Your father worked hard his entire life for the pension check and Social Security benefits he receives every month. Unfortunately, that monthly income isn’t enough to pay for a nursing home, and he’s going to need one soon. To make matters worse, his income is over his Medicaid eligibility limit, so it looks like he can’t qualify for long-term nursing home coverage through Medicaid.

It might seem like your father is trapped, but that’s not necessarily the case. There are pathways to eligibility and strategies he can use to qualify for Medicaid even though he’s over the income limit. To learn more about these strategies and qualifying for Medicaid when you’re over the income limit, keep reading and then get in touch with one our Certified Medicaid Planners.

Definition of Medicaid’s Income Limit

Medicaid is meant to help people with limited finances. So, in order to qualify, applicants need to meet two financial requirements – an income limit and an asset limit. This article focuses on the income limit. We’ve also written about qualifying when over the asset limit.

Almost all income is counted toward Medicaid’s monthly income limit – Social Security benefits, pension payments, IRA payments, property income, alimony, stock dividends, salary, wages, etc. If the total of the income is below the limit, the applicant can be eligible for Medicaid, as long as they also meet their asset limit and level care of requirement. If the total is above the income limit, the applicant might be ineligible, but there are still methods they can use to become eligible. We will discuss those methods below.

The income limits for Medicaid applicants can change depending on the state where they live, their marital status and the Medicaid program. In general, however, the income limits are low. In most states in 2024, the income limit for receiving long-term care at home or in a nursing home through Medicaid is $2,829/month.

Seniors who have long-term nursing home coverage through Medicaid must give almost all of their monthly income to the state to help pay for the cost of care. They are only allowed to keep a small “personal needs allowance” that ranges from $30/month to $200/month, depending on the state. They can also keep enough to make Medicare premium payments if they are dual eligible and have Medicare in addition to Medicaid. And they can keep enough to make monthly allowance payments to spouses who are not on Medicaid and would be in danger of living in poverty without those payments. In fact, they can keep more than the normal income limit in their state to make those payments. This is known as the Minimum Monthly Maintenance Needs Allowance, which we’ll explain in the next section.

Sharing Income with Your Spouse: Minimum Monthly Maintenance Needs Allowance

The Monthly Maintenance Needs Allowance (MMNA) is one of Medicaid’s spousal impoverishment rules, along with the Community Spouse Resource Allowance (which concerns assets, not income). These rules are designed to protect spouses who are not applying for or receiving Medicaid and are in danger of living in poverty without the financial support of their spouse who is applying for or receiving Medicaid.

The exact amount of income a Medicaid applicant or beneficiary can transfer to their spouse who is not on Medicaid (often called the community spouse) depends on the state and the income of the community spouse. Community spouses in every state are entitled to have an income that meets the state’s Minimum MMNA. If the community spouse’s income is below the state’s Minimum MMNA, the applicant/beneficiary spouse can transfer some or all of their income to the community spouse until they reach that Minimum MMNA, even if that means the beneficiary spouse has monthly income over their income limit for Medicaid eligibility.

A few states use one standard figure as their Minimum MMNA. Other states use a Minimum MMNA that can increase to a Maximum MMNA depending on the community spouse’s living expenses. The federal government sets MMNA limits that states must follow, and as of July 1, 2024, the Minimum MMNA limit is $2,555/month and the Maximum MMNA limit is $3,853.50/month, although some states round up to $3,854/month. All the states that use one standard figure as their Minimum MMNA use $3,853.50/month, with the exception of Alabama, which uses $2,555/month.

As mentioned above, a benefit of the MMNA for the applicant/beneficiary spouse is it allows them to have income over their limit. After they transfer that excess income to their community spouse, they will be below the limit and eligible for Medicaid.

Here’s an example that might help you understand some of these concepts. Jane lives in the community but her husband, Bill, is covered by Medicaid and lives in a nursing home. They live in a state where the Minimum MMNA is $2,555/month, the Maximum Monthly Maintenance Needs Allowance is $3,853.50/month and the income limit for eligibility is $2,829/month. Jane has utility bills and housing expenses that push her to the Maximum MMNA of $3,853.50/month. Since she only has $500/month of income on her own, Bill can transfer up $3,353.50/month of his income to her. That’s a good thing, because Bill is collecting $4,000/month in income, which would put him over the income limit for eligibility in his state, but after he transfers $3,353.50/month to Jane his countable income drops to $646.50/month, which is well under the income limit for eligibility. So, thanks to MMNA, Jane can have a decent standard of living in the community and Bill can qualify for long-term nursing home coverage via Medicaid.

Understanding all the rules surrounding the MMNA is difficult, as are the calculations to determine exactly what the allowance might be. In fact, it’s not uncommon for states to make errors when calculating MMNA because of all the variables when it comes to things like allowable housing expenses and utility bills, as well as countable and non-countable income. Our team of professionals at Eldercare Resource Planning can help you understand all the MMNA rules, make the correct calculations and make sure the state is doing the same. Contact us to get started.

Options to Qualify for Medicaid When You’re Over the Income Limit

Even if you or your loved one is over the income limit for eligibility, you can still receive long-term care coverage through Medicaid. There are two ways you can do this: using the Medically Needy Pathway, or using a Qualified Income Trust.

Which one you can use depends on the state where you live. As of 2024, the following states offer a Medically Needy Pathway: Arkansas, California, Connecticut, 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 and Wisconsin, as well as the District of Columbia.

And the following states use Qualified Income Trusts as of 2024 – Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas and Wyoming.

Medically Needy Pathway

In states that offer the Medically Needy Pathway, Medicaid applicants over their income limit can spend excess income on medical bills to become eligible. The amount applicants need to spend to become eligible depends on their monthly income and the Medically Needy Income Limit in their state. Each state also has a “spend down” period. You must spend your excess income during each spend down period to maintain your Medicaid eligibility. It works like an insurance deductible. After you spend your excess income on medical bills during the spend down period, Medicaid will kick in and pay your medical bills for the rest of the spend down period. When the next spend down period starts, the cycle starts again. The spend down period in most states is one month or six months.

Medicaid applicants and beneficiaries using the Medically Needy Pathway can spend on a variety of medical and long-term care expenses in order to gain and maintain their eligibility. These include prescriptions, doctor bills, hospital services, nursing home services, eyeglasses, hearing aids, therapies, transportation and personal care assistance with the Activities of Daily Living (mobility, bathing, dressing, eating, toileting). It’s very important to keep copies of bills, receipts, visit summaries and any other documentation associated with these medical expenses in order to maintain a good standing on the Medically Needy Pathway.

Our Certified Medicaid Planners at Eldercare Resource Planning can be a huge help for anyone attempting to use the Medically Needy Pathway. These Medicaid Planning professionals know the limits, calculations, time frames and documents that are essential when it comes to gaining and maintaining your eligibility with this method. They can help you acquire and organize your documents, determine your Medically Needy Income Limit and calculate how much you need to spend each month to maintain your eligibility.

Qualified Income Trusts

In states that use Qualified Income Trusts (often called Income Cap states), Medicaid applicants with income over their eligibility limit deposit their extra income into a trust on a monthly basis until they get down to their income limit to gain and maintain their eligibility. It’s a more straightforward process than the Medically Needy Pathway, but there are still rules that you or your loved one must follow when it comes to using a Qualified Income Trust for Medicaid eligibility. These rules include:

• The trust itself must be irrevocable, which means it can’t be changed or canceled once it’s created.
• The trust must name the state as the beneficiary, which means the state gets the money in the trust after the Medicaid recipient’s death.
• The trust must have a manager who is someone other than the Medicaid recipient or their spouse, although it can be a family member or friend.

After the trust is created, some states require that you deposit all of your income in it while others require that you deposit only your excess income. Some states also require direct deposit into the trust, but not all.

QITs can also be called Miller Trusts, Income Trusts, Income Diversion Trusts, Income Cap Trusts, Income Only Trusts, Irrevocable Income Trusts and d4B trusts. Some of these names are specific to certain states. No matter what they call Qualified Income Trusts in your state, our Certified Medicaid Planners can help you use them. They know exactly how these trusts need to be created and used, and by whom. They understand how to adapt if your income fluctuates from month to month. And they’ll know how to adjust on the fly if the rules change or if any other issue arises around your QIT, your income or your Medicaid eligibility.

How Medicaid Planners Help You Qualify For Medicaid with Too Much Income

If you think you or your loved one is over Medicaid’s income limit for eligibility, the team of professionals at Eldercare Resource Planning can help. They know exactly what income is counted toward the limit. They can calculate if you’re over that limit and by how much. Then, they can take you through every step to help you resolve your income issues and qualify for Medicaid.

Our Certified Medicaid Planners can guide you down the Medically Needy Pathway, if that’s available in your state. They will know how much you need to spend on medical bills, which bills you can spend on and when you need to do it. If your state uses Qualified Income Trusts, they can help with those, too. They’ll know if you need an attorney to create the trust, they can connect you with that attorney and make sure you get the kind of trust you need. Then, they can show you exactly how to use the Qualified Income Trust to maintain your Medicaid eligibility.

Our team can also help you protect your spouse who remains in the community by getting the most out of Medicaid’s Minimum Monthly Maintenance Needs Allowance (MMMNA). They know all the specifics of the Monthly Housing and Standard Utility Allowances that can help increase the amount of money a “community spouse” can receive. And they understand how and when the MMMNA can help the Medicaid applicant become eligible.

A Certified Medicaid Planner will then tie it all together by helping you through the actual application process. They will help you gather all the paperwork you will need to submit with your application, which is the most time-consuming part of the Medicaid application process. These documents have to clearly illustrate your financial history, if they don’t, or if it looks like you’ve violated Medicaid rules, your application will be denied and you could be penalized with a period of ineligibility. When your application is accepted, a Certified Medicaid Planner can make sure the state correctly calculated your MMMNA, which doesn’t always happen.

Qualifying for Medicaid when you’re over the income limit is not easy, but it’s a lot easier with the help of a Certified Medicaid Planner. Connect with us now here.