Disclaimer: This article has been posted for general information purposes only, and applies only to Pennsylvania residents. You should not act upon the information in this article without first retaining legal counsel.
By Robert C. Gerhard, III, Esquire
We are commonly asked about the Medical Assistance (Medicaid) long-term care resource limits. In order to qualify for benefits the applicant must be “resource eligible.” This commonly involves a spend-down of excess resources to below the applicable limit. The problem is that there is a great deal of misinformation out there about how far one must spend-down before becoming eligible for benefits to cover nursing home costs.
This article will attempt to clear things up a bit as you begin your research. This article is not a substitute for legal advice, if legal advice is needed please reach out, but should help you better understand the topic. You will generally do better navigating the Medicaid application process if you have an experienced elder law attorney help you along the way.
Single, Widowed, and Divorced Medicaid Applicants
The answer to the resource limit question is a bit more straightforward for a single applicant than for a married applicant. For a single, non-married applicant, the resource limit depends on the person’s “gross” monthly income.
If a non-married person applying for benefits in 2024 has more than $2,829 of gross monthly income, then the resource limit for countable (non-exempt) resources is $2,400. If the applicant has gross income which is $2,829 or less, then the person’s resource limit is $8,000. Examples of “countable assets” include checking and savings accounts, stocks, bonds, brokerage accounts, and non-resident real estate.
This income limit, now $2,829/month, normally changes on January 1st of each year. This monthly figure represents 300% of the federal SSI benefit amount and is usually revised upwards each year due to inflation. $2,829 is the income threshold amount for 2024. This number is expected to be revised upwards by a few dollars on January 1, 2025.
Gross vs Net Income
We advise our clients not to rely on the bank statements to show the gross monthly income. The deposit amounts reflected on the bank statements normally verify net monthly income, not the gross income. The deductions are often subtracted from the gross amount of income for taxes and health insurance before the net amount is deposited.
For example, the amount of Social Security income that hits the bank account each month is usually net of the Medicare B premium. Similarly, pension payments often have federal income tax or supplemental health insurance premiums withheld. The caseworker reviewing the Medicaid application at the County Assistance Office will definitely determine the applicable resource limit based on gross income. The caseworker will need written proof of the monthly gross income amounts, typically Social Security and pension income.
Non-countable assets
It is important to note that not all assets are “countable.” One motor vehicle, household goods and personal effects, burial spaces for immediate family, a properly funded irrevocable burial reserve, and certain business property are examples of property that can be considered non-countable. Non-countable assets can be retained in addition to the resource allowance of either $2,400 or $8,000.
The residence of a single applicant is protected in 2024 to the extent its fair market value is under $713,000. Married applicants can keep their residence regardless of value.
Pennsylvania Aging Waiver Program (Community HealthChoices)
At the time of this writing, the $2,829 figure is also the income-cap, generally speaking, for access to the Pennsylvania Aging Waiver Program, also known as Medical Assistance Community HealthChoices. The Aging Waiver Program (HealthChoices) provides home and community-based services for those who might otherwise require nursing facility care but who can be safely cared for at home. The resource limit for Aging Waiver Program is $8,000, but as a general rule the applicant’s gross income needs to be at or under $2,829/month. There is a way to “spend-down income” to become eligible for Aging Waiver services, but it is not practical for many people, so although it is possible, it is not often pursued without the help of a lawyer. Most Pennsylvania seniors with gross income over $2,829/month are not able to access the Aging Waiver Program, and can more easily qualify for Medicaid benefits to pay for nursing home care. This is unfortunate since it is often preferable to care for loved ones at home and out of nursing facilities.
Married Nursing Home Residents
Calculating the resource limits in a spousal case is more complicated. Generally speaking, the spouse at home is permitted to protect half of the countable resources up to a statutory maximum, and subject to a statutory minimum. The 2024 maximum is $154,140, and the 2024 minimum is $30,828.
The protected spousal share is determined by the caseworker at the County Assistance Office following his or her review of the Resource Assessment, Form PA-1572. This form is provided to every nursing home resident upon admission in the Nursing Home Admissions Packet. The Resource Assessment captures the resource values as of the date of admission to the nursing home.
Nursing home admission
The first nursing home admission that lasts 30 days is, generally speaking, the relevant date of admission. Although the Resource Assessment form technically does not need to be filed until you apply for Medicaid long-term care benefits, our office usually opts to file the Resource Assessment shortly after admission to the nursing home – once we are certain the nursing home stay will exceed 30 days. At a minimum you will want to ascertain and document the precise values of the countable assets as of the date of admission to the nursing home. If you delay filing this form it can become more difficult to identify the historical account values as of the date of nursing home admission. It can be done, but it is more difficult to do so.
In cases of undue hardship the resource limit of the community spouse can be increased by filing an appeal, and then pleading the case before an administrative law judge with the Pennsylvania Department of Human Services Bureau of Hearings and Appeals (BHA). Sometimes the appeal can be settled and resolved with a “Stipulated Agreement” with the Department that is reviewed and approved by BHA.
Filing Appeals
An appeal can also be filed to protect additional assets for the community spouse where that spouse’s income, when combined with the income available from the institutionalized spouse, is insufficient to meet monthly needs. There are rules designed to prevent spousal impoverishment. The monthly maintenance needs allowance is determined after the caseworker’s review of shelter costs (rent or mortgage), property taxes, homeowner’s or renter’s insurance, and utility costs. The minimum monthly needs allowance is $2,465/month effective since July 1, 2023, and will be revised again July 1, 2024. The maximum monthly maintenance needs allowance is $3,853.50 effective January 1, 2024. It will be revised upwards on January 1, 2025.
In Pennsylvania, the qualified retirement accounts of the community spouse are not counted, but the retirement accounts of the institutionalized spouse (applicant) do count.
Spouse Assets
The spouse at home can retain the spousal share, described above, and the institutionalized spouse (the person in the nursing home) is also permitted to keep his or her own resource allowance of either $2,400 or $8,000, depending on gross monthly income. As mentioned above, gross income at or below $2,829/month results in a resource limit of $8,000 for the institutionalized spouse, and income over $2,829/month results in a resource limit of $2,400.
There are cases where the community spouse predeceases the institutionalized spouse, and the surviving institutionalized spouse then has increased income. For instance, this happens when the predeceasing spouse at home had high Social Security benefits, and the spouse in the nursing home had low Social Security benefits. Upon the death of the spouse at home, the spouse in the nursing home will receive the higher of the two amounts. When this happens, the nursing home resident’s gross income may be bumped up to a figure greater than $2,829/month. The change of income must be reported to the County Assistance Office, and this will result in a reduction of the resource limit from $8,000 to $2,400. If resources exceed the limit then there can be a notice of discontinuance set by the County Assistance Office.
Gifts Can Create Ineligibility
The Medicaid Gifting Problem. Parents sometimes help their children financially. Grandparents give money to their grandchildren. Unfortunately, if that parent or grandparent is admitted to a nursing home within 5 years of such gifting and needs to apply for Medical Assistance (Medicaid) long-term care benefits there could be problems, sometimes big problems. Specifically, the application for benefits could be denied for a period of time. This is known as the “Medicaid transfer penalty.” Large gifts can create long periods of ineligibility for Medicaid long-term care benefits. Read more about the Pennsylvania Medicaid gifting rules.
About Gerhard & Gerhard
We hope you have found this article informative. We can help you protect your assets by following the applicable rules. Please call our office and we would be glad to provide guidance with the Medicaid spend-down. To learn more about Medicaid estate recovery statute of limitations in PA we summarized the Pennsylvania Medical Assistance Estate Recovery Program.
Robert C. Gerhard, III Esquire is the managing shareholder of Gerhard & Gerhard, P.C., an estate planning and elder law firm located in Montgomery County, Pennsylvania. Attorney Gerhard specializes in elder law, with emphasis on Medicaid Planning, Medicaid Applications, and Medicaid Appeals. He is the author of the Pennsylvania law treatise, Pennsylvania Medicaid, Long-term Care.
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