The “spend-down” requirement is similar to an insurance deductible. It means that if you are over the income limit for full Medicaid coverage, you will need to have medical expenses that bring you under the limit. You do not have to actually pay those medical expenses to meet the spend-down, but only to show that you owe those expenses for purposes of qualifying for Medicaid. The expenses may be any type of medical expenses for anyone in your household, not just for you personally.
Medicaid is a federal/state program that gives certain groups of people a card that can be used to get free medical care, nursing home care, and prescription drugs at reduced prices. In general, eligibility for Medicaid is for people who have low income and low resources (property). Read this article for more information on Medicaid.