Call: 415-854-8653 | Fax: 415-484-7048

How to Qualify for Medicaid Long Term Care When One’s Income is Above the State Limit

In order to qualify for Medicaid Long Term Care, an individual must meet certain financial requirements. Simply put, their income and assets must be less than limits set forth by the state where they live. However, exceeding those limits does not automatically disqualify a person from Medicaid eligibility.

There are several ways an applicant with too many assets and/or too much income can get themselves below the financial barriers to Medicaid Long Term Care, and a Certified Medicaid Planner can walk you through all those possibilities and help find the best choices for your situation. This article will focus on how someone with too much income can get below the income limit and become eligible for Medicaid Long Term Care benefits.

What Medicaid Considers Income

First, you should know what the state considers income when it comes to applying for Medicaid. The applicant’s Social Security benefits, pension payments, IRA distributions, employment earnings, alimony, interest payments, estate income and dividends from bonds and stocks are all revenue sources that are counted toward the income limit. Some examples of income that won’t be counted against the limit are tax refunds, stimulus checks (COVID-19 or otherwise) or funds received from need-based programs like Temporary Assistance for Needy Families (TANF).

Veteran’s benefits are an income source that may or may not be counted against the limit, depending on the state. Some states, including Florida and California, do not count VA Pension with Aid & Attendance as part of the applicant’s income, while other states do count it.

Understanding Income Limits

Next, you should know your income limit, which can vary by state, marital status and the type of Medicaid Long Term Care for which you are applying. For a single applicant in 2022, the income limit to be eligible for both nursing home Medicaid as well as a Home and Community Based Services (HCBS) Medicaid waiver is $2,523 per month in most states. That means the applicant would add up all of their revenue streams and if that total is below, $2,523, they would meet the income eligibility requirement to receive care in a nursing home or a waiver that would help them pay for care at home or in a non-nursing home facility. If the income total is above the $2,523 limit, there are ways to get below, which will be covered later and can be explained in depth by a Certified Medicaid Planner.

For married couples where both spouses are applying for nursing home Medicaid or a HCBS Medicaid waiver, each applicant is considered an individual and each may have up to $2,523 in income, or a combined income of $5,046. Counting income for married couples where both are applying for Medicaid Long Term Care benefits follows the “name on the check” rule, which simply means whoever the check is made out to will count that dollar amount toward their individual income total.

Just because an applicant is allowed to have $2,523 in monthly income and still be eligible for nursing home Medicaid doesn’t mean they get to keep that income once they enter the nursing home. Rather, all of their income must go toward paying for their cost of care minus a small personal needs allowance, which ranges from $30 – $150 per month depending on the state. It’s different if one is accepted for a HCBS Medicaid waiver. Since the HCBS recipient is living at home or “in the community,” they still have expenses like rent (or a mortgage), food and utilities that need to be covered and therefore they are allowed to keep more of their income.

For a married couple in which only one spouse is applying for nursing home Medicaid or a HCBS Medicaid waiver while the other spouse is staying at home, or “in the community,” only the income of the applicant is applied to the $2,523 income limit. Even if the “community spouse” has a sizable monthly income, it will not be counted toward their applicant spouse’s limit, unless the couple lives in New York, the lone state where community spouses with high income may be required to contribute 25% of that income toward the care of their applicant spouse. If the applicant has a higher income and the non-applicant spouse does not, some income may be transferred. More on this below.

The income limits are different, and more restrictive, for people applying for Aged, Blind and Disabled Medicaid, which is often called Regular Medicaid or State Plan Medicaid. Depending on the state, the ABD Medicaid income limit for a single applicant ranges from was $841 – $1,073 per month. For married applicants to the ABD program, their income is always considered jointly and the limit ranges from $1,261 – $1,452 per month. These figures are linked to the Federal Poverty Level and have not been updated for 2022.

Minimum Monthly Maintenance Needs Allowance

For married people applying for nursing home Medicaid or a HCBS Medicaid waiver, the spousal impoverishment rule makes sure the community spouse has enough income to pay for their cost of living by allowing the applicant spouse to transfer some (or all) of their monthly income to the community spouse via the Minimum Monthly Maintenance Needs Allowance (MMMNA). In 48 states and the District of Columbia, the MMMNA is $2,177.50, a figure which may be rounded up to $2,178.00 and will remain in effect until June 30, 2022. Due to a greater cost of living, the MMMNA in Hawaii is currently $2,505.00 and the MMMNA in Alaska is $2,721.25. All of these numbers are set by the federal government and are based on the Federal Poverty Level.

Simply put, the applicant spouse is allowed to transfer some (or all) of their income to the community spouse until the community spouse has a monthly income of $2,178.00 (or more if they are living in Hawaii or Alaska). Most states also have a Maximum Monthly Maintenance Needs Allowance, a figure which is based on the SSI Federal Benefit Rate and is $3,435 for 2022. The applicant spouse may transfer up to $3,435 to the community spouse (or an extra $1,257 on top of the $2,178 allowed in most states) if the community spouse has housing expenses that exceed the Monthly Housing Allowance (which is $654 per month in 2022 for most states, $751.50 per month in Hawaii and $816.30 / month in Alaska) and/or utility expenses that exceed the Monthly Standard Utility Allowance (which varies greatly by state, but is $366 per month in Florida for 2022, for example).

So, if a community spouse has housing expenses that are $854 per month, they would be able to receive an additional $200 per month to cover that expense on top of the $2,178 MMMNA. If the monthly housing cost for a community spouse was $2,654 per month, they could not receive the entire amount their housing cost exceeds the $654 per month Monthly Housing Allowance (which would be $2,000 in this example) AND the standard $2,178 per month, because that would put their monthly total at $4,178, well above the Maximum Monthly Maintenance Needs Allowance of $3,435. The most the applicant spouse could transfer would be $1,257, which would put the community spouse at the $3,435 total.

Some states don’t bother with Minimum or Maximum Monthly Maintenance Needs Allowances that can be adjusted depending on housing or utilities costs. Instead, these states use a single figure for a Monthly Maintenance Needs Allowance that falls between the minimum of $2,178 and the maximum of $3,435. For example, Georgia, New York, Texas and California all use $3,435 as their one Monthly Maintenance Needs Allowance figure, which means, for example, that a community spouse with a monthly income of $1,435 is entitled to $2,000 per month from their applicant spouse regardless of other expenses.

Needs Allowances have been simplified for the purposes of this article and to allow for state differences. Married couple with a single applicant should strongly consider a consultation with a Medicaid Planning professional to ensure the couple retains the maximum income permitted by state law. Schedule a free initial consultation here.

Options When Over the Income Limit

Transferring income using the MMMNA is one way to get below the income limits and qualify for nursing home Medicaid, but it’s not the only way. Depending on their state of residence, applicants can also use a Medically Needy Pathway or a Qualified Income Trust (also called a Miler Trust) to help lower their income totals and become eligible for Medicaid, and a Certified Medicaid Planner can help you determine if either of these options are right for you.

Medically Needy Pathway

The Medically Needy Pathway allows the applicant to lower their income total, or “spend down,” by subtracting allowable medical expenses from that total. If that new figure is below the Medically Needy Income Limit (which is generally very low and called different names in different states), then the applicant will be eligible for Medicaid Long Term Care. For example, in California the Medically Needy Income Limit is called the Maintenance Needs Allowance and is currently set at $600 per month. If an applicant living in California has a monthly income of $3,600, but they spend $3,100 per month on allowable medical expenses, their total countable income is $500 per month, which puts them below the Medically Needy Income Limit and means they will be eligible for Medicaid Long Term Care benefits.
All states allow Medicare payments and other health insurance premiums to be deducted from one’s income total when applying for long term care Medicaid. In “Medically Needy” or “spend down” states, other allowable medical expenses include physician bills, prescription drugs, transportation for medical care, medical supplies/equipment prescribed by one’s doctor, nursing home services, hospital services, in-home medical/personal care, eyeglasses, dental bills, chiropractor services and therapies (physical, speech, occupational).

In 2022, states that allow the Medically Needy Pathway for seniors in some form are Arkansas, California, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin.

Qualified Income Trusts

States that do not allow the Medically Needy Pathway are often called “income cap” states, and they allow an applicant to get below the Medicaid eligibility income limit by putting their excess income in a Qualified Income Trust (also called a Miller Trust) until their monthly income is below the limit ($2,345 per month for 2022). The money in the QIT can only be used to pay for a “share of cost” of the Medicaid recipient’s long-term care expenses, like supplementing the care costs at the nursing home, or paying for medical bills that are not covered by Medicaid.

The person setting up the trust (also known as the grantor or the settlor) can be the Medicaid applicant, their guardian or someone who has power of attorney. However, there must also be a trustee named, and this person can not be the Medicaid applicant. The state where the Medicaid recipient will be receiving long-term care benefits must be named as the beneficiary of the trust, and upon the death of the individual, the state will receive up to an equal amount for which it paid for that individual’s long term care. The trust must also be irrevocable, which means it cannot be altered or canceled.

One does not need professional assistance when setting up a Qualified Income Trust, but this is another step where having a Certified Medicaid Planner on your team can be extremely helpful. The following states currently allow Qualified Income Trusts to be used by Medicaid Long Term Care applicants: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Mississippi, Missouri (only for HCBS Waivers), Nevada, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas and Wyoming.