What is Resident / Patient Liability for Medicaid? How is the Patient Liability to a Skilled Nursing Facility Figured?
Resident liability, also called patient liability or “share of cost”, is the amount a Medicaid recipient must pay towards the cost of his / her nursing home care (or in some cases, long term home and community based services via a Medicaid waiver). Stated differently, patient liability is the monthly amount that a Medicaid beneficiary must pay from his / her income before Medicaid will cover the remainder of the costs.
To be clear, even though Medicaid’s income limit for nursing home Medicaid is approximately $2,349 / month (in 2020), Medicaid beneficiaries must pay nearly all of their monthly income towards the cost of their nursing home care. (See income limits by state). Patient liability is determined based on one’s monthly income and allowable deductions (only a few specific deductions are allowed). First, a Medicaid recipient in a skilled nursing facility is entitled to a monthly personal needs allowance (approximately $30 to $200, based on the state in which one resides). Other deductions may include a monthly maintenance needs allowance, which is an income allowance for a non-applicant spouse (if applicable), Medicare premiums, and medical expenses that Medicaid will not cover. One’s monthly patient liability will remain the same each month unless one there has been a change in income or allowable deductions.
As an example, let’s say Fred is a nursing home Medicaid beneficiary with a monthly income of $2,000. The state in which he resides allows a $45 / month personal needs allowance and he has a healthy spouses living at home who is entitled to a $1,000 / month spousal income allowance. Therefore, his total allowable deductions are $1,045 / month ($45 for a personal needs allowance and $1,000 for a spousal income allowance). When these deductions are subtracted from his monthly income, it leaves him with a monthly patient liability of $955 / month. ($2,000 in income minus $1,045 in deductions = $955 patient liability).
Please note that being over the income limit for long term care Medicaid does not necessarily mean that one cannot become eligible for nursing home Medicaid (or home and community based services via a Medicaid waiver). Instead, the resident liability will be greater. Some states are considered medically needy states, and in these states, if the cost of nursing home care is less than the calculated patient liability, he / she will be eligible for Medicaid. (Essentially, one has to “spend down” his / her income to the medically needy income limit). Other states allow a Medicaid applicant to become income qualified by depositing “excess” income (income over Medicaid’s income limit) into a qualified income trust (QIT). It is through the QIT that the beneficiary’s patient liability is paid.