: Have a low spend-down so that they can afford to pay 3-6 months at a time – it’s too much trouble to bring in medical bills, or use Pay-In, every month; or Have someone to pay their spend-down for them, such as family or a charity To enroll in Pay-In, the client should contact HRA. For more, see http://www.wnylc.com/health/download/175/ and http://www.wnylc.com/health/download/174/http://www.wnylc.com/health/download/175/ http://www.wnylc.com/health/download/174/

40. 40 Special Hospital Stay Rule Medicaid requires a higher spend-down for inpatient hospital stays. Even if just hospitalized for one night, client is charged SIX times the monthly spend-down before Medicaid pays. EXAMPLE: The Medicare hospital deductible will be $1184 (2013). Client does not have Medigap to pay this. Spend-down is $100/month. Medicaid will pay only $584 of the $1184 bill, client is charged 6 x $100 = $600. If client needs Medicaid in the community for those 6 months, the spend-down is already met with this bill.

41. 41 Spending Down Excess Resources Spend-down is not only for excess Income. It can also be used if one’s Resources are over the Medicaid limit. EXAMPLE Jerry has $16,250 in the bank. He also has a $1500 burial fund and pre-paid funeral agreement. His resources are $1850 over the $14,400 resource limit (2013).

42. 42 Spending Down Excess Resources Jerry had a stroke earlier this month. He is 64 years old, receives Social Security Disability, but not yet Medicare. He needs Medicaid for the current month. If he applies now, he will have a $2000 “resource spend-down.” Medicaid will pay the hospital bill above $ 2000 + 6 times his monthly income spend-down. Past unpaid or paid bills can be applied to offset the resource spend-down, just like excess income.

43. 43 More about Resource Spend-Down Only Age 65+, Disabled, Blind may use Resource Spend-down, just like Income Spend-down. If Jerry was not disabled, and has no child/other relative under 21 living with him, he would be S/CC and not eligible. If Medicaid is not needed until the following month, it is always better to do other Medicaid planning, i.e. transfer assets (with legal advice), spend resources on other needs. This is because with Resource Spend-down, you may only spend-down on Medical Care, not pay rent or buy other things. EX: Jerry applies in May 2013 with $2000 excess resources. Even though he owes $2000 in back rent, he can’t spend-down the excess savings on that bill. Only on medical bills.

44. 44 Helping Joyce in the Doughnut Hole with Past Bills Joyce’s income is $1400/month, which is over $1293, the limit for both QI-1 Medicare Savings Program and Full Extra Help, and the $1436 limit for Partial Extra Help. She enrolled in an enhanced Part D plan (costing $45/month) and hit the doughnut hole by September, and has been taking high interest advances from her bank account to pay $1000/mo for medications. She is under 65 so not eligible for EPIC. She comes to you in November 2013. Her Medicaid spend-down is $475. Other than when she’s in the doughnut hole, her medical bills don’t meet her spend- down.

45. 45 Spend-Down and Part D (cont’d) You ask Joyce if she has any: UNPAID medical bills from any time in the last 6 years, or PAID medical bills from the past 3 calendar months SHE SAYS YES – you go through them and see she has $1500 of unpaid bills, including bills from her Part D plan for mail order drugs she ordered before she realized she was in the doughnut hole.

46. 46 Spend-Down and Part D (cont’d) With the bills, she can meet the spend-down for the Application Month (November 13), December 13, and part of Jan. 2014. TIP: Don’t forget to ask Joyce if she works even one hour per month. If she does, she might be eligible for MBI-WPD. Then, she would not have a spend down because the income limit for MBI-WPD is $2394/month.

47. 47 Spend-Down and Part D (cont’d) Even if the bills only meet ONE month’s spend-down: As long as she had Medicaid for just one month in 2013 after July, even if her Medicaid later stops, she gets Extra Help for the rest of 2013 and ALL of 2014. Once she receives a Medicaid card or acceptance letter it is “Best Available Evidence”* for the Part D plan to bill the Full Extra Help copays to pay for her drugs now. Even before Medicaid is accepted, while the application is pending, sweet-talk her pharmacist to fill her prescriptions free. If she isn’t yet in a Part D plan, pharmacist can back-bill Medicaid once Medicaid is approved. If she was already on Part D, the “Extra Help” will be retroactive - up to 3 months before the application was filed -- and pharmacist can back-bill the Part D plan. *http://www.cms.hhs.gov/PrescriptionDrugCovContra/17_Best_Available_Evidence_Policy.asp

48. 48 Helping Carol – age 75 Carol is 75, with income of $1800/mo. She needs Medicaid for home care & “Extra Help.” Family has been private paying home care $1500/mo. and would like to be reimbursed if possible. She comes to you in May 2013. You ask if she has Medigap – Her AARP premium $250/mo. brings her spend-down down to $ 625.

49. 49 Helping Carol – age 75 Does she have EPIC or other medical bills to meet the spend-down? She has EPIC – you write for a printout that says EPIC payments plus her copays total $1000 since 2/1/13. She has another $500 in paid medical bills since 2/1/13 – coinsurance, etc. Application is filed in May, is approved and she starts receiving Medicaid home care in July 2013.

50. 50 More Carol – Using EPIC bills for spend-down The $1500 in EPIC/medical bills can be used to meet Carol’s spend-down for 2 months EITHER beginning: With month she applied for Medicaid, in May 2013 OR Back to February, March or April 2013, if her resources were within the limits. Family could be reimbursed for private paid home care in these months, after deducting spend- down. The past EPIC bills would meet the spenddown for 2 of the months. For more information on reimbursement see http://wnylc.com/health/entry/18/ http://wnylc.com/health/entry/18/

51. 51 Helping Carol – going forward Going forward, you recommend that Carol enrolls in a pooled trust to eliminate her spend-down. See fact sheet at http://wnylc.com/health/entry/44/ http://wnylc.com/health/entry/44/ You counsel her on whether she needs to keep the Medigap policy, since Medicaid is now like a Medigap. By joining the trust, she may no longer need the Medigap as a deduction – she can simply increase her deposit to the trust. But she may want to keep it because her doctors don’t accept Medicaid. FOR MORE info on trusts see http://wnylc.com/health/14/http://wnylc.com/health/14/

52. 52 Checklist Ask Clients who have Excess Income or Resources: Do you (or spouse) have any UNPAID medical bills from the past, even as long as 6 years ago? (Bill showing amount due after Medicare paid counts). Do you (or spouse) have any PAID medical bills from services received in the 3 calendar months before the current month? Have you (or spouse) used EPIC or ADAP in the 3 calendar months before the current month, or in the current month?

53. 53 Advocacy resources/bookmarks NYS DOH Medicaid Reference Guide (MRG) http://www.health.ny.gov/health_care/medicaid/reference/mrg/ Spend-down is at INCOME section pp. 239-249 NYS DOH Administrative Directives, etc. http://www.health.ny.gov/health_care/medicaid/publications/ Key Spend-down Directive is 96-ADM-15 Directives before 1996 are on http://onlineresources.wnylc.net/pb/default.asp EPIC spend-down directive is 91-ADM-11 http://onlineresources.wnylc.net/pb/docs/91_adm-11.pdf

54. 54 Advocacy resources/bookmarks Medicaid income/resource charts updated and posted at http://www.nyc.gov/html/hra/downloads/pdf/income_level.pdf http://www.health.state.ny.us/health_care/medicaid/ NY Health Access – http://nyhealthaccess.orghttp://nyhealthaccess.org Pathways to Extra Help http://wnylc.com/health/entry/46/http://wnylc.com/health/entry/46/ Pooled Trusts http://wnylc.com/health/14/http://wnylc.com/health/14/ Spenddown & Medicaid Financial rules: http://wnylc.com/health/12/http://wnylc.com/health/12/

55. 55 IT’S OVER!!!