Individuals with incomes exceeding thresholds for regular Medicaid eligibility may qualify under state medically needy programs by spending down excess income on healthcare services. For the vulnerable population of Medicare beneficiaries who spend down to Medicaid, the Part D transition has added additional complexities that may result in disruptions in pharmacy coverage and add financial burdens.

This paper explores the inter-relationship of Medicare prescription drug coverage and Medicaid spend-down for the medically needy. It describes Part D impacts for spend-down individuals and the resulting effects on their eligibility both for Medicaid and the Medicare Low-Income Subsidy assistance.

 Issue Brief (.pdf)