Opinion ID: 590940
Heading Depth: 3
Heading Rank: 3

Heading: Resource Spend Down

Text: 18 Resource spend down is a term with chameleon-like flexibility. Generally speaking, a resource spend down rule allows Medicaid applicants to offset their resources by incurred but unpaid medical bills. Recently, an Indiana Court of Appeals held that Indiana allowed a resource spend down in January 1, 1972. Indiana Dep't of Public Welfare v. Payne, 592 N.E.2d 714 (Ind.App.1992). The Medicaid applicant in Payne had accumulated approximately $150,000 in medical bills during a five-month hospital stay. He was denied Medicaid eligibility because his resources exceeded $1,500 on the first of each of those months. The total amount of excess resources for those five months was around $4,000. Id. at 720-721. The court decided that Payne was due benefits, stating that Indiana must allow Payne to spend down his excess resources to become eligible for Medicaid. Id. at 724. In other words, once Payne applied his excess resources toward his medical bills, under Indiana's rules in 1972, the remaining $146,000 in medical bills would have been eligible for Medicaid reimbursement. Id. at 721. 19 The state of Illinois uses a resource spend down policy that works differently than the system described in Payne. In Hession v. Illinois Dep't of Public Aid, 129 Ill.2d 535, 136 Ill.Dec. 65, 72, 544 N.E.2d 751, 758, Illinois' resource spend down was described as follows: 20 [B]y allowing an applicant to spend down the assets above the disregard with incurred medical expenses, the applicant is entitled to Medicaid benefits once the medical expenses exceed the excess in assets. 21 This type of resource spend down is similar to an insurance deductible. Unlike the system described in Payne, Illinois apparently does not require proof of actual spend down before paying the applicant's medical bills. 8 From the perspective of the applicant, the only difference is one of timing. The medical provider would presumably prefer Indiana's old system because it gives an incentive to the applicant to pay his portion of the medical bills sooner. 22 Illinois' resource spend down applies only to medical debts. The discussion in Payne does not indicate such a limitation, but the facts of that case only involved medical debts. Unless otherwise specified, we limit our discussion of resource spend down to medical debts. This was the approach of the district court, which stated that Because Indiana does not allow applicants to spend down their resources, offsetting them against incurred medical expenses, the Ungers' available resources for February-August, 1989 were not decreased by their [nursing home debts]. 772 F.Supp. at 1087. Limiting spend down to medical debts is also consistent with an income spend down, which is limited to medical debts.