What Income Determines Medicaid Eligibility?
Now the question gets asked: What counts as income if you want to be eligible for Medicaid? In general, income is defined as anything that you use to buy food to eat and a roof over your head. Thus, the following are considered sources of income:
Take note that if you need skilled nursing home care, it is only your income that is included in determining financial eligibility for Medicaid. No matter how much your spouse earns, his or her income is not going to be bundled with your income. But if you need long-term care, state rules dictate if the applicant’s income is counted together with the earnings of his or her spouse or not to determine eligibility for Medicaid.
Special rules govern income earned from trusts or property jointly-owned with another person, so you need to be aware of how these will affect your Medicaid application. If you’re the beneficiary of a trust and the trustee determines how much money to distribute to you, you might be in for a rough ride. Say for example the trust earns $1,500 a month but the trustee decides to only give you $500 as your distribution, Medicaid will still calculate the amount earned by the trust ($1,500) to be your actual income when determining eligibility for the program. For jointly-owned property, you are considered to own half of the property even if you are not actually receiving half of the distributions.
However, there are cases wherein Medicaid will not count any extra income you earned. These are:
Maintenance Monthly Needs Allowance. This is the amount of money that the applicant needing nursing home or long-term care may keep for his or her spouse who has little or no income. The Federal government sets the minimum and maximum ranges which are adjusted for inflation each year and the states are given a free hand to choose the allowance that falls within the ranges to support the spouse.
Monthly Personal Needs Allowance. This is small amount ranging from $40 to $100 that states provide for Medicaid applicants to use for those things that the nursing home will not be able to cover. These include taxi fares, movie tickets, and personal care items.
Medical Cost Allowance. This is the amount of money that you can keep to help you pay for medical costs that only you can cover—e.g. insurance premiums.
Some Trusts. There are trusts that you can set up which will still make you qualify for Medicaid even if you have excess income. In these trusts, the income is paid to the trust. However, the trust you set up must comply with two conditions: 1) Income from the trust must be used only for your care, and 2) The remainder beneficiary of the trust must be the state. The latter means that after you die, the state will receive the remainder of your assets as a way of reimbursing it for what it spent on your care. If there are any assets left, it will be given to your beneficiaries.