This column first appeared in the San Antonio Express News on July 6, 2016.
Dear Mr. Premack: My spouse and myself are 74. She has applied for Medicaid because she needs long term skilled nursing care. Her social security is going to me. How much will Medicaid pay monthly for her care and how much can I earn? I want to return to work. The business manager of a nursing home told me I could earn money. I would be required to pay the nursing home only my wife’s monthly social security check. Is this correct? GC
When one spouse qualifies for Medicaid, the at-home spouse is allowed to retain no more than $2980.50 from all income sources. So, if you go back to work, your paycheck when combined with other income like your wife’s social security and your own social security, will be paid to the nursing home except for the first $2,980.50.
Here is a no job example: assume your own social security is $1100/mo and your wife’s is $900/mo and you do not get a job. Assume additionally that the nursing home’s monthly bill is $5000/mo. From your wife’s income, $60 will be set aside for her personal needs. The rest of the combined income ($1940) will be retained by you to help pay your own living expenses. The entire nursing home bill will be paid by the taxpayers through Medicaid.
Now assume you do get a job, and that your take home pay is $1500/mo. That raises your combined incomes to $3500/mo. $60 is still set aside for your wife, and the next $2980.50 is set aside for you. That leaves $459.50 from your paycheck which exceeds the allowances. That $459.50 will be paid to the nursing home, increasing your contribution and reducing the government’s contribution from $5000/mo to $4540.50/mo. The more income you earn over the allowances the higher is your contribution and the lower is the government’s share of her nursing home bill.
Income levels are only one of the roadblocks to qualifying for Medicaid. This column focuses on the income issue, not the asset limits. If her monthly income is higher than $2199/mo then she will not qualify for Medicaid assistance, even though your combined incomes are still insufficient to pay the monthly nursing home bill. Medicaid pays nothing toward the cost of her care.
The solution is to have a certified attorney create a “Miller Trust” (sometimes called a Qualified Income Trust). The Miller Trust deducts some of her monthly income away from Medicaid’s countable income calculation. It artificially yet legally reduces her countable income below the $2199/mo threshold.
Once below the threshold, she qualifies for Medicaid. It is then possible to determine how much the two of you pay monthly. For instance, if you do not get a job, if her monthly income from social security and pension is $2400, and yours is $1100, then she will need a Miller Trust. Her income is paid to the trust so she will qualify for Medicaid. When qualified, your combined income of $3500 is applied so that $60 is used for her personal needs and $2980.50 is retained by you. The difference, $459.50, is paid to the nursing home and the government pays the balance of the monthly nursing home bill.
If you do get a job under those circumstances, all of your earnings would offset the government’s contribution. Your entire paycheck would be paid to the nursing home. See a Certified Elder Law Attorney for help with your specific situation, and to establish a Miller Trust if that will help you.