The Medicaid Premium

Medicaid is a health payment plan for needy individuals.  In order to qualify for Medicaid benefits, an individual must have limited assets and insufficient income to pay for the cost of her care.

If a person qualifies for Medicaid benefits, Medicaid will help pay for the costs of long-term care. Medicaid assists with paying for a nursing home, an assisted living residence, or long-term care at home, such as a home health aide or an adult day care.   Many of the people I help qualify for Medicaid benefits are people who never thought they would need to qualify for Medicaid benefits, who never wanted to qualify for Medicaid benefits.

But these same individuals never thought they would be faced with long-term care costs that range from $5,000 per month to $14,000 per month. Few people could afford to pay such care costs for a long period of time, yet that is exactly what people who are faced with long-term care costs must address.

Whether an individual qualifies for Medicaid benefits is, in large part, a question of financial eligibility (though there is a clinical eligibility component for long-term care costs). As mentioned, an individual must have limited assets in order to qualify for Medicaid benefits.  “Limited assets,” in New Jersey, means that the individual must have $2,000 or less in assets.  This is a hard-and-fast issue.  While there are exclusions from what is and is not a countable asset, the $2,000 figure is a relatively simple concept to understand.

An individual must also have insufficient income to pay for the cost of her care.  Insufficient income to pay for the cost of one’s care is a more complicated issue than limited assets.  You can’t receive Medicaid benefits if your income is sufficient to pay for the cost of your care.  For instance, if you are residing in a nursing home that costs $12,000 a month and your income is $14,000 a month, then your income is more than sufficient to pay for the cost of your care, and you would not qualify for Medicaid benefits.  You simply have more than enough income to pay for the cost of your care.

If an individual is living at home and qualifies for Medicaid benefits, Medicaid will pay for items such as a home health aide or adult day care services.  What is “too much income” is more difficult to understand.

When an individual qualifies for Medicaid at home, she can retain a certain amount of her income to pay for living expenses (shelter costs, food costs, clothing, and other daily expenses).  The maximum amount of income that she can retain for these expenses is $2,313 per month.

If the Medicaid beneficiary is married, her spouse might be able to retain some of her income, if the spouse’s income is insufficient to meet his needs.  Finally, certain medical expenses can be deducted from the Medicaid beneficiary’s income, such as her health insurance premium.

Sometimes, with married couples, the Medicaid beneficiary is the spouse who has the higher income.  For instance, the Medicaid beneficiary might have fixed monthly income (Social Security and a pension) of $3,500 and her spouse might have fixed monthly income of $500 a month.

Under the standard spousal income allowance, her spouse might be entitled to a spousal income allowance of $500.  Under the income rules, the wife (the Medicaid beneficiary) would be entitled to retain the maximum amount of income, $2,313, and her spouse would be entitled to retain his spousal income allowance, $500.

Finally, let’s assume that this same Medicaid beneficiary has a monthly health insurance premium of $200 per month.  In this case, the Medicaid beneficiary would be entitled to retain her $2,313, her spouse would be entitled to retain his spousal income allowance, $500, and the beneficiary could pay her health insurance premium of $200.

Her remaining income [$3,500 – ($2,313 + 500 + 200) = $487] would have to be paid to the state of New Jersey every month if she wanted to qualify for Medicaid benefits at home.  So, in essence, the Medicaid beneficiary would be paying a premium of $487 per month for the benefit of receiving Medicaid benefits.

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