What is the Medicaid marriage penalty?

The Medicaid marriage penalty is when a Medicaid recipient loses their benefits as a result of getting married. Medicaid is a needs based program, which means a beneficiary must have limited financial means. For a senior to be eligible for Medicaid, they must have income and assets under a specified level. These limits vary based on program, marital status, and state. See state-by-state limits. If the non-Medicaid spouse has even a modest income or minimal assets, the marriage penalty could unfortunately push a beneficiary over Medicaid’s limits and result in Medicaid disqualification of the newly married spouse. Check your Medicaid eligibility here.

The risk of losing one’s Medicaid benefits is not as high when one spouse is a recipient of home and community based services (HCBS) via a Medicaid Waiver (or is a Nursing Home Medicaid beneficiary). In this case, the income of the non-Medicaid spouse is disregarded; Medicaid does not count it towards the income limit of the Medicaid beneficiary and cannot cause the loss of benefits. More on how Medicaid counts income. Assets, on the other hand, are considered jointly owned. In addition to the applicant asset limit, there is a Community Spouse Resource Allowance that allows a non-Medicaid spouse to retain a larger portion of the couple’s assets. However, even with the larger allowance of assets for a non-applicant spouse, if a new spouse has a significant amount of assets, it can cause the Medicaid beneficiary to lose their benefits.

If you or a loved one are a Medicaid recipient thinking about getting married, a Professional Medicaid Planner can assess the situation and help restructure finances (if possible) so that Medicaid benefits are not lost. Find a Medicaid Planner.

Note that there is another meaning for the term, “marriage penalty”, which has nothing to do with Medicaid. This definition is referring to when a married couple files their taxes and pays more in taxes than filing independently as single.

The Medicaid marriage penalty is when a Medicaid recipient loses his / her benefits as a result of getting married. Remember, Medicaid is a needs based program, which means a beneficiary must have limited financial means. Unfortunately, a marriage can push a beneficiary over the Medicaid set limits and result in Medicaid disqualification of the newly married spouse.
 
As further explanation, in order for a senior to be eligible for Medicaid, they must have income and assets under a specified level. (State-by-state limits can be found here). These limits vary based on marital status, as well as state. However, as a general rule of thumb, for regular Medicaid, often called aged blind and disabled Medicaid, a single individual’s monthly income is limited to either 100% of the Federal Poverty Level (approximately $1,063) or 100% of the Federal Benefit Rate (approximately $783). Assets are normally limited to $2,000. Now, consider the income and asset limits of a married couple (even with only one spouse as a Medicaid beneficiary), which is not significantly higher than for a single person. Generally speaking, they are limited to either 100% of the Federal Poverty Level (approximately $1,437) or 100% of the Federal Benefit Rate (approximately $1,175), but as a household of two. The asset limit, in most cases, is $3,000. Therefore, if the non-Medicaid spouse has even a modest income or minimal assets, the marriage penalty could definitely come into play and result in the disqualification of benefits.
 
The risk of losing one’s Medicaid benefits is not as high when one spouse is a recipient of home and community based services (HCBS) via a Medicaid waiver (or is a nursing home Medicaid beneficiary). In this case, the income of the non-Medicaid spouse is disregarded, meaning Medicaid does not count it towards the income limit of the Medicaid beneficiary and cannot cause the loss of benefits. (Learn more about how Medicaid counts income here). Assets, on the other hand, are considered jointly owned. That said, there is a community spouse resource allowance that allows a non-Medicaid spouse to retain a larger portion of the couple’s assets. At the time of this writing, most states allow a non-applicant spouse to keep up to $128,640, while the applicant spouse can retain $2,000 in assets. (State specific limits can be found here). However, even with the larger allowance of assets for a non-applicant spouse, if a new spouse has a significant amount of assets, it can cause the Medicaid beneficiary to lose his / her benefits.
 
If you or a loved one are a Medicaid recipient thinking about getting married, a professional Medicaid planner can assess the situation and help restructure finances (if possible) so that Medicaid benefits are not lost. For assistance finding a Medicaid planner, click here.
 
As a side note, there is another meaning for the term, “marriage penalty”, which has nothing to do with Medicaid. This definition is referring to when a married couple files their taxes and pays more in taxes than had they both been single and filed independently.