Medicaid income spend-down lets applicants whose monthly income exceeds the regular limit qualify by incurring medical bills equal to the gap. The state sets a Medically Needy Income Level (MNIL), subtracts it from countable income, and treats the difference as a monthly or multi-month deductible. Pennsylvania posts a $425 MNIL on a six-month budget. Michigan uses a $1,330 Protected Income Level on a one-month calendar cycle. About 34 states run a medically needy pathway; income-cap states like Texas often require a Miller Trust instead.
Regular Medicaid for seniors and people with disabilities sets a monthly income ceiling. Applicants above that ceiling are usually denied unless the state offers a medically needy pathway. That pathway turns excess income into a deductible you pay down with medical bills.
Federal rules let each state choose whether to run medically needy coverage. KFF counted 34 states with the pathway in 2026. The remaining states, including Texas and Florida for many nursing facility cases, cap income near $2,982 per month and expect a Miller Trust for dollars above the cap.
Income spend-down is not the same as asset spend-down. A retiree in Columbus might hold $18,000 in a Chase checking account and need asset planning on our Ohio calculator while a neighbor with $900 in savings but $1,400 monthly Social Security faces an income worksheet instead.
Our site focuses on countable resources at the state calculator hub. This guide covers the income side so you know when medical bills, not bank withdrawals, drive eligibility. Read our overview of Medicaid spend-down for the full asset-and-income picture.
Common mistake:Assuming a low bank balance guarantees Medicaid approval. Caseworkers run income and resource tests on separate worksheets. Clear the income column before you stop tracking medical receipts.
The MNIL is the income floor your state expects you to keep for non-medical needs after medical bills are counted. Medicaid regulations require each state to publish one MNIL figure per medically needy group, though states express it as a monthly dollar amount, a percentage of poverty, or a six-month lump sum.
KFF reported a median MNIL near $563 per month for seniors and people with disabilities in 2026. Real limits span from about $200 in Arkansas to above $1,800 in Vermont. The spread matters because the same $1,200 Social Security check clears eligibility in one state and triggers a $400 monthly deductible in another.
Michigan labels its figure a Protected Income Level (PIL) on Group 2 worksheets. Pennsylvania calls it the Medically Needy Only net income limit on CAO printouts. The name changes. The math does not: countable income above the published level becomes spend-down obligation.
Married couples often receive a higher MNIL than single applicants. Pennsylvania lists $442 monthly for a household of two. Michigan posts $1,804 for a couple in 2026. Spousal impoverishment rules can shift which spouse's income counts when only one spouse applies for nursing facility Medicaid.
| Measure | Pennsylvania (PA DHS) | Michigan (MDHHS) |
|---|---|---|
| Single MNIL / PIL | $425 per month | $1,330 per month |
| Couple MNIL / PIL | $442 per month | $1,804 per month |
| Typical budget period | 6 months ($2,550 single) | 1 calendar month |
| Nursing facility income cap | $2,982 gross monthly | Miller Trust above cap |
| Single asset limit | $2,000 countable | $2,000 countable |
| Local agency | County Assistance Office | County MDHHS office |
Caseworkers start with gross monthly income from Social Security, pensions, and recurring withdrawals. They subtract allowed deductions such as Medicare Part B premiums, earned income exclusions, and sometimes a small personal needs allowance.
The agency compares net countable income to the MNIL. The difference is excess income. In Pennsylvania, Eleanor in Erie earns $1,050 net after the Part B deduction. Subtract the $425 MNIL and she owes $625 per month in qualifying medical costs, or $3,750 across her six-month budget period.
Michigan runs the same subtraction monthly. Harold in Saginaw shows $1,900 countable income in March 2026. MDHHS subtracts the $1,330 PIL and sets a $570 deductible for that month only. If April income drops to $1,200, the deductible disappears because income fell below the PIL.
Some states annualize or multiply the monthly gap across the full budget window. Always ask your worker for the period start date and whether unused medical bills roll into the next month. Michigan allows certain old bills under BEM 545 rules. Pennsylvania CAOs apply a set deduction order on the MNO worksheet.
CMS lets states pick a budget period between one and six months. Nine states reported one-month periods to KFF in 2026. Thirteen used six-month windows. The period defines how long your spend-down obligation lasts before the counter resets.
Coverage timing varies after you meet the threshold. Some states activate Medicaid on the day your verified expenses cross the line. Others backdate to the first of that month. Bills submitted to meet spend-down generally remain your debt. Medicaid pays covered services incurred after eligibility begins, not the invoices that bought your way in.
Rosa in Miami-Dade applied for Florida Medicaid with $2,400 monthly pension income. Florida did not offer her a medically needy nursing facility pathway, so she opened a Qualified Income Trust with a local attorney instead of stacking hospital bills. Families comparing Florida rules can read income-cap details on our Florida calculator page.
New York runs a different excess-income model with a much higher resource allowance for many cases. Applicants there often work through surplus-income budgeting on the New York calculator while downstate workers apply district-specific forms.
Countable income includes Social Security, Railroad Retirement, pensions, annuity payments, and regular IRA distributions. States differ on whether VA aid and attendance counts in full. Temporary gifts and one-time lawsuit settlements usually spike a single month and can push you into spend-down for that period only.
Deductions lower the income side before MNIL subtraction. Medicare Part B at $202.90 per month in 2026 is a common adjustment. Employer-sponsored health premiums for a working spouse may count when the medical group definition includes that person on Michigan BEM 544 worksheets.
Pennsylvania CAOs also allow certain shelter and utility standards on community-based MNO cases before they compare net income to $425. Nursing facility applicants may see personal needs allowance deductions near $45 to $60 on facility worksheets.
Thomas in Pittsburgh tried to deduct car payments and credit card minimums. The CAO disallowed both because they are not medical costs or authorized income disregards. He later submitted $680 in pharmacy and dental bills that did count toward his six-month MNO target.
Common mistake:Reporting gross Social Security without subtracting the Medicare premium already withheld. Overstating income inflates your spend-down and can delay approval by hundreds of dollars per month.
Federal guidance allows states to count incurred medical and remedial care expenses toward medically needy spend-down. Most states accept doctor copays, hospital statements, prescription receipts, dental charges, vision exams, and health insurance premiums.
Unpaid bills often qualify if the provider will verify the balance. Michigan Group 2 manuals list old bills that were not used on prior months. Pennsylvania may accept projected nursing facility costs once level-of-care is approved, which helps families pre-clear a nursing home move.
Expenses for non-applicants sometimes count when they belong to the medical group defined on the case. A wife's chemotherapy bill may reduce the husband's spend-down if both are on the same medically needy group worksheet.
Non-medical spending never counts. Prepaying rent, buying a car for a grandchild, or paying off a credit card does not replace medical receipts. Those channels belong to asset spend-down planning, not income deductibles.
Roughly 36 states enforce a special income limit near 300 percent of the federal SSI benefit rate, $2,982 per month in 2026 for nursing facility Medicaid. Applicants above that cap cannot qualify on income alone without a planning tool.
In strict income-cap states, excess monthly income must flow into a Qualified Income Trust, also called a Miller Trust. The trust pays the nursing home a patient liability amount each month. Read our Miller Trust guide for funding and trustee rules.
Texas HHSC does not offer medically needy spend-down for most nursing facility applicants. A Dallas widow with $3,400 monthly income needs a Miller Trust, not a stack of hospital bills. Our Texas page explains the asset side while an elder law attorney drafts the trust.
Pennsylvania and Michigan sit in the overlap zone. Both publish the $2,982 nursing facility gross cap and still run medically needy or Group 2 pathways for applicants who cannot use a trust. That dual-track system confuses families who read only the higher cap online.
Use this checklist at the start of each budget period. Adjust steps when your state uses six-month windows instead of calendar months.
Pair the checklist with asset math on our Pennsylvania or Michigan calculators when savings still exceed $2,000. Income and resource tests run in parallel.
Keep copies for your application packet. County workers reject incomplete folders even when the spend-down math is correct.
No two states publish the same MNIL, budget period, and deduction list. KFF's 2026 table shows Michigan at $1,330 for an individual while Pennsylvania lists $425. Ohio offers medically needy coverage with its own figures on the Ohio calculator page.
Florida and Texas steer many nursing facility cases toward Miller Trusts instead of medical-bill spend-down. New York uses surplus-income budgeting with higher asset allowances for certain households. Always open the state page on our calculator hub before you assume your neighbor's rules apply to you.
Pennsylvania CAOs work from six-month MNO limits posted at PA DHS. Michigan MDHHS caseworkers apply Group 2 PIL tables from county offices in Detroit, Grand Rapids, and Lansing. The agency name on your approval letter is the final authority.
We publish limits as of September 2026 on our about page and explain sourcing on the editorial policy. Email corrections with a link to the state PDF and we will update the tables.
Common mistake:Applying last year's MNIL after a January rate change. Pennsylvania and Michigan typically update income figures each January. Reconfirm numbers every winter.
Our state calculators estimate countable asset gaps against the $2,000 single limit and 2026 CSRA brackets. They do not yet run full income spend-down worksheets with MNIL subtraction and medical bill totals.
Use the home page comparison table when you need a quick view of which states pair low MNIL figures with standard asset caps. Pennsylvania and Michigan entries call out the $425 and $1,330 income benchmarks directly.
After asset math shows a $0 gap, shift to income planning with this guide's checklist. If assets still exceed limits, work the asset spend-down first because gifts during the 60-month look-back can block both tests.
We are not a law firm. A positive calculator result is a planning estimate, not an eligibility determination from PA DHS, MDHHS, or any county office.
It is the difference between your countable monthly income and your state Medically Needy Income Level, often multiplied across the budget period. In Pennsylvania, $1,050 net income minus a $425 MNIL leaves $625 per month, or $3,750 over six months. Michigan uses a $1,330 PIL on monthly Group 2 cases.
The $2,982 figure (300% of the federal SSI rate in 2026) is a gross income ceiling for categorical nursing facility Medicaid. The MNIL is the lower net-income floor used in medically needy spend-down. Pennsylvania applicants can be under $2,982 gross yet still owe spend-down if net income exceeds $425.
Pennsylvania DHS publishes Medically Needy Only limits on a six-month basis. A single applicant sees $2,550 per period, which equals about $425 per month. Medical expenses must clear the full six-month target unless your CAO worker applies a different budget classification.
Michigan sets a higher Protected Income Level for Group 2 medically needy cases. MDHHS subtracts $1,330 from countable monthly income to find the deductible. A retiree with $1,900 income faces a $570 March deductible, while the same income in Pennsylvania would create a much larger six-month obligation.
Most states count doctor visits, hospital charges, prescriptions, dental work, vision care, and health insurance premiums. Michigan BEM 545 allows certain unpaid and carryover bills. Pennsylvania may count projected nursing home costs after level-of-care approval. Cosmetic procedures and non-medical purchases do not count.
Low assets alone do not waive income rules. You must either meet the MNIL after deductions, satisfy spend-down with medical bills, or use a Miller Trust in income-cap states. Asset and income tests are separate worksheets.
Most nursing facility applicants in Texas and Florida must use a Qualified Income Trust when income exceeds the special income limit. Medical-bill spend-down is not the standard pathway there. Confirm with HHSC or Florida DCF before you delay trust planning.
Coverage often begins the day verified expenses reach the threshold, though some states backdate to the first of the month. Bills used to meet spend-down usually stay your responsibility. Medicaid covers services after eligibility starts, subject to program rules.
The obligation resets. You must accumulate new qualifying expenses unless your state allows limited rollover of unused bills. Mark your renewal date and keep receipts organized by period.
