Here's a situation that plays out in Brooklyn households every week: an older adult gets a letter saying they don't qualify for Medicaid because their income is too high. They assume the door is closed, stop asking questions, and start spending down savings they worked decades to build. What they don't know is that New York has a specific program built for exactly this situation, the Medicaid spend-down, also called the excess income program. Most families who need it have never heard the name.
At Alatsas Law Firm, we walk Brooklyn families through these situations every day. Understanding how the medicaid spend down New York program works, how to calculate your amount, and which bills actually count can mean the difference between keeping your assets and losing them to long-term care costs. This article covers the numbers, the two ways to meet your spend-down requirement, which expenses qualify, and what the nursing home rules look like.
How does Medicaid spend down in New York work?
New York doesn't simply reject you when your income exceeds the Medicaid limit. Instead, the state calculates the gap between what you earn and what the limit allows. That gap is your spend-down amount, sometimes called your surplus income or excess income. Meet it each month, and Medicaid coverage activates for the rest of that month.
The 2026 income limits you need to know
For 2026, the Medicaid income limit is $1,836 per month for a single person and $2,489 per month for a couple when both spouses are applying. Any income above those thresholds is treated as excess income. If a single person receives $2,200 per month in Social Security, their spend-down amount is $364 per month, that's the number they need to satisfy each month to unlock coverage.
Here's a second worked example: a couple with $3,000 in combined monthly income would have $511 in excess income ($3,000 minus $2,489). Each month, they would need to submit qualifying medical bills totaling at least $511, or pay that amount directly to the Medicaid program, to activate coverage for that month.
Who the spend-down program is designed for
This program applies to non-MAGI Medicaid applicants, which generally means adults 65 and older, people with disabilities, or individuals who need long-term care services. It is not available to younger adults applying through the standard marketplace-based Medicaid. The rules for nursing home Medicaid share these income limits, but the process differs significantly, that distinction is covered below.
Two ways to meet your spend-down requirement
Once you know your excess income amount, you have two options to satisfy it. Neither requires you to hand over money before receiving care. Each month, you choose the route that works best for your situation.
Option 1: Submit medical bills (the incurring-expenses route)
You can bring paid or unpaid medical bills to your local Department of Social Services that total at least your excess income amount. Once the office accepts those bills, Medicaid covers eligible services for the rest of that month. One important point: you don't have to pay the bill first. An unpaid bill counts as long as it was legitimately incurred.
This is the route most people use, and it's often the most practical because older adults tend to accumulate medical bills quickly. If you have recurring prescriptions, regular therapy visits, or ongoing specialist care, those bills can routinely satisfy your monthly threshold without any additional out-of-pocket cost.
Option 2: The pay-in route
With this option, you send a monthly payment equal to your excess income amount directly to the Medicaid program, and coverage activates for that month in return. In New York City, payments go through HRA's Division of Accounts Receivable and Billing. Upstate applicants handle pay-in through their local DSS office. County processing procedures vary, which is one reason local guidance matters. You can typically pay for one to six months at a time, and paying the full six months upfront can unlock full Medicaid coverage for that entire period.
Which expenses count and what proof you need
Not every bill qualifies toward your spend-down amount. New York has specific rules, and the documentation requirements are stricter than most families expect going in.
Approved expenses: what the state accepts
New York recognizes a broad range of countable medical expenses. Qualifying bills include:
- Doctor visits, dental care, eye exams, and lab tests
- Prescription drugs and medications
- Health insurance premiums, including Medicare-related premiums and private insurance costs
- Medical equipment such as hearing aids, eyeglasses, and prosthetic devices
- Home care, physical therapy, and transportation to medical appointments
- Prescription costs covered by programs like EPIC or ADAP (those payments can count toward your spend-down)
What doesn't count: cosmetics, rent, food, utilities, and general living costs are all excluded.
Documentation rules and the timing trap
Two timing rules catch families off guard. Paid bills must have been incurred and paid within the three calendar months before your application month. Unpaid bills are treated far more generously: they can be years old, sometimes up to six years, as long as they're still legally collectible.
Every bill submitted should include the patient's name, date of service, a description of the service, and the cost. In New York City, faxed submissions require additional identifying information: your case number, CIN number, and the month for which coverage is being requested.
Nursing home Medicaid and the rules that work differently
Community Medicaid spend-down and nursing home Medicaid share the same income thresholds, but the requirements for institutional care are considerably stricter. Families who don't understand this distinction often make decisions that cost them tens of thousands of dollars.
Asset limits, NAMI, and the personal needs allowance
In 2026, a single nursing home applicant must bring countable assets below $33,038 to qualify. Once approved, nearly all monthly income goes to the facility as the Net Available Monthly Income (NAMI). The resident keeps only $50 per month as a personal needs allowance. A spouse remaining in the community has separate income and resource protections under spousal impoverishment rules, which can preserve substantially more for the at-home spouse.
The 60-month look-back and why it matters more here
Unlike community Medicaid, nursing home Medicaid applies a 60-month look-back period. Any assets transferred for less than fair market value during those five years can trigger a penalty period of ineligibility. This is where families encounter serious trouble without advance planning. The application itself is processed by local DSS or HRA, not NY State of Health, and mistakes made before submission are very difficult to undo afterward.
Spend-down rules NY residents should know before filing
The core framework is straightforward: know your income, calculate your excess amount, decide between submitting bills or using the pay-in route, and gather the right documentation. File using form DOH-4220, with supplement DOH-5178A when required. Spend-down is a monthly process. Missing a submission means losing coverage for that month, with no ability to recover it retroactively.
Running the numbers on your spend-down amount is a math exercise. Protecting your assets while qualifying for Medicaid is a legal strategy, one that requires someone who knows New York's rules well. At Alatsas Law Firm, attorney Ted Alatsas has spent nearly 30 years helping Brooklyn families navigate exactly these decisions, from community Medicaid spend-down to nursing home applications and Medicaid Asset Protection Trusts. The stakes are too high to navigate alone, and the first conversation is free. Reach out to our Brooklyn office to schedule your initial consultation before you submit anything to the government.
