The Income Test
In determining Medicaid eligibility in Florida, Medicaid first considers the applicant’s gross monthly income. It is important to note that only the applicant’s income is counted. If the applicant is married, Medicaid does not count the income of the well spouse still living in the community.
When Medicaid considers the applicant’s income, it counts gross income, not just the net amount that the person actually receives from Social Security and/or pension income. Usually taxes and Medicare and/or other health insurance premiums are automatically deducted from these monthly income sources. Therefore one has to be sure to calculate the total gross income before any deductions are taken and remember that all income is considered including interest and dividends from any investments.
Each state implements Medicaid differently. Florida is an "Income Cap" state. This means if the applicant's gross income exceeds $2,022 per month, in all likelihood they will fail Medicaid’s income requirement and typically they would not qualify for Medicaid. However since 1993, Medicaid has developed a way to qualify even if the gross income exceeds the income cap.
Qualified Income Trust (QIT)
Stated simply, a Qualified Income Trust is created to divert the applicant’s income to the trust in an amount great enough to bring the income below the cap. This requires a separate checking account created in the name of the trust. Example: (John Smith Irrevocable Income Trust). It is a vehicle whereby the excess income (plus some additional monies to compensate for unforeseen income events, such as interest, dividends, etc.) can be placed into a trust, and then a check is written to the nursing home from the trust each month for this excess amount. The income diverted to the trust is still used in the calculation to determine the applicant’s “patient responsibility*”. In other words, Michael would be able to maintain his INCOME eligibility because he was now UNDER the income level necessary to qualify, because of the QIT. The nursing home receives the monies from the trust, plus Michael’s remainder of his other income. The trust, however, MUST be in place PRIOR to approval of an application by DCF.
Notes: Should you wish to engage The Angel Solution to assist you with the EIN, we include this service as part of our Medicaid Eligibility planning package. Our affiliate attorney will create the Qualified Income Trust, if necessary, for an small additional fee. A Medicaid planner would assist arranging for your local bank to set up the Qualified Income Trust account.
*Patient Responsibility is the money the patient owes the nursing home each month. It is the total sum of all the patient’s income, plus whatever is being diverted through the trust, (if there is a trust established)….minus $35 for personal needs.
VA Aid & Attendance. (This is the ONLY income that is not counted for Medicaid eligibility purposes. VA Aid & Attendance is available to a veteran who requires the aid and attendance of another person in order to avoid the hazards of his/her daily environment. A veteran in an Assisted Living Facility is presumed to be in need of Aid and Attendance. (If you are a veteran with above living arrangements, please contact “The Angel Solution, Inc.” for further information.)
The Single-Person
Example: Michael is single. He needs skilled nursing custodial care, which would cost him $5500 a month. His gross income consists of Social Security of $1,200 a month, and a gross pension of $300 a month. Since his gross income is LESS than the $1,869 (2007 figure) limit, he passed the INCOME test for Medicaid eligibility.
Inherited Monies
Below is an example of someone who inherits monies AFTER they have qualified for Medicaid.
Mary is in a nursing home. Her expenses are $5,000 a month for her care, of which her Social Security income pays the Nursing Home $1,000 and Medicaid pays the other $4,000. Her Aunt passed away, and left her an inheritance of $100,000 in her Last Will & Testament. The direct inheritance of this money will suspend her Medicaid benefits until the $100,000 is gone. Instead, the Aunt could have established a Testamentary Special Needs Trust for her niece in the Nursing home. Mary’s Medicaid benefits would have continued, and the inheritance would have been available for those things Medicaid does not pay for. However, such a trust must be drafted carefully by a qualified attorney to ensure it meets all Federal and State guidelines.
Note: The above is INFORMATION ONLY. A competent and qualified Medicaid professional should be consulted for your particular case. We have an affiliate attorney to create these documents, if necessary at The Angel Solution.
Income Married Person
Income cap still applies. Patient can have no more than $1,869 in income.
RULE: Each individual’s income is handled separately. The Community Spouse (spouse living at home) is allowed to keep all of his/her income, no matter what the amount. IF the Community Spouse’s income is LOWER than $1,712 a month, he/she can keep a portion of the Patient’s income to supplement up to the maximum of $2,541. How much the Community Spouse can keep of the patient’s income is determined by a formula used by the State, and the expense section of the application. This exercise is referred to as the Spousal Diversion.
How the Spousal Diversion is calculated:
From this amount, subtract 30% of the Minimum Monthly Maintenance Income Allowance, or 30% of $1,712. Remainder is the EXCESS shelter costs, or $734 a month.
This figure is then added TO the Minimum Monthly Maintenance Income Allowance or (MMMIA) to determine allowable shelter deduction, equaling $2,446.
Using the patient’s income, add together the average earned income, Social Security gross income, (including Medicare payment), and interest income. In our “example”, we will have a total of $1,300 a month in gross income for the patient. This amount is then subtracted from the Minimum Monthly Maintenance Income Allowance (or MMMIA), plus excess shelter deduction to establish the Community Spouse’s Monthly Income Allowance, minus the $35 a month allotted to the patient for personal needs.
In the event that the Community Spouse’s income is greater than the patient’s income, there is no ruling that insists the Community Spouse must use his/her income to help pay the patient responsibility. For the purposes of this section, however, we will assume the Community Spouse’s income is LESS than that of the patient, and some Spousal Diversion will need to be created for the Community Spouse to maintain his/her lifestyle. This is referred to as the Minimum Monthly Maintenance Income Allowance, or MMMIA…or Spousal Income Allowance.
If the Community Spouse has his/her own IRA, the income from such an account will be counted as part of the Minimum Monthly Maintenance Income Allowance, however, if spouse is not 70 ½ years of age, do not take the distribution from the IRA, or it would count as income, and a portion of the spousal diversion would be lost.
Example: John has been admitted to a nursing home, and Mary, his wife, remains at home. John’s income from all sources is $2,300 a month, which actually puts him OVER the income cap for Florida. Mary’s income is only $600 a month. Because of the $975 monthly shelter expenses, Mary requested that she receive a Spousal Income Allowance. (If John had NO income, Mary would not be entitled to a subsidy from the government.) Mary only has the right to a portion of John’s income.
Another example: Husband is in a nursing home. His income is $2,500 a month. Wife has $360 a month in Social Security income. Home is mortgaged for $1,150 a month. Taxes are $250 a month. Insurance is $50 a month. Utilities maximum allowance is $198 a month. Total Shelter Cost: $1,648.
Her total allowance would be $2,846, if it were not capped by law. The caseworker can only allow $2,541 by law, and the first $35 of hubby’s income goes to his personal needs allowance, so the wife gets the next $2,181. The rest is applied to the nursing home.
Note: The “downside” to the spousal diversion is in the event the Community Spouse or “healthy” spouse predeceases the nursing home patient...the income then reverts back to the patient, and could most likely place the patient OVER the income limit. Very careful planning must be done to ensure this situation be averted.
Example:
John is in a nursing home, and Mary is the Community spouse. Mary was allowed to keep $101,640 of the family’s assets, and has a portion of John’s income, as well. All of the assets were in Mary’s name, with John Jr. as the beneficiary. Following a short illness, Mary passes away. Medicaid now looks at John’s asset and income base, and determines that his income is over the limit, and a QIT will need to be prepared for his continued eligibility.
Income Medicaid Eligibility Documents
- Year-end statement from Social Security with the COLA (Cost of Living Adjustment) for both spouses, if married)
- Year-end statement or monthly statements from pension plans (for both spouses, if married) A letter must be furnished directly from the pension income provider verifying gross & net income, and any anticipated changes.)
- Bank statements for ALL accounts for the past three months.
- Most current statement from all other accounts
- If employed, pay stubs for the last 8 weeks
- Civil Service, VA, and Disability statements
- Other (alimony, rent, etc.) Letter from provider must be furnished.
- Copy of Qualified Income Trust, if applicable.
It should be noted, that DCF will require you to apply for any benefits for which you might be potentially eligible before applying for Medicaid benefits, including, but not limited to Veterans’ benefits, widow’s benefits, Social Security benefits, Workmen’s Compensation, Unemployment Insurance, etc.
Note: Should you engage the services of The Angel Solution to process your Medicaid application, we will assist you in obtaining documents from all providers, as part of your Medicaid Eligibility planning package.
