The other week, I began writing about the Medicaid spousal impoverishment provisions. Medicaid is a health insurance program for needy individuals. In order to qualify for Medicaid benefits, an individual must have a limited amount of assets and income insufficient to pay for his care.
Typically, a Medicaid recipient can have no more than $2,000 in assets. Furthermore, the assets of the husband and wife are pooled for purposes of determining the ill-spouse’s eligibility for Medicaid. So, for instance, if the husband enters a nursing home and seeks to qualify for Medicaid benefits, his assets and those of his wife will count against his eligibility for Medicaid.
This pooling of assets would result in both the husband and wife being permitted to retain no more than $2,000 if the Medicaid law did not have a spousal impoverishment provision that permitted the wife to retain more than $2,000 in assets. Two weeks ago, I wrote about the provision of the Medicaid law that permits the wife to retain a maximum of $115,920 in countable assets and a minimum of $23,184, depending upon the amount of assets that the couple owned when the husband entered the nursing home.
This week, I wanted to write about the spousal income allowance, which is a spousal impoverishment provision of the Medicaid law that permits the wife, in certain circumstances, to retain a portion of her husband’s income. Without a spousal income allowance, most of the husband’s income would be owed to the nursing home to reduce the amount the Medicaid program pays the nursing home.
When a person qualifies for Medicaid benefits, Medicaid will pay the nursing home for the cost of his care. Most nursing homes cost between $8,500 and $12,000 a month to a private-paying resident. If the resident is a Medicaid beneficiary, the nursing home will receive no more than (approximately) $6,500 per month from the Medicaid program.
The Medicaid beneficiary’s income reduces the amount Medicaid pays to the nursing facility. So, for instance, if the husband has income of $2,000, then his income (less certain deductions) will be paid to the nursing home reducing the amount Medicaid pays the nursing home from $6,500 to $4,500.
One deduction from the husband’s income is his $35 per month personal needs allowance, which is the amount of money Medicaid will permit the husband to retain for his monthly personal needs.
Because Medicaid is a health insurance program, Medicaid will also permit the husband to deduct the cost of his health insurance premium from his income. If the husband pays a health insurance premium of $100 per month, then Medicaid will permit a $100 per month deduction to pay his monthly health insurance premium. In this way, the husband will have Medicare, private health insurance, and Medicaid; Medicaid is the payer of last resort, so Medicaid will only pay for things for which Medicare and the private health insurance do not pay.
Finally, if the Medicaid beneficiary is married, the Medicaid program may permit the wife to retain a certain amount of his income, depending upon her expenses and her income. The calculation of the spousal income allowance is a two-part calculation.
First, there is a basic allowance of $1,891 to cover non-shelter expenses. Assume the wife has monthly income of $1,500. Given that amount of income, she will be permitted to retain a basic allowance of $491 ($1,891 – $1,500 = $491).
Second, there is an excess shelter allowance. The wife can retain an amount sufficient to pay her shelter expenses (mortgage, real estate taxes, property insurance, utilities) to the extent those expenses exceed $567. So, if the wife has shelter expenses of $1,000, she can retain an excess shelter allowance of $433 ($1,000 – $567 = $433).
In total, our wife can retain $924 ($491 + $433 = $924) of her husband’s monthly income. The husband can deduct $35 for his personal needs allowance and $100 for his health insurance premium. The remainder of his $2,000 a month income is owned to the nursing home to reduce Medicaid’s cost share.