Social Security Vs. Medicaid: Can I Use a Spend-Down?

Transitioning to a Social Security widow’s benefit is a major life change, but it shouldn’t have to mean losing your health care. Depending on your health status and your state’s rules, there are two primary ways you can stay covered.

1. The “Disabled Widow” Protection (Mandatory Federal Law)

Before looking at a “spend-down,” you should check if you fall under a federal protection known as Section 1634(d) (or OBRA ’87).

• The rule: If you are a widow(er) aged 60–64 and you lost your Supplemental Security Income (SSI) because you began receiving widow’s benefits, the state must treat you as if you are still receiving SSI for Medicaid purposes.
• The benefit: The state is required to “ignore” the Social Security income that pushed you over the limit. This means you keep your full Medicaid with no spend-down at all.
• Requirement: You must have been eligible for SSI in the month before your widow’s benefits started.

2. The Medicaid Spend-Down (State Option)

If you don’t qualify for the protection above, you may still qualify through a “medically needy” or “spend-down” program.

• How it works: Think of it as a monthly insurance deductible. If the Medicaid limit is $900 and your income is $1,100, your “spend-down” is $200. Once you show the state $200 worth of medical bills (paid or unpaid) in a month, your Medicaid activates for the rest of that period.
• The catch: Not every state offers this. Currently, about 33 states have a spend-down program, while others (like Arizona or Texas) do not.

3. How to Verify Your Eligibility

Because Medicaid is run at the state level, you need to confirm which “door” is open to you:

1. Ask for the “pickle amendment” or “widow protection” check: When talking to your caseworker, specifically ask: “Do I qualify as a ‘deemed SSI recipient’ under the widow’s protection rules?”
    
2. Contact a SHIP Counselor: The State Health Insurance Assistance Program (SHIP) offers free, expert help for people navigating the overlap of Social Security and Medicaid. They can tell you exactly which programs your state offers for people aged 60–64.
    
3. Check for Medicare Savings Programs (MSP): While you usually have to wait until age 65 for Medicare, if you are receiving widow’s benefits based on a disability, you might already be eligible for Medicare. If so, an MSP can pay your premiums and increase your income limits.