Qualifying for Medicaid

While two-thirds of nursing home residents are covered by Medicaid, at root it is a health care program for the poor.

The definition of ‘poor’ has become quite complex in the area of nursing home coverage. In order to be eligible for Medicaid benefits, a nursing home resident may have no more than $2,000 (in most states) in ‘countable’ assets. The spouse of the nursing home resident – called the ‘community spouse’ – is limited to one half of the couple’s joint assets up to $128,640 (in 2020) in countable assets. (In some states the community spouse may keep all of the couple’s assets up to $128,640, not just half up to that amount.) This figure, called the community spouse resource allowance (CSRA), changes each year to reflect inflation. In addition, the community spouse may keep the first $25,728 (in 2020), even if that is more than half of the couple’s assets. This figure is higher in some states, up to the full $128,640 as mentioned above.

All assets are counted against these limits unless the property falls within the short list of ‘noncountable’ assets. These include:
1. Personal possessions, such as clothing, furniture, and jewelry.
2. One motor vehicle of any value as long as it is used for transportation.
3. The applicant’s principal residence, provided it is in the same state in which the individual is applying for coverage. In most states, the home has not been considered a countable asset for Medicaid eligibility purposes as long as the nursing home resident intended to return home. But such houses may be deemed non-countable only to the extent their equity is less than $595,000, with the states having the option of raising this limit to $893,000 (figures rise with inflation). In all states, the house may be kept with no equity limit if the Medicaid applicant’s spouse or another dependent relative lives there.

Medicaid’s Treatment of Income
The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. Medicaid pays nursing home costs that exceed the resident’s income. But in some states, known as ‘income cap’ states, eligibility for Medicaid benefits is barred if the nursing home resident’s income exceeds $2,349 a month (for 2020), unless the excess above this amount is paid into a ‘(d)(4)(B)’ or ‘Miller’ trust. If you live in an income cap state and require more information on such trusts, consult an elder law specialist in your state.

For Medicaid applicants who are married, the income of the community spouse is not counted in determining the Medicaid applicant’s eligibility. Only income in the applicant’s name is counted. Thus, even if the community spouse is still working and earning, say, $5,000 a month, she will not have to contribute to the cost of caring for her spouse in a nursing home if he is covered by Medicaid. In some states, however, if the community spouse’s income exceeds certain levels, he or she does have to make a monetary contribution towards the cost of the institutionalized spouse’s care. The community spouse’s income is not considered in determining eligibility, but there is a subsequent contribution requirement.

What if most of the couple’s income is in the name of the institutionalized spouse, and the community spouse’s income is not enough to live on? In such cases, the community spouse is entitled to some or all of the monthly income of the institutionalized spouse. How much the community spouse is entitled to depends on what the Medicaid agency determines to be a minimum income level for the community spouse. This figure, known as the minimum monthly maintenance needs allowance or MMMNA, is calculated for each community spouse according to a complicated formula based on his or her housing costs. The MMMNA may range from a low of $2,113.75 to a high of $3,216 a month, and even higher in Alaska and Hawaii (for 2020; the first figure rose July 1, 2020).

If the community spouse’s own income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse’s income. (See a possible alternative under Increased Resource Allowance below). RLF