New Hampshire Medicaid Spenddown for Disability: How the In-and-Out Program Works

When Standard Medicaid ABD Doesn't Work

New Hampshire's standard Medicaid pathway for adults with disabilities — Medicaid for the Aged, Blind, and Disabled (ABD) — has a monthly income limit of $928 for a single individual and a resource limit of $1,500. For many transition-aged adults, especially those receiving Disabled Adult Child (DAC) benefits based on a parent's work record, that income limit is too low. A DAC payment can easily run $1,200 or more per month.

That's where the medically needy "In and Out" spenddown comes in. It's not a separate program — it's a mechanism within Medicaid that lets people with higher incomes qualify by spending down their excess income on medical expenses.

How the Spenddown Calculation Works

The medically needy income limit in New Hampshire is $591 per month. The resource limit under this pathway is $2,500 — higher than the $1,500 ABD limit but still quite tight.

Here's the math. If someone receives $1,200 per month in DAC benefits:

• Countable income: $1,200
• Medically needy limit: $591
• Excess (the spenddown obligation): $609

In this example, to qualify for Medicaid coverage, the individual must submit proof of qualifying out-of-pocket medical expenses equal to the spenddown obligation for that period: $609 for a one-month period or $3,654 for a six-month period. Once those expenses are documented, Medicaid kicks in and covers the rest for that period.

Qualifying expenses include doctor copays, prescription costs, therapy sessions, medical equipment, dental work, and other healthcare costs paid from the individual's own funds. Expenses already covered by insurance don't count.

The Eligibility Period Rhythm

New Hampshire processes spenddown eligibility in periods — either one-month or six-month periods chosen when you apply. At the start of each period, DHHS calculates the total spenddown obligation (monthly excess multiplied by the number of months in the period). The individual submits medical receipts as they accumulate expenses. Once the total meets the obligation threshold, Medicaid coverage activates for the remainder of that period.

The practical challenge: coverage doesn't start on day one. Someone with a $609 monthly excess and a six-month period faces a $3,654 total spenddown before Medicaid begins paying. If their medical expenses are spread evenly, they might not hit the threshold until month three or four — leaving them uninsured for the first portion of each cycle.

This is why the spenddown pathway works best as a bridge or safety net, not as a long-term Medicaid strategy for people who need consistent coverage for waiver services, prescriptions, or ongoing therapy.

Spenddown vs. Other Medicaid Pathways

For working adults with disabilities, the MEAD program (Medicaid for Employed Adults with Disabilities) is almost always a better option. MEAD has an income limit of $5,985 per month and a resource limit of $37,789, with no spenddown requirement — just an employment requirement (any amount of paid work counts, with no minimum hours).

For non-working adults whose income is below $928, standard Medicaid ABD is simpler and provides uninterrupted coverage.

The spenddown pathway fills the gap for people who:

• Aren't working (so MEAD is off the table)
• Have income above $928 (usually from DAC, SSDI, or a pension)
• Need Medicaid for waiver services or other long-term supports that private insurance won't cover

Filing the Spenddown Application

The application goes through the NH EASY portal (nheasy.nh.gov) or the local DHHS District Office. When applying:

1. Select the disability-based category — you're applying under the medically needy pathway, not Granite Advantage (which has no asset test but doesn't cover long-term waiver services)
2. Document the disability — provide the same medical evidence used for SSI or DAC determinations
3. Report all income — DHHS calculates the spenddown amount; accuracy upfront prevents delays
4. Track medical expenses carefully — keep every receipt, explanation of benefits, and pharmacy printout; submit them to your DHHS caseworker as they accumulate
5. Reapply at recertification — each period requires renewed documentation

Protecting Medicaid During DAC Transitions

The spenddown pathway is particularly relevant when a young adult transitions from SSI to DAC benefits. If a parent retires or dies and the adult child starts receiving DAC payments, the higher income can push them off SSI and standard Medicaid simultaneously.

Federal law under Section 1634(c) of the Social Security Act provides Medicaid protection for people who lose SSI solely because of new or increased DAC payments. But in New Hampshire, local DHHS caseworkers sometimes aren't familiar with this provision, and coverage terminations can happen erroneously. The spenddown pathway functions as a fallback if Section 1634(c) protection isn't applied correctly — it keeps the individual Medicaid-eligible while the administrative issue is resolved.

Our New Hampshire SSI at 18 & Adult Disability Benefits Guide includes a complete comparison of all four Medicaid pathways (ABD, MEAD, Granite Advantage, and spenddown), with the specific income and asset thresholds for each and a worksheet for determining which pathway fits.

See more New Hampshire guides →