What Is Medicaid Share of Cost?

Medicaid provides health insurance to low-income adults and children around the country. Funded jointly by federal and state governments, Medicaid is administered by states, so eligibility criteria can differ depending on where you live. Every state requires that beneficiaries earn below a certain amount, but share of cost can help those with slightly higher incomes access the program. Keep reading to learn more about Medicaid share of cost and what it means for you.

What Is Medicaid Share of Cost?

Medicaid share of cost is a general name for programs that help people with high medical costs access Medicaid, even if their income is too high to qualify. As of 2023, 37 states had share of costs programs known by a number of names, including medically needy programs, maintenance needs allowances and Medicaid spend downs.

Medicaid share of cost is a pathway for people to get access to Medicaid, even if they don’t meet the financial eligibility requirements. It’s geared toward helping people with unusually high medical expenses.

In this program, medically needy beneficiaries must pay a certain amount of their health care costs before they gain access to Medicaid. In this way, share of cost is similar to deductibles in private health insurance plans. Share of cost looks at all medical expenses combined rather than having a specific amount for each procedure or service.

How Does Share of Cost Work?

Medicaid share of costs programs set an income limit, known as the medically needy income limit, or MNIL. People in the program must spend down their excess income on medical expenses to reach the MNIL. Once they spend enough excess income, Medicaid covers any further medical costs for the rest of the period. 

As an example, a person has a monthly income of $600. The MNIL in their state is $300. If the participant incurs $300 of medical expenses in the month, they have spent down to the MNIL. At this point, Medicaid will cover any further health care costs.

Share of costs work within a certain time period, known as the medically needy period. This period is between one and six months, depending on the state. At the end of the medically needy period, the share of cost resets and participants have to spend down their income again to qualify for the next period. 

What Are the Medicaid Share of Cost Eligibility Requirements?

To qualify for a share of cost program, applicants must meet all eligibility criteria except the income limit. This means they must be in a category that’s eligible for Medicaid, such as an older person or someone who is blind, disabled or pregnant. They must also have limited assets, as the asset limit applies for the medically needy pathway. 

In addition, the applicant must have very high medical expenses. The MNIL can be quite low, so it’s difficult to meet the requirements without significant health care costs. 

Qualifying for any Medicaid program can be complicated. Talking to a Medicaid planner can help you determine if you’re eligible, and they can also assist with the application process.

How Is Share of Cost Calculated?

MNIL’s are determined by the state. They can vary based on the number of people in your household. 

When calculating whether you’ve met your share of costs, Medicaid looks at any medical bills you have, paid or unpaid. Each bill can only be counted once towards your share of cost. This means that if you count an unpaid bill in one period, it can’t be counted in the next period, even if that’s when it’s paid. 

Paid bills can only be counted in the month that they’re paid, and they must be paid by you or someone who didn’t have to pay it, such as your grown child. Any bill that’s been paid for by Medicare or private insurance doesn’t count toward your share of cost.  

Other expenses that can possibly be counted toward share of cost, depending on your state, include:

• Bills for other members of your household if they’re for your spouse, children under 21 or a disabled person who’s dependent on you
• Cost of trips to the doctor, hospital or drugstore
• Cost of medical supplies, such as needles or over-the-counter prescriptions
• Cost of health insurance, such as Medicare and other health insurance premiums