Medicaid is a health payment plan for needy individuals. If a person qualifies for Medicaid benefits, the program will pay for many of the costs associated with long-term care. Medicaid will pay for care in a nursing facility, care in an assisted living residence, and long-term care at home, such as a home health aide.
Since Medicaid is for needy individuals, a qualified beneficiary must have very limited assets. A Medicaid beneficiary can retain no more than $2,000 in countable assets. Countable assets include all assets with the exception of certain, limited non-countable assets. Non-countable assets are the home (if the beneficiary is living in the home), a car, a prepaid funeral, and personal goods.
A Medicaid beneficiary must also have very limited income. The beneficiary’s income must be insufficient to pay for her care. So, for instance, if a Medicaid beneficiary had $10,000 a month in income and the cost of her care were $9,500, she would not qualify for Medicaid, even if she had no assets. Since most people do not have income sufficient to pay the costs of long-term care—which is very expense—very few people would have too much income to qualify for Medicaid.
When a person qualifies for Medicaid and if the person lives in a nursing home, she can only retain $35 of her income. The remainder of her income is owed to the nursing home. The payment of the beneficiary’s income to the nursing home simply reduces the amount of money that the Medicaid program will pay to the nursing home.
Typically, once a person qualifies for Medicaid, the Medicaid program will pay the nursing home approximately $6,500 a month. Let’s assume that Mrs. Smith has $1,535 a month in income from Social Security. When Mrs. Smith qualifies for Medicaid benefits, she will be entitled to retain $35 a month of her income for her personal needs, such as haircuts and clothing. The remainder of her income, $1,500, will be owed to the nursing home. The $1,500 that Mrs. Smith pays to the nursing home will reduce the amount the Medicaid program pays the nursing home from $6,500 to $5,000.
Some elderly individuals who require long-term care are eligible for a program administered by the United States Veterans Administration called Aid and Attendance. Aid and Attendance will pay a certain amount of cash to an eligible individual in order to defray the cost of her long-term care. Aid and attendance might pay a beneficiary anywhere from $1,100 to $2,100 per month.
Under the rules governing the Aid and Attendance program, once a beneficiary qualifies for Medicaid benefits and resides in a nursing home, her Aid and Attendance benefit will be reduced to $90 per month. The question then becomes, does the beneficiary of Aid and Attendance retain the $90 plus the $35 that the Medicaid program allows her to retain or is the $90 payable to the nursing home, along with the Medicaid/Aid and Attendance beneficiary’s other income?
Even if most of your needs are being met by the Medicaid program, $35 per month isn’t much money, so being able to retain another $90 could go a long way.
As many elderly people as there are who receive Medicaid and Aid and Attendance, you would think the answer to this question is well known, but I can assure you that it is not well known, including by those who administer the Medicaid program. The answer is, the Medicaid beneficiary can retain the $35 and the $90. A federal statute says this is the case. If you are a beneficiary of Aid and Attendance, you should remember this fact, because someday, you might have to fight for your right.
The personal needs allowance may seem like a small detail in the Medicaid system, but small details often have a significant impact on quality of life. Understanding what funds can be retained and how they may be used can help families avoid confusion and frustration later.