By Linda Toga
THE FACTS: My house and most of my liquid assets are held in an irrevocable trust that I funded over five years ago. I am fortunate in that my income is sufficient to for me to live comfortably without using my savings.
THE QUESTION: If I do need to move into a nursing home down the road, how will Medicaid deal with my income when it comes to determining if I am eligible for benefits?
THE ANSWER: Since Medicaid is a needs-based program, your eligibility will be based on the value of your available assets, meaning assets that are not in your trust, and your income. Even if your assets are very limited, if your income is sufficient to cover the cost of a nursing home, you will not be eligible for assistance.
However, because there are some sources of income that are exempt under the Medicaid rules, determining eligibility is more involved than simply applying the same monthly income level across the board.
Medicaid looks at all of the income you receive, at the source of that income and at your medical expenses to determine your Net Available Monthly Income or NAMI. If your monthly medical expenses equal or exceed your NAMI, Medicaid will deem you “income eligible.”
In general, Medicaid will consider income from stocks and bonds, IRAs and other qualified plans, pensions and trusts when making a determination as to whether you are eligible to receive benefits.
Medicaid will not, however, include in your NAMI income from German and Austrian reparation plans, Nazi persecution funds, state crime victims’ assistance funds, Seneca Nation Settlement Act Funds, special payments to American Indians or payments from federal volunteer programs.
Medicaid also exempts funds received from a reverse mortgage as long as you use the funds during the month you receive them.
If you are single, you will be allowed to keep all the exempt income you may receive plus an additional $50/month in nonexempt income and funds to cover the cost of your supplemental medical insurance premiums.
If you are a veteran, you get to keep $90/month plus exempt income and the cost of supplemental medical insurance. NAMI in excess of $50 (or $90 for veterans) plus the cost of insurance premiums must be paid to the nursing home.
If you are married and your spouse is well and continues to live in the community (the “community spouse”), the amount of income you may keep is the same as for an unmarried individual. However, your spouse, as the community spouse, is allowed a monthly income of close to $3,000 to help cover living expenses. If your spouse’s income is too large, Medicaid will apply a percentage of his or her excess income to the cost of your care in the nursing home.
Linda M. Toga, Esq. provides legal services in the areas of estate planning, probate, estate administration, litigation, wills, trusts, small business services and real estate from her East Setauket office.