Nursing Home Patient Liability: What Medicaid Pays & Income the Beneficiary Can Keep

Last updated: February 06, 2024

 

Introduction to Medicaid Nursing Home Patient Liability

It is commonly thought that once approved for Medicaid-funded nursing home care, Medicaid will cover 100% of the cost. This, unfortunately, is not generally the case. Instead, Nursing Home Medicaid beneficiaries are required to contribute the majority of their income towards their care costs. This is known as a monthly patient liability, also called a share of cost, co-payment, or patient pay amount.

 Patient liability is the amount of a Medicaid beneficiary’s income they must give over to the nursing home.

Patient liability is calculated individually during the Medicaid eligibility process. It is based on the amount of one’s monthly income and allowable deductions and allowances. While all nursing home residents are entitled to a small allowance for personal needs, other potential deductions that lower one’s share of cost include unreimbursed health care costs, an income allowance for a spouse and / or dependent family member, and an allowance to temporarily maintain one’s primary home. To calculate one’s patient liability, all allowable deductions are subtracted from one’s total monthly income. All remaining income is the monthly patient liability. After this is paid, Medicaid will pay the remainder of nursing home costs. If there is no remaining income after subtracting deductions and allowances, there is no patient liability and Medicaid will pay the cost in its entirety.

A nursing home resident’s monthly income minus their allowable deductions and allowances = their monthly share of cost.

 

Allowable Deductions & Allowances that Increase the Income the Beneficiary Keeps

Personal Needs Allowance

All Medicaid nursing home residents are entitled to a Personal Needs Allowance (PNA), which automatically lowers their patient liability. A PNA is a minimal amount of monthly income that a nursing home resident can retain for their personal use. This might be used for clothing, hair appointments, vitamins, books, magazines, stationary, stamps, and favorite snacks. The amount of the PNA is state-specific and ranges from $30 – $200 / month. As a few examples, in 2024, the following states allow the following PNAs: California ($35 / month), New York ($50 / month), Texas ($75 / month), Arizona ($141.45 / month), Florida ($160 / month), and Alaska ($200 / month). Some states increase their PNA annually, others increase it every few years, and still others have not increased theirs in many years.

Veterans / surviving spouses who receive the VA Aid & Attendance or Housebound Pension and are single and have no dependent child, have their VA pension reduced to $90 / month. This is not counted as income towards Medicaid eligibility, and therefore, does not count towards one’s patient liability. A nursing home resident is able to keep this money. In some states, such as Texas and Montana, one can receive the reduced pension in addition to their state’s PNA. In other states, like West Virginia, which has a $50 PNA, or in Mississippi, which has a $44 PNA, one receives their $90 reduced pension in lieu of a PNA.

 

Uncovered Medical & Remedial Expenses

Medical and remedial expenses that are not covered by Medicaid or a third party, such as Medicare or a private insurance company, are allowable deductions from one’s patient liability. Medical expenses include services and items for preventing, diagnosing, treating or curing an injury or disease, while remedial expenses are those that relieve, decrease, or heal a medical condition. Examples of expenses that may be deducted include Medicare and private health insurance premiums, deductibles, and co-insurance, dental services, hearing aids, eyeglasses, prescribed over the counter drugs and supplements, and prescription drugs. Unpaid nursing home costs prior to Medicaid approval can also potentially be deducted from patient liability.

 

Home Maintenance Allowance

The Home Maintenance Allowance allows nursing home residents a monthly allowance for up to 6 months to pay expenses to maintain their home in their absence, simultaneously reducing their patient liability. Expenses for the home, which could be rented or owned, might include rent / mortgage payments, utilities, property taxes, and rental / homeowners insurance. The name of this allowance is often state-specific and include the following: Arizona (Home Maintenance Needs Allowance), California (Home Upkeep Allowance), and Pennsylvania (Home Maintenance Deduction).

To be eligible for this allowance, the nursing home resident must have Intent to Return home within 6 months of nursing home admittance. Minnesota is an exception and only allows for 3 months. Furthermore, a physician statement confirming one’s return home is likely within the designated timeframe is required. Expenses may need to be documented. This may include payment type, to whom it is paid, and the amount of payment. One generally is not eligible for the Home Maintenance Allowance if they have a spouse living in the home. This is because there is a Monthly Maintenance Needs Allowance, which allows married nursing home beneficiaries to transfer some of their income to their spouse at home.

The amount of the Home Maintenance Allowance varies by state. Some states set a standard figure and persons are entitled to that amount despite their actual home costs, while other states take into account one’s actual costs. In 2024, the following states allow for the following allowances: Arizona ($210 / month), California ($209 / month), Pennsylvania ($965.10 / month), and Washington ($1,215 / month).

Patient liability is not limited to persons receiving Medicaid-funded nursing home care. Seniors receiving services and supports at home and in the community via a home and community based services Medicaid Waiver may also have a patient liability.

 

Spousal Income Allowance

The Monthly Maintenance Needs Allowance (MMNA), which is another potential patient liability deduction, is relevant for married Medicaid beneficiaries who have a non-Medicaid spouse living at home. Note that the at-home spouse is commonly called the community spouse, while the nursing home spouse is often called the institutionalized spouse. The exact name of this Spousal Income Allowance varies based on the state. The following states use the following names: District of Columbia (Community Maintenance Needs Allowance), Illinois (Community Spouse Maintenance Needs Allowance), Michigan (Community Spouse Income Allowance), Montana (Community Spouse Income Maintenance Allowance), and New York (Community Spouse Monthly Income Allowance).

While a community spouse is able to retain all of their own monthly income, sometimes they have no income of their own or it is insufficient on which to live. The MMMA is intended to bring their income up to a specified amount by allowing their nursing home spouse to transfer monthly income to them. In all states, this amount is between $2,465 (eff. 7/1/23) and $3,853.50 (eff. 1/1/24). As an oversimplified example, a community spouse has $700 in monthly income and lives in a state with a MMNA of $2,465. The nursing home spouse can transfer $1,765 / month in income ($2,465 – $700 = $1,765) to their spouse as a monthly income allowance. Some states use one standard MMNA figure, as described in the example above, and other states utilize both a minimum MMNA figure and a maximum MMNA figure. While community spouses are automatically entitled to the minimum MMMNA, they may be able to receive a higher allowance, up to the maximum figure, based on their shelter and utility costs. Learn more about calculating this allowance and see state-specific figures.

 

Family / Dependent Allowance

Two types of family income allowances are available for dependent family members, which can further lower one’s patient liability. Dependent relatives, which may be biological, adoptive, or step, include minor children under 21 years old, adult children, parents of the institutionalized or community spouse, and siblings of the institutionalized or community spouse. “Dependent” means that they are claimed as a dependent by either the institutionalized or community spouse on their tax return.

One income allowance is available when dependent relatives live with a community spouse, and the other is available when there are dependent relatives, but no community spouse. These allowances can easily be confused, as based on the state, the same name may be used, but for the opposite allowance. For instance, the dependent allowance with a community spouse is called a Family Maintenance Needs Allowance in Illinois, but in Ohio, the dependent allowance with no community spouse is called a Family Maintenance Needs Allowance.

When there is a community spouse, the family allowance / dependent allowance is available in addition to the Spousal Income Allowance. To calculate a dependent’s income allowance, a needs standard of $2,465 (eff. 7/1/23) is generally used. This is 150% of the Federal Poverty Level for a household of two. Essentially, a dependent’s income is subtracted from $2,465 and then divided by three. The maximum allowance per dependent is $821.67.

A needs standard, which varies based on the state, is also used to calculate a dependent relative’s income allowance without a community spouse. For instance, in Texas, the dependent’s income is subtracted from the SSI Federal Benefit Rate (FBR) for an individual, which in 2024, is $943 / month. In Rhode Island, the income of each family member is calculated, added together, and then subtracted from the medically needy income limit for the coordinating family size. In 2024, for a household of two, this amount is $1,175 / month.

 

Examples of Medicaid Nursing Home Patient Liability

1) Eleanor is single, has no dependents, and has $2,000 in monthly income. She lives in Oregon, which in 2024, allows for a Personal Needs Allowance (PNA) of $77.14 / month. She pays $174.70 / month for her Medicare premium. Her patient liability is $1,748.16 / month.

Income $2,000
PNA – $77.14
Medicare Premium – $174.70
Patient Liability = $1,748.16

2) William, who resides in a nursing home and has a monthly income of $2,200, is married to Mary, who lives at home and has $2,000 / month in income. They live in Colorado, where the PNA is $105.56 / month in 2024. The Medicaid agency determines Mary’s Spousal Income Allowance is $1,750 / month. William’s patient liability is $344.44 / month.

Income $2,200
PNA – $105.56
Spousal Income Allowance – $1,750
Patient Liability = $344.44

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