To qualify for Medicaid, you must meet both the asset and income eligibility rules. In our last blog, we discussed the 2018 Medicaid asset rules. Now let us review some of the Medicaid income rules.
To understand the income rules, you will need a little Medicaid background. A “Community Spouse” is the term used for a healthy spouse of a Medicaid applicant who is living in the community. The spouse applying for Medicaid is referred to as the “Institutionalized Spouse.” The income rules vary between Medicaid for a nursing home and Medicaid for home care. We will start with nursing home Medicaid.
First, the Community Spouse’s income is disregarded. That is right, the Community Spouse is allowed to keep all the income that is in the Community Spouse’s name. The income of the Institutionalized Spouse must be spent on the Institutionalized Spouse’s medical expenses including nursing home charges. The amount the Institutionalized Spouse must pay is referred to as “Applied Income.” There are 2 exceptions to the income of the institutionalized spouse paying the nursing home charges. One is the $60 per month personal needs allowance. The other exception is Community Spouse Allowance.
How to Calculate the Community Spouse Allowance
As with most things related to Medicaid, calculating the Community Spouse Allowance is a complicated procedure. To begin, we must first add up the Community Spouse’s rent, mortgage, and condo fees (if applicable), real property taxes, and house insurance. We then add the standard Utility Allowance to this sum. See below for the latest allowance figures. From this total, we subtract the standard Shelter Allowance. This gives us the monthly Excess Shelter Costs of the Community Spouse. The Excess Shelter Costs are then added to the Minimum Monthly Maintenance Needs Allowance. This total cannot be higher than the Maximum Monthly Maintenance Needs Allowance. We then subtract the Community Spouse’s actual income from this figure. If the result is a positive number, then this is the amount of the Community Spouse Allowance. The Community Spouse Allowance is diverted each month from the Institutionalized Spouse’s income to the Community Spouse. This in turn reduces the Applied Income paid to the nursing home each month. The State of Connecticut will pay the balance of the nursing home bill. If the result is a negative number, then there is no Community Spouse Allowance.
Let us look at an example of how calculating the community spouse allowance works. John is the Institutionalized Spouse and Margaret is the Community Spouse. John earns $4,000 per month income from social security and his pension. Margaret earns $1,000 per month in social security income. Margaret’s mortgage is $1,000 per month. Her real estate taxes are $500 per month, and her homeowner’s insurance is $200 per month. With the average cost of nursing home care in Connecticut reaching $12,851 in 2018, John will need Medicaid coverage to afford this cost. The following is the calculation of the Community Spouse Allowance:
Because the Tentative Monthly Maintenance Needs Allowance is greater than the maximum Monthly Maintenance Needs Allowance of $3,090, Margaret’s MMNA is only $3,090. From that, we subtract Margaret’s monthly gross income of $1,000 to arrive at her Community Spouse Allowance of $2,090. Because John’s monthly gross income of $4,000 exceeds Margaret’s Community Spouse Allowance of $2,090, Margaret can keep $2,090 of John’s income each month. That leaves $1,910 per month for John. John receives his personal needs allowance ($60 as of 7/1/18), pays his Medicare premium of $105.90 and the remaining amount, $1,744.10, is John’s Applied Income that he must pay each month toward his nursing home costs.
If John did not have sufficient income to pay the Community Spouse Allowance, Margaret could seek to keep more of the couple’s assets to generate the income shortfall. She would need to request a Fair Hearing and present evidence of her need to retain more of the couple’s assets to generate sufficient income.
Now let’s discuss what would happen if John applied for Medicaid to pay for home care instead of nursing home care. As stated in the table above, the income limit for Medicaid under the Connecticut Home Care Program for Elders is only $2,250 per month. John’s income exceeds the cap. Consequently, John would not qualify for Medicaid under the Home Care Program unless he diverts the $1,720 of excess income to a Pooled Trust. For more details on Pooled Trusts, see our blog, "What is a First-Party Special Needs Trust?"
If you would like more information on whether you or a loved one qualify for Medicaid, contact the elder law attorneys at Cipparone & Zaccaro, PC to discuss your situation. Call (860) 442-0150 today.
