Treatment of Income

Medicaid requires that nursing home residents contribute whatever income they have, minus a sixty dollar per month “personal needs allowance” and any health insurance premiums and other medical costs not otherwise covered.  If the applicant is married there is an allowance for part of the income to go to the at-home spouse if that spouse is below a certain minimum monthly income allowance (currently about $1700 per month in 2007).  

The basic Medicaid rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. The deductions include a sixty dollar per month “personal needs allowance” (this amount may be somewhat higher or lower in particular states), a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance for the spouse who continues to live at home if he or she needs income support. A deduction may also be allowed for a dependent child living at home.

For married Medicaid applicants, the income of the at-home spouse (“community spouse”) is not counted in figuring the eligibility of the spouse applying for Medicaid.  Only the income in the name of the Medicaid applicant spouse is considered when determining that person’s eligibility.  For instance, if the community spouse was still employed and had $4000 per month in income that spouse would not have to contribute any income toward the bill of the institutionalized spouse’s nursing home bill if he or she is covered by Medicaid.