The key to this is "spend down". This indicates that the context is health insurance; in fact I am sure it refers specifically to a well-known US health insurance scheme, but I will not give the name because you have chosen to conceal it.

In order to be eligible for medical insurance cover, your income or assets (wealth) must not be higher than a certain level, because the scheme is designed for poor people. However, if you are above that level, you may still be able to get cover. The way this is done is called "spend down" or "surplus" (in this case, the bar indicates that they are alternative names for the same thing).

The idea is that if your income or assets are above the maximum level you offset the excess against medical expenses: in other words, the insurance scheme does not cover 100% of your medical costs, as it does for poorer people below the limit; instead, it covers only part of the costs, and you pay a proportion corresponding to the surplus: the degree to which you are above the limit. It is called "spend down" because you "spend down" to the limit; you spend part of the costs to bring yourself down to the limit for cover:

"The spend-down program (also called excess or surplus income) is a way for certain categories of applicants to get XXX [name of health insurance scheme] even though their income or assets are over the limit, by offsetting their excess with medical expenses. For example, imagine two potential XXX applicants (who we will assume both are in the DAB category and both have assets below the limit).

Sam has income of $700/mo., and is therefore fully eligible for XXX ($700 is less than $792).

Pam has income of $900/mo., but also spends $140/mo. on medical supplies and doctor's visits. She would ordinarily not be eligible for XXX, because her income is over the limit by $88/mo. (XXX "disregards" the first $20 of income for people in the DAB category[...]). However, she can "spend-down" her excess income to the XXX level by using the $ 88/mo. of medical expenses. Once she shows XXX that he has $ 88/mo. of medical expenses in a given month, then [her] XXX coverage will be activated for the rest of that month. It is almost like a monthly deductible."
http://wnylc.com/health/entry/46/

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Note added at 4 hrs (2012-04-19 14:10:05 GMT)
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So "surplus" here means an amount in excess of a limit: the excess income of the insured person and the corresponding excess amount that the insured must pay beyond the amount covered by the insurance.