In order to be eligible for Medicaid, one of the requirements for seniors is to have limited income (as well as assets). However, the focus of this article will be strictly on income: what is considered income, how it’s counted in differing situations (single vs. married), and how those over the income limit can still qualify for Medicaid.
What is Considered Income?
Prior to discussing how Medicaid counts income, it can be helpful to know what is considered to be income. The following are all counted towards the income limit: Social Security benefits, Veteran’s benefits, alimony, employment wages, pension payments, dividends from bonds and stocks, interest payments, IRA distributions, and estate income. A few states, such as California and Arkansas, do not count VA Pension with Aid & Attendance as income for Medicaid eligibility.
The income limit for long-term care (nursing home Medicaid and home and community based services Medicaid waivers) in most, but not all states in 2018 for a single applicant is $2,250 / month.
How is Income Counted?
For single elderly applicants, it is very straightforward as to how income is counted. All of the monthly income the individual receives is added up and counted towards the income limit (with the exception of VA Pension with Aid & Attendance in some states). If an applicant’s total monthly income is under the Medicaid limit, they are income eligible. If their monthly income is over the income limit, they are not income eligible.
Being over the income limit does not mean one is automatically disqualified for Medicaid eligibility. See the section below, “What If One Exceeds the Medicaid Income Limit?”.
How income is counted for senior married applicants (both spouses of a married couple) applying for Medicaid is more complicated. The way income is counted varies based on the program in which one is applying and the state in which one resides. In many states, married applicants applying for nursing home Medicaid or a Medicaid waiver are considered as single applicants. This means each spouse is able to have income up to the income limit. In this case, the “name on the check” rule is followed. This means that whichever spouse’s name is on the check is considered to own the income, and it will be counted towards that spouse’s income eligibility.
Please note, for married applicants that are applying for Aged, Blind and Disabled (ABD) Medicaid (part of the state Medicaid plan) rather than nursing home Medicaid or a Medicaid waiver, income is considered differently. In this case, the couple’s income is considered jointly and there is an income limit for a household of two. This income limit is different from the income limit mentioned at the beginning of this article and varies based on the state in which one lives. Generally, most states use 100% of the Federal Poverty Level for a household of two (as of 2018, $1,372 / month) or the SSI Federal Benefit Rate for couples (as of 2018, $1,125 / month).
Married applicants over the income limit can still qualify for Medicaid. Check out the section below: “What If One Exceeds the Medicaid Income Limit?”.
Married Couples with One Applicant
For married elderly seniors, it is common that one spouse requires long-term care, whether it is in-home assistance via a Medicaid waiver or nursing home care, while the other spouse is able to live in the home unassisted. When only one spouse of a married couple is applying for Medicaid, only the income of the applicant is considered. Medicaid follows the “name on the check” rule, which means that whoever’s name is on the check is the “owner” of the income. Therefore, any income of the non-applicant spouse (often called the community spouse or well spouse) is considered their income, and it will not be counted towards the applicant spouse’s (commonly called the institutionalized spouse) income limit. Even if the community spouse has a rather large monthly income, for instance, $4,500 / month, it will not count towards their spouse’s income limit for Medicaid eligibility.
In order to protect the community spouse from having little to no income, and hence, becoming impoverished, the federal government has set what is called a Minimum Monthly Maintenance Needs Allowance (MMMNA). This spousal impoverishment rule allows the applicant spouse to transfer a portion (or all) of their income that would otherwise go towards their cost of care to their non-applicant spouse. For more information about the MMMNA, click here.
Being over the income limit is not automatically means for Medicaid ineligibility. Learn more below under the section, What If One Exceeds the Income Limit”.
What If One Exceeds the Medicaid Income Limit?
Being over the income limit is not cause for automatic disqualification for Medicaid benefits. Based on the state in which one lives, one may be able to utilize a Qualified Income Trust or “spend down” their income on care expenses / medical bills. All states allow one of these methods of reducing one’s countable income for Medicaid eligibility.
Qualified Income Trust
A Qualified Income Trust (QIT), also called a Miller Trust, is an irrevocable trust (it cannot be changed or cancelled). In very simple terms, a Medicaid applicant’s income is deposited into the trust and is controlled by a trustee, who is named by the Medicaid applicant. The funds, which no longer count towards Medicaid’s income eligibility, can only be used for very restrictive purposes. Examples include a personal needs allowance for the Medicaid participant, private health insurance premiums, spousal allowance (also referred to as a Monthly Maintenance Needs Allowance), and care costs. Not all states allow for QIT’s, but those that do are referred to as Income Cap states.
Spend Down on Care / Medically Needy
Some states have a medically needy pathway for Medicaid eligibility. Depending on the state in which one resides, this program may be called by a variety of names, such as a Spend-Down Program, Adult Medically Needy Program, Medicaid Deductible Program, and Share of Cost Program. For simplification purposes, an applicant who is over the income limit, but has high medical expenses relative to their income, can still qualify for Medicaid by “spending down” their excess income on medical bills. As with Qualified Income Trusts, not all states have a medically needy pathway. The states that do have a medically needy pathway are called Medically Needy or Spend-Down states.
Working with a Medicaid Planner
Applying for Medicaid isn’t always a straightforward process, especially for married couples with only one spouse applying for long-term care benefits or if an applicant is over the income limit. If one is in either of these situations, it is highly advised the counsel of a Medicaid expert be sought. Locate a Medicaid Expert.