Medicaid Income Rules and Spousal Protections for Nursing Home Residents

 In Long-Term Care Planning

The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. Medicaid pays nursing home costs that exceed the resident’s income. But in some states, known as “income cap” states, eligibility for Medicaid benefits is barred if the nursing home resident’s income exceeds $2,205 a month (for 2017), unless the excess above this amount is paid into a “(d)(4)(B),”  “Miller” or “Qualified Income” trust. If you live in an income cap state and require more information on such trusts, consult an elder law specialist in your state.

For Medicaid applicants who are married, the income of the community spouse is not counted in determining the Medicaid applicant’s eligibility. Only income in the applicant’s name is counted. Thus, even if the community spouse is still working and earning, say, $5,000 a month, she will not have to contribute to the cost of caring for her spouse in a nursing home if he is covered by Medicaid.

Spousal Protections

What if most of the couple’s income is in the name of the institutionalized spouse, and the community spouse’s income is not enough to live on? In such cases, the community spouse is entitled to some or all of the monthly income of the institutionalized spouse. How much the community spouse is entitled to depends on what the Medicaid agency determines to be a minimum income level for the community spouse. This figure, known as the minimum monthly maintenance needs allowance or MMMNA, is calculated for each community spouse according to a complicated formula based on his or her housing costs. The MMMNA may range from a low of $2,002.50 to a high of $3,022.50 a month (for 2017). If the community spouse’s own income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse’s income.

 Case Study

After Alice and George spend down their assets so that George qualifies for Medicaid coverage of his nursing home care (see an explanation here), the state Medicaid agency calculates Alice’s MMMNA to be $2,400 a month, based on her housing expenses and the utility costs in the state. Since her own monthly income is only $750 from Social Security, she has a shortfall of $1,650 a month. George is permitted to pay this amount from his own income over to Alice each month rather than pay all of his income to the nursing home. His “patient pay amount,” the amount he has to pay the nursing home each month, is determined to be $790, calculated as follows:

$2,500 George’s total monthly income
– $1,650 Income allowance to Alice
–        60 Personal needs allowance (income George may keep)
$       790 Patient pay amount

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