Understanding Medicaid Income Guidelines
Overview
To determine if an individual is financially eligible for New Jersey’s long term Medicaid program, Medicaid takes 3 factors into account, the applicants monthly income, the applicants available assets, and Medicaid will execute a 5 year look back to verify that there were no asset transfers for below market value (aka gifting). In this article, we are going to focus on the monthly income portion of financial eligibility.
What is Considered Income
First and foremost it is important to understand what Medicaid considers to be monthly income. Examples of countable income include but are not limited to, employment income, pensions, social security benefits, IRA withdrawals, and stock dividends.
So for instance, if an individual receives social security of $1000 per month as well as $1000 per month from a pension, their total monthly income would be $2000.
Income Limits
The marital status of the applicant plays a crucial role in how Medicaid counts income. There are 3 possible scenarios, a single applicant, a married couple applying together, and a married couple with only one spouse applying. Below we will discuss each scenario.
A Single Applicant – In 2021, the income limit for a single applicant is $2382 / month. This means that in order to be deemed “income eligible” by Medicaid, all monthly income must not exceed $2382. If an individual’s income does exceed the limit, this does not mean that they can’t get Medicaid, but rather, there are certain measures that can be taken in order to be deemed income eligible. A Qualified Income Trust (QIT) will have to be set up and funded with all, or a portion of the monthly income. Any income deposited into the QIT will not be counted as countable income.
For example, if an individual receives $1500 in social security and $1000 in alimony, the total monthly income is $2500 which is above the limit of $2382. However, if a QIT is set up and funded with the $1500 of social security, those $1500 dollars are not counted as income, and you are left with only the $1000 in alimony as countable income, thus, you are now income-eligible for Medicaid.
Married Couple | Both Applying – When both spouses of a married couple are applying for long term Medicaid, the rules are pretty straight forward, each spouse is allowed $2,382 / month or a combined income of $4,764 / month.
Married Couple | One Applying – If only one spouse is applying for Medicaid things get a bit more complicated. The institutionalized spouse ( the spouse that is applying) is allowed to keep $2382 / month, however, a portion of the applicants income may be allocated to the community spouse because of a spousal impoverishment rule called the Minimum Monthly Maintenance Needs Allowance (MMMNA)
Minimum Monthly Maintenance Needs Allowance
The Minimum Monthly Maintenance Needs Allowance (MMMNA) was put in place to ensure that a community spouse will have enough money to live in the community while their spouse is in a nursing home. It allows for a portion, and in some cases the entirety of the institutionalized spouse’s income to be allocated to the community spouse.
As of July 1, 2020, the minimum amount that the community spouse can keep is $2155 / month. So for example, if the community spouse had an income of $2000/month, he/she would be entitled to at least $155 from the income of the institutionalized spouse in order to bring up their income to a minimum of $2155. (The Minimum amount is set to change in July 2021)
The maximum amount for the community spouse maintenance allowance as of January 2021 is $3259.50 / month. Medicaid calculates certain monthly expenses that the community spouse has, in order to determine if they would be entitled to more than the minimum maintenance allowance. These expenses are shelter costs and utility costs. If these expenses were to exceed the shelter allowance amount, and the standard utility allowance amount, Medicaid will allow the community spouse to retain additional income from the institutionalized spouse up to a maximum of $3259.50 / month.