An individual in a nursing home who qualifies for Medical Assistance (Medicaid) long-term care benefits will normally have to pay their income to the nursing facility, but exceptions apply to the income calculation.
The determination of what income a Medicaid recipient is expected to contribute toward the cost of care is referred to as the “patient pay liability” or “payment toward the cost of care.”
Read on to learn more about how contribution expectations are calculated and what exceptions may apply.
Understanding Medicaid Exceptions for Income Payments
Not all income counts for Medicaid and must be paid to the nursing home
Health Insurance Premiums
The payment of income to the nursing home is reduced by health insurance premiums paid, notably the Medicare B premium and the monthly cost of supplemental health insurance. A deduction can also be allowed for the cost of prescription health insurance, if applicable. Note that once a person is authorized for Medicaid long-term care benefits, they will be enrolled in a zero-premium, zero-deductible, zero-coinsurance Medicare D prescription drug plan.
Personal Needs Allowance
A “personal needs allowance” of $45 per month can be deducted from income and may be spent by the Medicaid recipient as he or she chooses. This $45 figure for the personal needs allowance has been in effect and unchanged for more than 15 years since 2007, and so it is not being increased to keep pace with inflation.
Spousal Allowance of Income
There are protections for the spouse at home who would not have enough income to make ends meet without the income of the spouse being cared for in a nursing facility. Medicaid rules allow income of the nursing home spouse to be redirected from the nursing home and be paid to the spouse at home instead. The computation of the spousal allowance of income is a bit complicated and based on certain living expenses and is designed to prevent spousal impoverishment. An elder law attorney can compute the spousal allowance of income before your loved one has been admitted to a nursing home and can check to make sure the spousal allowance has been computed properly once benefits have been authorized.
Spousal Allowance in Exceptional Circumstances
The normal spousal allowance discussed above can be increased through an appeal process in cases of exceptional circumstances. This increase is rare, but it is important to know that a process exists to get additional income to the spouse at home if there are “exceptional circumstances resulting in significant financial distress.” An example of exceptional circumstances would be extraordinary medical expenses for the spouse at home, such as prescription costs or home care needs. The applicable rules provide that this increase can not be done at the initial application stage with the County Assistance Office, and instead must be pursued with an appeal to the Pennsylvania Department of Human Services Bureau of Hearings and Appeals before an administrative law judge. Our office can assist with this process.
Home Maintenance Deduction
If the nursing home resident’s physician certified that the nursing home resident is expected to return home within six months, a monthly allowance is granted to provide for the temporary maintenance of the Medicaid recipient’s home during the short-term nursing home stay. At the time of this writing, the home maintenance deduction is $863.10/month. The term “home” is defined as the residence maintained by the Medical Assistance eligible person before they entered the nursing facility and to which they plan to return. This can include a house or an apartment.
Certain Medical Expenses
Certain documented medical expenses are deductible from the income that is otherwise due to the home. We’ve already discussed the deduction of health insurance premiums, but it can also, in certain cases, be possible to deduct other medical expenses that are necessary but not covered under the Medicaid program, including previously unpaid medical and nursing home expenses, subject to certain limitations. The limitations include a prohibition of deducting unpaid nursing home expenses from income that are the result of a transfer penalty, and Pennsylvania law also placed a $10,000 lifetime limit on the deduction of medical expenses from income unless there is undue hardship. Undue hardship is said to exist when the denial of Medicaid long-term care benefits would 1) deprive the individual of medical care and endanger the individual’s health or life, or 2) the individual or a financially dependent family member would be deprived of food, shelter, or the necessities of life.
Guardian Fees
If the person in the nursing home has a court-appointed guardian, the Pennsylvania Department of Human Services permits a $100/month deduction from income for guardianship fees – if that $100/month fee has been ordered by the court. It is important when obtaining the guardianship that the lawyer request the $100/month payment from income when presenting the guardianship petition to the court. The court paperwork ordering the guardianship will recite the $100/month guardianship fee, and if this paperwork is then provided to the County Assistance Office, the Medicaid authorization notice will set forth a deduction of $100/month from income.
Veterans Aid and Attendance
The County Assistance Office does not normally count a Veteran’s Aid and Attendance benefits unless the United States Department of Veterans Affairs instructs the County Assistance Office to apply it toward nursing home costs. The United States Department of Veterans Affairs should be provided notice of 1) nursing home placement, 2) when a Medicaid application has been filed, and 3) when Medicaid long-term care benefits have been authorized. If proper notice is not provided to the VA then overpayments of benefits can occur for which the Department of Veterans Affairs may seek reimbursement in the future.
Income in First Month of Nursing Home Admission
The requirement to pay monthly income to the nursing home is normally waived in the first month of nursing home residency, even if the person qualifies for Medicaid benefits in that first month. This is a significant exception.
Garnishments and other Court Orders
If Social Security has been garnished due to the recoupment of an overpayment of benefits, or for income tax, or if a court order requires payment of income to a former spouse or other person or is the subject of a garnishment order, this documentation should be provided to the County Assistance Office during the application process. If the income is not available, then it may fall into an exception and not have to be paid to the nursing facility.
Seek Additional Guidance
Medicaid and income can feel like complicated topics. You may wonder what income counts for Medicaid, what income should be paid to the nursing home, and how Medicaid calculates the income payment.
Disclaimer: We recommend that you have ongoing legal advice from an elder law attorney before attempting to navigate the Medicaid application process. If you have questions or wish to secure our services, please contact Gerhard & Gerhard, P.C.
