- No—standard Medicaid does not have an annual deductible.
- Yes—some people have a monthly “spenddown” (Medicaid deductible/share of cost) in medically needy programs.
- States can charge small copays and limited premiums, but federal law caps your total Medicaid out-of-pocket at 5% of your family income.
- If you have Medicare + Medicaid (dual eligible): Medicaid or a Medicare Savings Program often picks up your Medicare deductible and coinsurance—especially if you have QMB—and providers cannot bill you for that Medicare cost sharing.
Quick Summary
- Standard Medicaid = no annual deductible. It does not work like employer or Marketplace plans.
- Key exception: In some states, medically needy coverage uses a monthly “spenddown” (also called Medicaid deductible, excess income, or share of cost). That behaves like a deductible for that month.
- Cost sharing: States can charge small copays and limited premiums, but total Medicaid out-of-pocket can’t exceed 5% of your family income in the tracking period.
- Dual eligibles (Medicare + Medicaid): Under QMB, Medicaid (or your state) pays your Medicare deductibles and coinsurance, and providers cannot bill you for those amounts.
- Action: Use the “10‑minute No‑Deductible Check” script below to confirm whether you have:
- No deductible and only small copays, or
- A medically needy spenddown/share-of-cost, and how to clear it quickly.
You came for clarity: Do you have any deductible at all, and if so, what’s the fastest way to deal with it? That’s exactly what follows.
1. First principles: What counts as a deductible?
Deductible (standard insurance definition):
A fixed amount you must pay out of pocket before your plan starts paying for covered services in a benefit period (usually a calendar year).
- Employer and Marketplace plans: large annual deductibles are normal.
- Medicaid: built on different rules. Federal law deliberately restricts deductibles and cost sharing for low‑income enrollees.
Under the Social Security Act §§ 1916 and 1916A, Medicaid:
- Severely limits premiums and cost sharing; and
- Caps total out‑of‑pocket costs at 5% of family income over a tracking period.
Key point:
If you qualified for regular Medicaid based on income and category (child, parent, pregnant person, disability, older adult, expansion adult, etc.) and your approval letter didn’t mention “spenddown,” “share of cost,” or “excess income,” you do not have an annual deductible.
2. What Medicaid uses instead: small, capped cost sharing
Instead of big deductibles, Medicaid uses nominal cost sharing:
- Small copays for some services (office visits, prescriptions, possibly nonemergency ER)
- Limited premiums for some higher‑income groups or waiver programs
- Strict 5% cap on total out-of-pocket costs
Federal rules:
- SSA §1916 and §1916A
- 42 CFR Part 447, Subpart A
- Medicaid.gov – Cost Sharing guidance
These rules require:
- Nominal copay ceilings. For example, a state can set a few‑dollar copay for an office visit, within federal max amounts.
- 5% income cap. Your total Medicaid premiums + copays for the tracking period (usually monthly or quarterly) cannot exceed 5% of your family income.
- Mandatory exemptions. States must not charge cost sharing for certain people and services, including:
- Most services for children under EPSDT (Early and Periodic Screening, Diagnostic, and Treatment)
- Family planning services
- Emergency services
- Most pregnancy‑related services
- Broad protections for American Indians and Alaska Natives
Takeaway:
Standard Medicaid trades big, unpredictable deductibles for small, legally capped copays.
3. The one real “Medicaid deductible”: medically needy spenddown / share of cost
Here’s where the “Medicaid deductible” rumor is actually rooted.
Some states run a Medically Needy (MN) program. It’s for people who:
- Have income too high for regular Medicaid,
- But have significant medical expenses.
The state lets you qualify by “spending down” your excess income each month on medical bills. Once you meet that amount, Medicaid covers eligible services for the rest of that month.
Different labels, same idea:
- Spenddown
- Excess income program
- Share of cost (SOC)
- Medicaid deductible
How states calculate a medically needy spenddown
Exact math varies by state, but the structure is the same:
- Count your monthly income.
Wages, Social Security, pensions, etc., using the state’s rules. - Subtract allowed disregards.
For example, part of your earnings or certain expenses. - Compare to the Medically Needy Income Level (MNIL).
- If your countable income is below the MNIL → you qualify without a spenddown.
- If it’s above, the difference = your spenddown for that month.
- Meet the spenddown with medical expenses.
You apply medical bills (paid or unpaid, depending on state policy) until their total equals your spenddown amount. After that point in the month, Medicaid kicks in.
Common expenses that usually count (confirm with your state):
- Doctor, hospital, and clinic bills
- Prescription drugs and some OTC items with a prescription
- Lab and imaging
- Dental, vision, and hearing services, if recognized by the state
- Health insurance premiums (including Medicare Part B or Medigap you pay yourself)
- Approved transportation/mileage to medical appointments
Monthly reset
The spenddown is not annual. It resets every month:
- Each month, the state compares your income to the MNIL again.
- You must meet that month’s spenddown to trigger Medicaid coverage for that month.
What happens after you meet it
Once your state confirms you met the spenddown:
- Medicaid covers eligible services for the rest of that month, under state rules.
- Some states apply the spenddown retroactively to bills earlier in the month; check your notices or ask directly.
Real‑world names
- California: Medi‑Cal Share of Cost (SOC)
- New York: Excess Income Program / Spenddown
- Florida: Share of Cost Medicaid
- Many other states: simply Medically Needy or Spenddown Medicaid
Micro‑scenario: The Chicago caregiver’s playbook
- Her father’s income is $150 over Illinois’s medically needy limit.
- The state sets a $150 monthly spenddown.
- Instead of guessing with random bills, she plans ahead:
- On the 1st of each month, she refills a prescription that reliably costs about $150, keeps the receipt, and uploads it to the state portal the same day.
- The spenddown is met immediately. Medicaid covers the rest of that month’s services.
- She repeats this routine each month and stops scrambling mid‑month.
Pro tip:
Pick one predictable expense early in the month (a prescription, therapy appointment, or scheduled visit) to clear the spenddown. Track it on a simple monthly sheet, and always submit proof the same day.
4. Dual eligibles: How Medicaid handles Medicare deductibles
If you have both Medicare and Medicaid, you’re “dual eligible.” Your cost‑sharing rules change again—usually in your favor.
Core programs
- QMB (Qualified Medicare Beneficiary)
- State pays your Medicare Part A and Part B premiums (if you owe them).
- State is responsible (subject to state payment rules) for your Medicare deductibles and coinsurance.
- Providers cannot bill you for Medicare cost sharing. CMS calls this “prohibition on balance billing QMBs.”
- QMB Plus
- You have QMB + full Medicaid.
- Same no‑billing rule for Medicare cost sharing, plus regular Medicaid benefits.
- SLMB and QI
- State pays your Part B premium only.
- You still owe your Medicare deductibles and coinsurance unless you also have full Medicaid.
- If you do have full Medicaid, the state may cap what it pays providers at the Medicaid rate; providers must follow state coordination rules.
How to use these protections
Always tell providers you are QMB or QMB Plus.
- Your QMB status appears on your Medicare Beneficiary Identifier file and usually on your state letter or plan card.
- If a provider bills you for the Medicare Part A or B deductible or coinsurance and you have QMB:
- Call the billing office.
- Say:“I am a Qualified Medicare Beneficiary (QMB). Federal law prohibits billing me for Medicare deductibles and coinsurance. Please reprocess this claim with Medicare and Medicaid.”
- Reference: CMS MLN Fact Sheet on QMB Balance Billing.
5. Copays, premiums, and the 5% family income cap
Federal guardrails limit what states can charge:
5% out‑of‑pocket cap
Under SSA §1916A and 42 CFR 447 Subpart A:
- Your combined Medicaid premiums + copays + other cost sharing cannot exceed 5% of your family’s income for the state’s tracking period (monthly or quarterly).
- Once you hit that cap, the state must stop imposing additional cost sharing for that period.
Typical cost sharing you’ll see
Varies by state and eligibility group, but you may see:
- $0–$4 range for primary care visits
- Small differences for specialist visits
- Tiered copays for prescriptions: generic vs brand
- Higher copays for nonemergency ER use if the state adopted that option
Your ID card or health plan handbook usually lists copays by service. You’ll notice:
- No annual deductible line for typical Medicaid populations.
Mandatory no‑cost‑sharing services
States cannot impose copays for:
- Family planning services
- Emergency services
- Many pregnancy‑related services
- Most services for children under EPSDT
- Most services to American Indians and Alaska Natives who receive care through IHS or tribal providers and related referrals
Practical warning:
If your state charges extra for nonemergency ER visits, call your plan’s nurse advice line or use urgent care when it’s safe to do so. That avoids unnecessary ER copays.
6. Long‑term care: “Patient liability” is not a deductible
If you’re in a nursing facility or receiving home‑ and community‑based services (HCBS), you may hear about “patient liability” or “share of cost” in a different context.
This is not a deductible.
What patient liability is
Under post‑eligibility treatment of income rules, once you qualify for Medicaid long‑term care:
- The state looks at your monthly income.
- It subtracts allowed amounts, such as:
- A personal needs allowance (money you keep for personal items)
- An allowance for a community spouse and sometimes other dependents
- Certain medical insurance premiums
- The remaining income becomes your monthly patient liability.
- You pay this amount toward your long‑term‑care costs each month.
- Medicaid pays the rest of the facility or HCBS provider rate.
You still keep your regular Medicaid coverage for other medical services. Patient liability is just your monthly income contribution, not an amount you must meet before coverage starts.
Micro‑scenario: The “nursing home deductible” myth
- A family is told their mother in a nursing facility has a $700 “deductible.”
- In reality, that $700 is her monthly patient liability, calculated from her Social Security income minus her personal needs allowance.
- She owes that every month, not once per year. There is no annual deductible on her Medicaid benefits.
Action:
Ask the caseworker or facility to show you the post‑eligibility worksheet so you can see exactly how they got the monthly liability amount.
7. The 10‑minute “No‑Deductible Check” script
Use this when calling your state Medicaid agency or your Medicaid health plan.
Before you call
Have in front of you:
- Medicaid ID number
- Health plan card (if you’re in managed care)
- Most recent eligibility/approval notice
- Basic income info (pay stubs, award letters) in case they ask
Script (read or adapt)
- Confirm spenddown / share of cost
“I want to confirm whether my Medicaid coverage uses a medically needy spenddown or share of cost. My ID number is [ID]. Does my case have a spenddown or share of cost?”
If yes:
“What is my exact monthly spenddown amount? What types of expenses count toward meeting it?”
- Ask how to clear it quickly
“How do I submit proof of my expenses to meet the spenddown each month—online portal, fax, mail, or in‑person? What is the fax number or web address, and is there a preferred format?”
- Get your copay schedule
“Please list my copays by service type:
– primary care visits
– specialist visits
– generic prescriptions
– brand‑name prescriptions
– emergency room and nonemergency ER, if different.”
- Check for exemptions
“Do any cost‑sharing exemptions apply to me? I am [pregnant / under 21 / American Indian or Alaska Native / in hospice / dual eligible with Medicare].”
- Get it in writing
“Please send me the copay schedule and spenddown/share‑of‑cost instructions in writing or by email today.”
If you have Medicare + Medicaid, add:
“I have QMB. Please confirm that providers cannot bill me for Medicare deductibles or coinsurance.”
8. How to meet a spenddown fast without overpaying
If you do have a medically needy spenddown, treat it like a monthly deductible you can control.
Simple monthly workflow
- Pick one predictable bill.
- A regular prescription refill
- A scheduled therapy or specialist visit
- A recurring medical supply order
- Schedule it early.
- Aim for the 1st–3rd of the month so your coverage turns on as early as possible.
- Collect proof immediately.
- Receipt, statement, or itemized bill
- If allowed, an unpaid bill that states your liability
- Submit through the fastest channel.
- Online portal or fax (ask which processes fastest)
- Include your name, Medicaid ID, month, and that you are applying the bill to your spenddown/share of cost.
- Track confirmation.
- Keep a simple notebook or spreadsheet with:
- Date, provider, amount, confirmation number, who you spoke with.
- Keep a simple notebook or spreadsheet with:
- Coordinate with providers.
- For non‑urgent procedures or tests early in the month, ask:“I’m on a Medicaid spenddown. Could you submit this claim after my spenddown is met this month?”
- Many offices will hold the claim a few days when you explain the situation.
What usually counts toward spenddown
Check your state list, but commonly:
- Doctor and clinic visits
- Hospital and ER bills
- Dental, vision, hearing (if medically necessary and recognized)
- Prescription drugs and some OTC with a prescription
- Medical equipment and supplies
- Transportation/mileage to medical visits (if allowed)
- Premiums you pay for:
- Medicare Part B
- Medicare Advantage
- Medigap
- Other health insurance
Micro‑scenario: California Medi‑Cal Share of Cost
- A Los Angeles resident gets a Medi‑Cal notice showing a $400 Share of Cost (SOC).
- She schedules a necessary dental treatment costing about $400 on the 1st of the month.
- She uploads the detailed dental invoice to the county/State portal the same day, marked “Apply to SOC.”
- Once the SOC posts as met, Medi‑Cal pays for her other covered services for the rest of the month.
- She repeats this process monthly using planned care, instead of being blindsided.
9. Common mistakes and how to avoid them
- Waiting too long to submit bills
- Problem: Spenddown coverage starts only after you meet it.
- Fix: Schedule one qualifying expense early in the month and submit proof immediately.
- Using random, unpredictable bills
- Problem: You lose track, and coverage may not kick in when you expect.
- Fix: Use one planned expense each month to clear the spenddown; treat everything else as normal covered care.
- Ignoring the 5% cap
- Problem: People pay copays month after month and never ask whether they hit the legal limit.
- Fix: If your copays seem heavy relative to your income, call your plan and say:“Please tell me how you are tracking my 5% family income cost‑sharing cap and how much I’ve paid this period.”
- Letting providers ignore QMB rules
- Problem: QMB enrollees get billed for Medicare deductibles and coinsurance they do not owe.
- Fix: Show your QMB documentation, cite the CMS QMB balance billing prohibition, and ask them to rebill correctly.
- Confusing patient liability with a deductible
- Problem: Families think nursing‑home patient liability is a deductible and delay placement or services.
- Fix: Ask for the post‑eligibility income worksheet; understand it’s a monthly income contribution, not a deductible.
- Using the ER for nonemergencies
- Problem: States that charge higher nonemergency ER copays can increase your out‑of‑pocket.
- Fix: Use your plan’s nurse line, telehealth, or urgent care when it’s safe, and reserve the ER for true emergencies.
10. Medicaid vs Medicare vs Marketplace: Deductibles at a glance
| Program | Annual Deductible? | Other Cost Sharing |
|---|---|---|
| Medicaid (standard) | No annual deductible. | Small copays, limited premiums, 5% cap. |
| Medically Needy Medicaid | No annual deductible; monthly spenddown/share of cost behaves like a monthly deductible. | After spenddown is met, normal Medicaid copays & rules apply. |
| Medicare (Original) | Yes: Part A and Part B deductibles set each year. | Coinsurance; may be covered by Medigap or Medicaid/MSP. |
| Marketplace (ACA plans) | Yes: Usually substantial annual deductibles. | Coinsurance and copays; cost‑sharing reductions for low‑income enrollees. |
11. Keyword and concept map (for search and clarity)
Covered concepts so you don’t need another explainer:
- Cost structure: deductible, copay, coinsurance, premium, out‑of‑pocket cap
- Medically needy: spenddown, share of cost, excess income, Medicaid deductible
- Dual eligibles: QMB, QMB Plus, SLMB, QI, Medicare Savings Programs
- Long‑term care: LTSS, nursing facility, HCBS, post‑eligibility treatment of income, patient liability
- Protection rules: EPSDT, family planning, emergency services, preventive services, AI/AN cost‑sharing protections
- Delivery systems: Managed Care Organizations (MCOs), fee‑for‑service (FFS)
- Legal framework: SSA §1916, §1916A; 42 CFR Part 447 Subpart A; CMS and MACPAC guidance
12. Case studies
A. The new job bump
- A single parent takes overtime that pushes income $120 over the regular Medicaid limit.
- She gets a notice saying she no longer qualifies under that category and assumes Medicaid is gone.
- A navigator explains the state has a Medically Needy program. Her monthly spenddown = $120.
- She sets a monthly $120 prescription refill on the 1st, sends the receipt in, and meets spenddown each month.
- She keeps Medicaid coverage instead of going uninsured.
Lesson: When income creeps above the limit, ask about “Medically Needy” or “spenddown” before giving up.
B. The QMB surprise bill
- A dual‑eligible senior with QMB receives a bill for the Medicare Part B deductible.
- The bill is wrong —QMB prohibits providers from billing this.
- Her daughter calls the office manager and says:“She’s a Qualified Medicare Beneficiary. CMS prohibits billing her for Medicare deductibles and coinsurance. Please refile this with Medicare and Medicaid.”
- The office corrects the claim and writes off the balance.
Lesson: If you are QMB, never pay Medicare cost sharing bills without challenging them.
C. The nursing home “deductible” myth
- A family hears that their father has a $700 ‘deductible’ each month in the nursing home.
- The Medicaid worker clarifies:
- Dad’s monthly income is $1,500.
- The state allows him a $50 personal needs allowance and $750 spousal allowance.
- The remaining $700 is his patient liability each month.
- Medicaid pays the rest of the facility’s rate; there is no annual deductible blocking coverage.
Lesson: Always ask whether a quoted amount is patient liability or an actual deductible. They’re very different.
13. Practical checklists
A. Deductible or not? 60‑second decision path
- Do you have regular Medicaid without “spenddown” or “share of cost” language in your notice?
- → No annual deductible. Just check your copays.
- Does your approval letter mention “medically needy,” “excess income,” “spenddown,” or “share of cost (SOC)”?
- → You have a monthly spenddown that acts like a deductible for that month.
- Do you have Medicare and a letter/card saying QMB or QMB Plus?
- → Providers cannot bill you for Medicare deductibles or coinsurance.
- Are you in a nursing facility or HCBS waiver and told you owe a monthly amount?
- → That’s likely patient liability, not a deductible. Ask to see the post‑eligibility calculation.
B. Documents to keep handy
- Latest Medicaid eligibility notice
- Any spenddown/SOC letters with the exact amount
- Your Medicaid ID card and health plan card
- Written copay schedule from your state/plan
- Recent medical bills, EOBs, and RX receipts
- If dual eligible: Medicare card and QMB/MSP approval letter
14. Reader Q&A: People Also Ask
A. No. Standard Medicaid does not use an annual deductible. Instead, states use small copays and limited premiums, and federal law caps total out‑of‑pocket at 5% of family income.
A. It’s a monthly amount in medically needy programs that functions like a deductible. You qualify for Medicaid coverage for that month after you show medical expenses equal to your excess income over the state’s medically needy income level.
A. Call your state Medicaid agency and ask:
“Do you have a Medically Needy program, sometimes called spenddown or share of cost? Am I in it?”
Use the script in Section 7.
Q4. If I have QMB, can a doctor bill me for the Medicare deductible?
A. No. CMS explicitly prohibits providers from billing QMB enrollees for Medicare Part A or B deductibles and coinsurance.
Q5. Do kids and pregnant people pay copays?
A. Federal law shields children and pregnant people from most Medicaid cost sharing. States must follow the exemption list, though there are some narrow exceptions; check your state’s specifics.
Q6. What if my copays seem to exceed 5% of my income?
A. Ask your plan or state:
“Show me how you are tracking my 5% cost‑sharing cap and how much I’ve paid this period.”
If they miscalculated, they must stop charging cost sharing beyond the cap and correct errors.
Q7. Is “patient liability” in a nursing home a deductible?
A. No. It’s the portion of your monthly income you pay to the facility after allowances. It is not a deductible and does not reset in the way a deductible does.
Q8. Can states charge for nonemergency ER visits?
A. Yes, within federal limits. States can set higher cost sharing for nonemergency ER use if they meet specific conditions. To avoid these charges, use urgent care, telehealth, or call your plan’s nurse line when safe.
15. Key sources and citations
Federal law and regulations:
- Social Security Act §1916 and §1916A (Medicaid premiums and cost sharing; 5% cap)
- 42 CFR Part 447 Subpart A – Payments for Services; Premiums and Cost Sharing
Policy and explainer resources:
- Medicaid.gov — Cost Sharing
- MACPAC — Premiums and Cost Sharing in Medicaid
- KFF — Premiums and Cost Sharing in Medicaid
Dual-eligible protections:
- CMS MLN Fact Sheet — Prohibition on Balance Billing Qualified Medicare Beneficiaries (QMB)
State program examples (for concept, not legal advice):
- California DHCS — Medi-Cal Share of Cost
- New York State Department of Health — Excess Income (Spenddown) Program
- Florida Department of Children and Families — Share of Cost Medicaid
Key points to walk away with
- Standard Medicaid does not have an annual deductible.
- The only “deductible‑like” feature is the medically needy spenddown/share of cost, and it operates monthly, not yearly.
- Federal law caps Medicaid out‑of‑pocket at 5% of family income.
- QMB stops providers from billing you for Medicare deductibles and coinsurance.
- Patient liability in long‑term care is a monthly income contribution, not a deductible.
What to do next (10‑minute action)
- Call your state Medicaid agency or plan with the script in Section 7.
- Confirm whether you have no deductible, a medically needy spenddown, or QMB protections.
- If you have a spenddown, set up one predictable expense early each month and a simple tracking system so you clear it fast without overpaying.
Author bio
David writes evidence-based explainers on U.S. health coverage and patient finance, with a focus on Medicaid, Medicare, and dual-eligible populations. They rely on primary sources from CMS, MACPAC, KFF, and state policy manuals, and specialize in turning complex rules into checklists ordinary people can use the same day.
Disclaimer (read this first)
Educational information only. This is not legal, medical, tax, or financial advice. Medicaid rules vary by state and by eligibility group. Always confirm details with your state Medicaid agency or your plan. Federal rules cited are current through late 2024; the basic cost‑sharing structure has been stable for years, but state policies change, so verify locally.