Your Income & Medicaid Eligibility

Income plays a crucial role in determining eligibility for Medicaid benefits to pay for long-term care. Medicaid is a joint federal and state program that provides healthcare coverage, including long-term care services, for individuals with limited financial resources. Eligibility criteria for Medicaid, particularly regarding income, vary by state, but there are some common principles to consider:

Income Limits: Medicaid eligibility is typically based on both income and assets. Each state sets specific income limits, which may vary depending on the applicant's marital status and whether they are applying for institutional or home- and community-based services. Income limits are usually expressed as a percentage of the federal poverty level (FPL). In some cases, individuals with income above the limit may still qualify if they have high medical expenses that reduce their countable income. The state of Florida specifically uses income to determine eligibility. Florida’s income cap limit for the year 2023 is $2,742 of gross monthly income. Only the income of the applicant is counted when determining eligibility. The spouse’s income is not counted.

Countable Income: Medicaid considers "countable income" when determining eligibility. Countable income is pretty much all income of the applicant including wages, Social Security, pensions, and other sources of income. Do not confuse non-taxable income and ordinary income. Just because income is non-taxable income does not mean that it is non-countable.

Community Spouse and Income Protection: If one spouse needs long-term care and the other spouse remains in the community (the "community spouse"), Medicaid has specific rules to protect the community spouse from becoming impoverished. When a person is receiving Medicaid benefits, he or she has an obligation to pay all their income to the nursing home each month. If that person is married, the loss fo that income to the family can be catastrophic. Medicaid’s rules set a minimum amount of income that must be provided to the community spouse. In these cases, income that would have been paid out for care may be diverted to help support the community spouse.

Qualified Income Trusts (Miller Trusts): If an individual's income exceeds the state's Medicaid income limit, they may still qualify by reducing their countable income through the use of a Qualified Income Trust (QIT or Miller Trust). A QIT is a legal arrangement that allows the excess income to be placed in the trust’s checking account each month, making it non-countable for Medicaid eligibility purposes.

Look-Back Period: Medicaid has a look-back period, usually five years, during which financial transactions, including gifts and transfers of assets for less than fair market value, are scrutinized. In some states, transferring income within the look-back period can result in a penalty period for Medicaid ineligibility.

Medically Needy Programs: Some states offer "Medically Needy" programs that allow individuals with significant medical expenses to qualify for Medicaid, even if their income exceeds the regular Medicaid limits. This may sometimes be referred to as share of cost Medicaid.

Waivers and Home and Community Based Services (HCBS): Some states offer Medicaid waiver programs that allow individuals to receive long-term care services at home or in a community-based setting such as an assisted living facility. The income limits for these waiver programs are often the same as those for institutional care in a nursing home.

Navigating the Medicaid application process and understanding how income affects eligibility can be complex, so it's advisable to seek assistance from a Medicaid elder law attorney. We can help individuals and families understand the specific Medicaid rules and develop a strategy to meet the income requirements while preserving financial security and access to necessary long-term care services.

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