Michigan Medicaid spend-down (the deductible): how it works, and how it can work with Home Help

The short answerMichigan's word for a Medicaid spend-down is a deductible. If your parent is 65 or older (or blind or disabled) and meets every Medicaid rule except income, MDHHS can open an "active deductible" case (BEM 166 and BEM 545). Each month, once your parent has allowable medical bills that add up to the deductible amount, Medicaid coverage is added for that month, and can start partway through it. For a parent who needs help at home, the State's manuals describe a personal care option that may apply if the State-approved care cost is more than the deductible: the Home Help payment is reduced by the deductible, and your parent pays that amount to the caregiver.

Families often hear "she's over the income limit" and stop there. The State's rules leave a path open for people with income above the limit, and for someone who needs daily help at home it may apply, if every condition below is met. This guide sets out what Michigan's published manuals say, in plain words. Already Caring is not a government agency, and only MDHHS decides Medicaid and Home Help.

Who has a deductible

BEM 166 describes "Group 2" Medicaid for people who are aged (65 or older), blind or disabled. The person must meet the usual Medicaid rules, including the asset limit in BEM 400 (see our guide to Michigan Medicaid income and asset limits). If net income is higher than the Group 2 needs set out in BEM 544, Medicaid is still possible through the deductible in BEM 545.

How the amount is figured

The deductible is the person's monthly excess income: net income minus the Group 2 needs. The main need is the protected income level, a set allowance for shelter, food and other everyday costs (BEM 544). RFT 240 lists it by household size and by the county's shelter area (RFT 200). For one person, the table we read (RFT 240, dated December 1, 2013) lists the amounts below; check with MDHHS for the amount that applies:

• $341 a month in shelter areas I and II (for example Alger, Huron, Chippewa, Houghton)
• $350 in area III (for example Jackson, Muskegon)
• $375 in area IV (for example Wayne, Berrien, Calhoun)
• $391 in area V (for example Kent, Kalamazoo, Ottawa, Saginaw)
• $408 in area VI (Genesee, Ingham, Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw)

For two people the levels run from $458 to $541. Health insurance premiums the person pays, including Medicare premiums, also count as needs and lower the deductible (BEM 544). How net income itself is figured is in other manual items (BEM 530 and 541), so we do not try to work out a number here.

This is a made-up example, not an estimate for anyone: a single parent in Wayne County whose net income MDHHS counts as $1,400 a month, with no premiums counted, would have $1,400 minus $375, or a $1,025 deductible each month. The protected income level is low, so deductibles can be large. That is why the personal care option below matters.

Meeting the deductible each month

Each calendar month is a separate deductible period (BEM 545). Medicaid covers a month once your parent reports and verifies allowable medical expenses that equal or exceed that month's deductible. Coverage can start on the day the bills cross the line rather than the first of the month, and the bill that crosses it may be partly your parent's to pay.

BEM 545 Exhibit I lists what counts. Among them:

• care from doctors, hospitals, clinics, dentists, nurses and therapists
• pharmacy items: prescription drugs and some supplies such as insulin, oxygen, ostomy and incontinence supplies
• medical equipment such as wheelchairs, walkers and a personal response system
• transportation for medical reasons
• personal care services at home that relate to daily activities, such as bathing, dressing, eating, toileting and taking medication

Old unpaid medical bills can sometimes be used too (BEM 545 Exhibit IB), and timing rules apply, so report expenses to the specialist promptly. MDHHS sends a Deductible Notice (DHS-114) and a report form (DHS-114A) for listing expenses. The case is renewed at least every 12 months, and changes must be reported within 10 days.

The personal care option: a deductible that works with Home Help

For a parent who needs help at home every month, the deductible can be met through the care itself. BEM 545 Exhibit II and ASM 105 describe the option. All of these must be true:

1. Your parent meets every Medicaid factor except income.
2. Your parent has an active Adult Services case with Home Help and receives personal care at home.
3. The amount MDHHS approves for personal care is more than your parent's excess income.
4. Your parent agrees to pay the excess income to the Home Help caregiver.

When they are, the State reduces its Home Help payment by the excess income, and your parent pays that amount straight to the caregiver each month, much like a share of cost. That amount can include the employer's share of Social Security and Medicare (FICA) taxes; the Adult Services Worker knows the split. For those months, eligibility comes through this route rather than by matching bills to the deductible each month.

Some limits from the manual:

• The option stops after changes such as your parent no longer needing personal care at home, the cost of care no longer being more than the excess income, or your parent entering long-term care, among other changes.
• If care costs more than the State will pay, your parent also owes the part the State does not cover, so the option may not suit everyone. Ask the worker to walk through the numbers.
• When the person lives in their own home, the provider cannot be a "responsible relative": the person's spouse, or the parent of an unmarried child under 18 (BEM 545 Exhibit ID). A physician must also verify the need for personal care and how long it is expected to last.

What to do next

1. Apply for Medicaid through MI Bridges or your county MDHHS office, and ask for Home Help at the same time. Our guide to contacting your county office has the State's numbers.
2. If MDHHS says your parent has a deductible, ask the Adult Services Worker about the personal care option in BEM 545 Exhibit II.
3. Keep every medical bill and receipt, and report expenses as soon as you have them.

Moving money or property to get under a limit has its own rules (divestment, BEM 405), which this guide does not cover. Talk to MDHHS or a licensed elder law attorney before doing that.

Questions families ask

What is a Medicaid spend-down in Michigan?

Michigan calls it a deductible (BEM 545). When a person who is aged, blind or disabled meets every Medicaid rule except income, MDHHS can open an active deductible case. Each calendar month is its own deductible period. Medicaid coverage is added for a month once the person reports and verifies allowable medical expenses that equal or exceed that month's deductible amount.

How is the Michigan Medicaid deductible amount figured?

The deductible is the person's monthly excess income: net income above the Group 2 needs in BEM 544. The main need item is the protected income level in RFT 240, which depends on household size and the county's shelter area; for one person it ranges from $341 to $408 a month in the 2013 table we read. Health insurance and Medicare premiums the person pays also count as needs. MDHHS works out the exact figure.

What bills count toward the deductible?

BEM 545 Exhibit I lists allowable medical expenses, including care from doctors, hospitals, pharmacies (prescription drugs and some supplies such as incontinence supplies), medical equipment, transportation for medical reasons, and personal care services at home that relate to daily activities. Old unpaid medical bills can sometimes be used. The specialist must verify each expense.

Can my parent get Home Help with a deductible?

Possibly. BEM 545 Exhibit II and ASM 105 describe a personal care option. If your parent meets every Medicaid factor except income, has an open Home Help case, the amount MDHHS approves for personal care is more than the excess income, and your parent agrees to pay the excess income to the caregiver, Medicaid can continue each month. The State reduces its Home Help payment by that amount, and your parent pays it to the caregiver. MDHHS decides each case.

Who decides?

MDHHS does. A Medicaid eligibility specialist figures the deductible, and an Adult Services Worker decides Home Help. This guide explains the published rules; it cannot tell you what a particular person's deductible will be or whether they qualify.