Table of Contents
To be eligible for Medicaid, seniors must have limited financial means. While this includes income and assets, the focus of this article is strictly on income eligibility. Topics covered include what Medicaid considers to be income, how income is counted based on marital status and differing programs, and how seniors over the income limit can still become income-eligible and qualify for Medicaid.
What is Considered Income?
Understanding what Medicaid considers to be income is vital to a discussion on how Medicaid counts 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. Many states, including California, Florida, and Arkansas, do not count VA Pension with Aid & Attendance as income for Medicaid eligibility. Learn more here. Furthermore, no state counts Holocaust restitution payments or Covid stimulus checks as income, and therefore, they do not impact income eligibility.
See our Medicaid eligibility income chart for state specific income limits by Medicaid program.
How is Income Counted?
For single elderly applicants, the way income is counted is very straightforward. All of one’s monthly income is added up and counted towards the income limit. 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.
In 2022, the individual income limit for nursing home Medicaid and Medicaid Waivers in most states is $2,523 / month ($30,276 year). For regular Medicaid, often called Aged, Blind and Disabled Medicaid, the income limit is generally either $841 / month ($10,092.40 / year) or $1,133 / month ($13,590 / year).
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?”.
The way income is counted for married seniors with both spouses as applicants is more complicated. Income is counted differently based on the Medicaid program and one’s state of residence. In many states, each spouse is considered as a single applicant if they are applying for nursing home Medicaid or a Medicaid waiver. This means each spouse can have income up to the income limit. In this case, the “name on the check” rule is followed. Whoever’s name is on the check is considered to be the owner of the income, and it will be counted towards that spouse’s income eligibility. In 2022, this generally means each spouse can have up to $2,523 / month ($30,276 / year) in income.
Income is counted differently for married applicants who are applying for Aged, Blind and Disabled Medicaid. For this program, the income of both spouses is considered jointly and an income limit for a household of two is utilized. In 2022, states set the income limit at either 100% of the Federal Poverty Level for a household of two ($1,526 / month or $18,310 / year) or the SSI Federal Benefit Rate for couples ($1,261 / month or $15,136.93 / year).
Married Couples with One Applicant
For married elderly seniors, it is common for only one spouse to require long-term care. When just one spouse of a married couple applies for nursing home Medicaid or a HCBS Medicaid waiver, only the income of the applicant spouse, often called the institutionalized spouse, is considered. This means the income of the non-applicant spouse, commonly called a community spouse, is not counted towards the income eligibility of their spouse. Even if the community spouse has a high monthly income, it will not count towards their spouse’s income limit for Medicaid eligibility. However, in New York, community spouses with income over a specified amount may have to contribute 25% of their income towards their Medicaid spouse’s care costs unless they institute “spousal refusal”.
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.
For married couples with just one spouse applying for Aged, Blind and Disabled Medicaid, income is calculated jointly. This means that it doesn’t matter to which spouse the income belongs; The income of the applicant spouse and the non-applicant spouse is used towards the income eligibility of the applicant spouse. In most states, in 2022, the income limit is usually 100% of the SSI Federal Benefit Rate for couples ($1,261 / month or $15,136.93 / year) or 100% of the Federal Poverty Level for a household of two ($1,526 / month or $18,310 / year) is used.
How is Income Verified?
Medicaid applicants generally have to provide documentation of their monthly income (earned and unearned) with their Medicaid application. Examples include copies of dividend checks, social security check or award letter, pay stubs, alimony checks, and VA benefits check or award letter. States may also use an electronic system to cross reference an applicant’s income. Learn more here.
What If One Exceeds the Medicaid Income Limit?
Being over the income limit does not mean one is automatically disqualified from receiving Medicaid benefits. Based on the state, an applicant may be able to utilize a Qualified Income Trust, or alternatively, “spend down” their income on care expenses / medical bills to become income eligible. All states allow one of these methods of reducing one’s countable income for nursing home Medicaid and Medicaid waiver eligibility. For Aged, Blind and Disabled Medicaid, some states allow applicants to “spend down” their income.
Qualified Income Trust
A Qualified Income Trust (QIT) is an irrevocable trust in which an applicant’s income is deposited and is no longer counted towards Medicaid’s income limit. Irrevocable means the terms of the trust cannot be changed or canceled. Also called a Miller Trust, trust funds are controlled by a trustee, who is named by the Medicaid applicant. The money can only be used for very restrictive purposes. Examples include a personal needs allowance for the Medicaid participant, private health insurance premiums, Medicare premiums, a spousal income allowance for a non-applicant spouse (a Monthly Maintenance Needs Allowance), and care costs. Not all states allow for QIT’s, but those that do are called Income Cap states.
Spend Down on Care / Medically Needy
Some states have a medically needy pathway for Medicaid income eligibility. Based on the state, this program may be called by a variety of names: 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, can still qualify for Medicaid by “spending down” their income on medical bills to the medically needy income limit (MNIL). Not all states have a medically needy pathway, and for those that do, the MNIL varies based on the state. To learn more about the medically needy pathway and to see MNILs by state, click here.
Working with a Medicaid Planner
Applying for Medicaid can be complicated and confusing, especially for married couples with only one spouse applying for long-term care benefits or if an applicant is over the income limit. In these situations, it is highly advised the counsel of a Medicaid expert be sought for the best chance of acceptance into a Medicaid program. Locate a Medicaid Expert.