INCOME’S EFFECT ON MEDICAID

First published in Newsday Ask the Expert column on March 17, 2007.

The problem: I created a trust to protect my assets in the event I need nursing home care in the future. Is it true that any income I receive from the trust would be used by Medicaid toward the cost of my possible future care?

The expert: Linda M. Toga is an estate planning/elder law attorney with an office in East Setauket, New York.

The rules: Since Medicaid is a needs-based program, your eventual eligibility for it will be based on the value of your available assets and your income. Whether you receive money from stock dividends, an IRA, a pension or a trust, Medicaid will consider that money “income” when deciding whether you are eligible for benefits.

How it works: Medicaid calculates what it calls your “NAMI” (net available monthly income) by examining all the income you receive and where it comes from. It also factors in the cost of your medical expenses. If your medical bills equal or exceed your NAMI, Medicaid deems you “income eligible” for benefits. In calculating Medicaid eligibility, some types of income are exempt. These include income from German and Austrian reparations plans, Nazi persecution funds, state crime victims’ assistance funds, Seneca Nation Settlement Act Funds, special payments to American Indians, payments from Federal volunteer programs and payments from a reverse mortgage, provided the payment is used during the month it is received.

The results: If you are single, need nursing home care and are deemed eligible for Medicaid, you will be allowed to keep all exempt income you may receive, an additional $50/month in non-exempt income, plus enough to pay supplemental medical insurance premiums. Any NAMI over that amount will go to pay for your nursing home care.

If you are married and your spouse lives outside the nursing home, you are still limited to $50 in income. As of 2007, your spouse would be allowed to keep a monthly income up to $2,541 to help cover cover his or her living expenses. If your spouse has income over that amount, a percentage of it would be applied to your institutional care.

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