How do Michigan’s medically needy/spend‑down calculations work and which medical expenses count toward qualifying in 2026?
Executive summary
Michigan’s medically needy or “spend‑down” pathway lets people whose income exceeds Medicaid limits become eligible by applying unpaid medical bills against the excess; the state’s 2026 long‑term care income threshold for institutional Medicaid sits at about $2,982/month while the medically needy income standard used to calculate a spend‑down is lower (Mich. MDHHS figures cited as of April 1, 2025) so applicants must incur medical expenses equal to the difference to qualify [1] [2] [3]. Countable asset ceilings for Michigan long‑term care programs in 2026 are low (individual asset limit $9,950; married limits and spousal protections differ), and Michigan requires documentation of medical bills and enforces a five‑year look‑back on transfers [4] [2] [5].
1. What “spend‑down” actually is and how Michigan applies it
“Spend‑down” in Michigan is the state implementation of the federal medically needy option: when a person’s monthly income exceeds the state’s medically needy income level, the difference becomes a monthly deductible that must be met through unpaid medical and remedial expenses before Medicaid pays for the rest of the month; once the incurred medical expenses exceed that spend‑down amount, the applicant is eligible for Medicaid for the remainder of that month (federal guidance on medically needy programs and the mechanics of incurred expenses applies; Michigan describes the process similarly) [3] [2].
2. The math: converting income and the medically needy standard into a monthly deductible
The basic calculation is straightforward in concept and precise only with applicant numbers: take total countable monthly income, subtract Michigan’s medically needy income limit (Michigan’s TM Group/Medically Needy standard was published as $1,304.17 for an individual and $1,762.50 for a couple as of April 1, 2025), and the remainder is the monthly spend‑down amount the person must meet with medical bills in each spend‑down period; for most long‑term care eligibility the standard institutional income limit is higher (about $2,982/month for single applicants in 2026), but if income exceeds the medically needy standard the spend‑down pathway is what enables coverage [2] [1] [3].
3. Which medical expenses count toward meeting the spend‑down
Expenses that “count” are medically necessary charges for medical and remedial care that the applicant has incurred and is personally responsible for (the federal rule: incurred expenses for medical/remedial care without insurance coverage count toward spend‑down) and Michigan requires proof of those bills to MDHHS [3] [5]. Examples cited across guidance include bills for nursing home care, doctor visits, prescriptions, and insurance premiums such as Medicare Part B or Part D premiums when applicable — Michigan explicitly allows certain premium payments and the state’s long‑term care rules permit Medicare premium payments for dual eligibles while institutionalized residents may be limited to a small personal needs allowance (e.g., $60/month) [2] [5] [3].
4. Assets, spousal protections and the practical constraints
Even after meeting spend‑down rules, applicants must satisfy Michigan’s asset limits: nursing‑home Medically Needy pathway asset limits for 2026 are reported at $9,950 for an individual (and different rules apply for couples, including community spouse resource allowances up to federal maxima), and asset treatment varies by program type and whether both spouses apply; legal and planning advisories stress that transfers during the look‑back and the need to preserve community spouse resources complicate simple “spend it down” strategies [4] [6] [7] [2].
5. Practical notes, enforcement and limits of available reporting
Michigan enforces a 60‑month look‑back on transfers that can trigger penalties, requires documentation of medical bills to verify spend‑down, and applies differing monthly reporting periods that may force applicants to repeat the process each month; available sources describe the mechanics and the main figures but do not publish an exhaustive, line‑item list of every allowable expense or the precise monthly accounting rules that MDHHS will apply in every case — applicants and advisers must consult MDHHS or a specialist for case‑specific calculations and bill‑by‑bill acceptance [5] [3] [2].