It is important to make sure that a Medicaid applicant’s income is properly calculated and paid to the nursing home. Sometimes a Medicaid application is filed and remains pending for several months.
It is a common mistake to spend the applicant’s income to pay bills other than the nursing home during this period. Income can be due to the nursing facility going all the way back to effective date benefits are authorized.
If income has been spent elsewhere then there will be an unpaid nursing home bill, and this can cause stressful financial problems. An unpaid bill can be the subject of collection efforts or even a lawsuit by the nursing home against the resident, the resident’s spouse, and the resident’s children pursuant to Pennsylvania’s filial support laws.
Calculating Income for Medicaid
The income obligation to the nursing home is normally computed by taking gross income, not net income, and then subtracting allowable deductions. When making these computations, we cannot safely refer to what Social Security or pension amount is deposited in the bank each month. Sometimes the automatic deposits of Social Security or pension income have deductions for income tax withholding, life insurance, union dues, or other items that are not allowable deductions when calculating income due to the nursing home. Verification of gross income must be obtained, and the “1099-R” received at year end for tax purposes is not sufficient documentation for purposes of this calculation.
Here is a sample computation in a typical case when Medicaid benefits have been authorized:
Gross Social Security Income: $1,500
Gross Pension Income: $500
Total Gross Income: $2,000
LESS Spousal Allowance: ($892) – This varies in each case, if there is a spouse at home, depending on the spouse’s expenses and shelter costs.
LESS Personal Needs Allowance: ($60) (effective 1/1/2025)
LESS Medicare Part B Premium: ($185.00)
LESS Supplemental Health Insurance: ($230)
Payment of Income Due Each Month: $633.00
Note that the Medicaid authorization notice (Form PA-162) does not always set forth the amount of health insurance premiums being deducted. Documentation of this income deduction must be provided to the nursing home so they have that verification in their file, otherwise when they are audited it might appear that they over-billed for their services by the amount of the health insurance premiums.
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Disclaimer: We recommend that you have ongoing legal advice from an elder law attorney before attempting to navigate the Medicaid application process. If you wish to secure our services in connection with the Medicaid planning and application process for long-term care benefits, please contact Gerhard & Gerhard, P.C.
