How Does Medicaid Treat Income?
The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. The deductions include a $83-a-month personal needs allowance (this amount may be somewhat higher or lower in your state), a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance for the spouse who continues to live at home if he or she needs income support. A deduction may also be allowed for a dependent child living at home.
In determining how a Medicaid applicant’s income affects his or her eligibility for nursing home coverage, most states use what is known as the “medically needy” or “spend-down” approach. These states allow the applicant to spend down their assets on their care until they reach the state’s assets standard for eligibility, at which point Medicaid will begin covering their care.
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David Wingate is an estate planning and elder law attorney at Estate and Elder Planning by David Wingate. The Estate and Elder Planning office services clients with powers of attorneys, living wills, Wills, Trusts, Medicaid and asset protection. The Elder Law office has locations in Frederick, Washington and Montgomery Counties, Maryland.
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