Medicaid Spend Down in Virginia: Eligibility, Limits, and How to Apply

Medicaid spend down in Virginia is a way to qualify for coverage when your income is above the regular Medicaid limit. Once your out-of-pocket medical bills bring your countable income down to the state’s Medically Needy Income Level, Medicaid starts paying for the rest of a set budget period. Virginia calls this the Medically Needy pathway, and it’s open to children, pregnant individuals, some people under 21, and aged, blind, or disabled adults.¹

How the Spend-Down Amount Is Calculated

You’re only evaluated for a spend down after Virginia determines that your income is too high for full-benefit Medicaid. The state subtracts the Medically Needy Income Level from your countable income. Whatever’s left is your spend-down amount, and it works like a deductible: you have to incur that much in medical expenses before Medicaid begins paying.¹

Most medical costs count. That includes doctor and behavioral health visits, dental care, hospital bills, prescriptions, health insurance premiums (Medicare premiums included), and certain medical supplies. Older unpaid bills can also be applied, as long as you’re still responsible for them and they weren’t already used in a prior spend-down period. Bills you’ve already paid only count if you paid them during the current budget period. For any expense, you’ll need documentation showing what insurance or another payer covered and what you still owe.¹

When Coverage Starts and How Long It Lasts

Virginia uses two different budget periods.

If you’re receiving long-term services and supports, your spend down is figured month by month. That covers people in nursing facilities, in the Program of All-Inclusive Care for the Elderly (PACE), or receiving home and community-based services. Coverage starts on the first day of the month the spend down is met. Nursing facility and PACE residents can use projected future expenses to hit the threshold; HCBS recipients have to use expenses already incurred.¹

Everyone else gets a six-month budget period. Expenses have to be actually incurred before they can be counted. Coverage begins the day you meet the spend-down amount and runs through the end of that six-month window.¹

When a six-month period ends, people also enrolled in QMB, SLMB, or QI Medicare-related programs are re-evaluated automatically at annual renewal. If you have no other Medicaid coverage, you have to submit a new application to be considered again.¹

Who Qualifies

You have to meet Virginia’s general Medicaid requirements first: state residency, U.S. citizenship or qualifying immigration status, and a Social Security number. Beyond that, the spend down is only open to four groups:¹

Children under 18.
People who are pregnant or within 12 months of the end of a pregnancy.
People under 21 who are in non-IV-E foster care or adoption assistance, in the custody of the Department of Juvenile Justice, or living in an intermediate care nursing facility.
Aged, blind, or disabled adults, who are evaluated on a separate track with their own application supplement.

If you’re a working-age adult who doesn’t fit one of these categories, the Medically Needy spend down isn’t a path to coverage for you, even if your bills are high.

Asset Limits

You also have to be under the resource limit: $2,000 for a household of one, $3,000 for a household of two, plus $100 for each additional person. The $100 add-on applies to children and pregnant applicants, but not to the aged, blind, or disabled category.¹

A lot of what you own doesn’t count. Virginia excludes your principal residence and the land it sits on, one vehicle per household, ordinary household goods and personal effects, up to $3,500 in burial funds per person and their spouse, cemetery plots, life insurance policies with a combined face value of $1,500 or less per person, ABLE account funds, and property essential to self-support (including resources held in an approved Plan for Achieving Self-Support). Real property that isn’t automatically exempt can still be disregarded if you’re making a documented, reasonable effort to sell it.²

How to Apply

There’s no separate spend-down application. You start by submitting a Virginia Cardinal Care Application, the state’s standard health coverage application. If you’re found ineligible for full Medicaid because your income is too high, you’ll then be asked to complete a supplement so the state can evaluate you for Medically Needy coverage.³

Which supplement depends on your category. Children and pregnant applicants use Appendix E, which asks for the cash value of bank accounts, life insurance, and other countable resources for the applicant, a spouse, and, for a child applicant, parents and siblings.⁴ Aged, blind, or disabled applicants use Appendix D, which comes with the initial application.¹

Once your spend-down period is set, you submit proof of your medical expenses to your local Department of Social Services office. Each bill needs to show what insurance or another responsible party paid and what balance you still owe.

Extra Protections for Pregnant Applicants and Children

If you enroll while pregnant or on the day the pregnancy ends, you stay eligible through the end of the 12th month after the pregnancy ends. Income increases during that stretch don’t affect your spend-down eligibility, and before coverage ends the state has to check whether you qualify under any other Medicaid group.⁵

Since January 1, 2024, children under 19 on Medicaid get 12 months of continuous eligibility. Their coverage isn’t cut off mid-year for income changes, with narrow exceptions: turning 19, moving out of state, a request to close the case, death, or enrollment through agency error or fraud. Income increases during a child’s spend-down budget period are also disregarded.⁵

If You’re Denied or Disagree With the Calculation

You can appeal any action that denies, reduces, or terminates your Medicaid coverage, including how your spend down was figured.⁶

If you’re in managed care, the first step is an internal appeal with your managed care organization, filed within 60 days of the adverse notice. If that doesn’t resolve it, you can request a State Fair Hearing through DMAS, generally within 120 days of the MCO’s final decision. A hearing officer issues a written ruling; if you disagree, you have 30 days to file a Notice of Appeal with DMAS and 30 more to petition in circuit court.⁷

To keep existing services in place while you appeal, act before the change’s effective date or within 10 days of the notice date (DMAS adds five days for mailing). If your appeal fails, you may have to repay the cost of services you received while it was pending.⁷

Appeals can go through the DMAS Appeals Information Management System (AIMS) online, by email to appeals@dmas.virginia.gov, by fax to (804) 452-5454, or by mail to the DMAS Appeals Division, 600 East Broad Street, Richmond, VA 23219. For help, Virginia Legal Aid runs a helpline at (866) 552-7977.⁶

Where to Get Help

Cover Virginia answers spend-down questions at 1-855-242-8282 (TDD 1-888-221-1590), and the Appendix E form and related materials are on the Cover Virginia applications page in English and Spanish.³ For forms in other languages, large print, or other accessible formats, call 1-833-5CALLVA (TTY 1-888-221-1590).⁴

1
Cover Virginia (DMAS). Fact Sheet: Spend Down
2
Virginia Code Commission. 12VAC30-40-290
3
Cover Virginia (DMAS). Applications
4
Cover Virginia (DMAS). Appendix E: Medically Needy Spenddown
5
DMAS. Transmittal Notice DMAS-30
6
DMAS. Appeals
7
Virginia Poverty Law Center. Medicaid Guide