Illinois Medicaid Spenddown and Medicare: How It Works

Illinois’s Spenddown Program is part of the State’s medical-assistance system. It can apply when a person is otherwise in an aged, blind or disabled eligibility pathway but has income or resources above the regular limit for medical assistance.

Yes. Illinois HFS specifically lists health-insurance premiums, including Medicare premiums, as expenses that can be used to meet spenddown. Medicare deductibles and copayments can also count, along with many other medical expenses.

The bill does not always have to be paid first. Illinois allows qualifying unpaid medical bills as well as receipts for bills that were paid, subject to the State’s timing and documentation rules.

The simplest way to think about the process is that Illinois assigns a spenddown amount and you establish that enough allowable medical expense has been incurred or paid to reach that amount.

One bill or receipt cannot be reused repeatedly. Once an expense has been applied toward spenddown, the same charge cannot be counted again in another month.

Illinois has specific timing rules for using expenses. The exact documentation should be reviewed with the DHS caseworker, but the State’s Spenddown booklet provides two particularly useful rules.

If you have old hospital, doctor or prescription expenses, do not assume they are useless. Keep the paperwork and ask DHS whether the bill or receipt can be applied to your current spenddown.

Pay-in Spenddown gives some Illinois participants another way to meet the monthly amount without first accumulating the entire amount in new medical bills.

Illinois says eligible people who are aged, blind or have a disability and live in the community may receive a Pay-in Spenddown enrollment form. Participation is not automatic merely because a spenddown case exists.

For someone on Medicare, this distinction is important. Medicaid Spenddown and a Medicare Savings Program are not the same benefit.

If your goal is mainly to get help with the Medicare Part B premium, do not assume spenddown is the only route. Review the Illinois Medicare Savings Programs guide and let Illinois determine which assistance categories you qualify for.

Not necessarily. A person with a spenddown case may have Illinois medical coverage only after the spenddown requirements for the applicable period are satisfied. That is different from having continuous full Medicaid eligibility without a monthly spenddown obligation.

For the broader Illinois Medicare/Medicaid picture, see Medicare and Medicaid in Illinois and Full vs. Partial Dual Eligibility.

If you have Medicare, Medicare generally remains the first payer for Medicare-covered care. Illinois Medicaid may become a secondary payer for eligible Medicaid-covered costs when your Medicaid coverage is active and the provider can bill the State appropriately.

• Continue using your Medicare coverage according to the rules of Original Medicare or your Medicare Advantage plan.
• Do not assume that meeting spenddown changes a Medicare Advantage network, referral or prior-authorization requirement.
• Confirm that a provider accepts the applicable Illinois Medicaid coverage before expecting Medicaid payment.
• Keep Medicare Explanation of Benefits, Medicare Summary Notices, premium records and medical bills because they may help document allowable spenddown expenses.
• If your Medicaid status changes during the year, re-check any D-SNP, Extra Help or cost-sharing assumptions tied to that status.

Illinois uses its Application for Benefits Eligibility (ABE) system for medical-assistance applications. The ABE application specifically explains that a person who is aged, blind or has a disability and is over the regular AABD Medical income or resource limit may be evaluated for spenddown.

When first applying for medical assistance, Illinois may also evaluate up to three months before the application month. HFS explains that coverage for those months depends on meeting the spenddown requirement for each applicable month.

1. Read the State notice. Confirm that the case is actually an AABD Medical spenddown case and note the assigned monthly amount.
2. Save Medicare premium records. Keep documentation showing Medicare premiums and other health-insurance premiums you are responsible for.
3. Keep medical bills and receipts. Include doctor, hospital, prescription, dental, therapy, equipment and other potentially allowable expenses.
4. Track which bills were already used. The same expense cannot be credited twice.
5. Ask about Pay-in Spenddown. If you are aged, blind or have a disability and live in the community, confirm whether HFS has offered you the Pay-in option.
6. Specify the month when needed. If the timing of the expenses matters, ask the caseworker how the expenses will be applied and whether you can designate a later month.
7. Verify provider acceptance. Having an active medical card does not force every medical provider to accept Illinois Medicaid.
8. Re-check Medicare plan eligibility. If Medicaid status is being used to qualify for a D-SNP or other dual-eligible benefit, verify the exact current category and effective dates.