Q: I am looking into different care options for my mom, but I am concerned that she will lose her income to pay for care. This is the money she lives on every month. I recently heard that I could get her care at home through Medicaid and she would still be able to use her income for her regular monthly expenses. How does this work?
A: Community Medicaid is a great way to get the care mom needs at home while still being able to use all of her income for her every day expenses. Unlike Chronic Medicaid (Medicaid for a nursing home) where the nursing home gets to keep all but $50 of the Medicaid recipient’s income, Community Medicaid allows the recipient to keep up to $879 in monthly income in her own personal account and deposit any income in excess of this amount into a pooled income trust to be used solely for the recipient’s benefit. A pooled income trust is a type of supplemental needs trust that is administered by a charity.
Sources of income include but are not limited to Social Security benefits, retirement account distributions, pension payments, rental payments, and income from investment accounts. Income is calculated on a monthly basis by adding together all sources of income using the gross amount, then deducting the cost of any health care premiums. The excess amount that is diverted to the pooled income trust can then be used to pay any bills on behalf of the Medicaid recipient, including but not limited to rent, mortgage payments, food, clothing, etc. While the unused amount accumulates in the fund from month to month, any funds left in the trust at the time of mom’s death will be paid over to the charity.
But what happens when the amount or source of income changes, and therefore the excess income changes? Medicaid renewals occur every year from the date Medicaid picked up coverage, and this is the opportunity to report any change in income so that Medicaid can recalculate the excess income due to the pooled trust.
However, changes in income levels may not be concurrent with when a Medicaid renewal is due. For example, a recipient’s increase or decrease in their monthly Social Security payments is usually effective as of January 1 of the new year, which for most, is not the same date as their Medicaid renewal. It is therefore a good idea to contact your Elder Law attorney when there is a change in income levels so they can advise on how to proceed, especially when there is a significant decrease in income levels and one can no longer afford to pay the precalculated amount.
In general, you should always contact your Elder Law attorney immediately upon receipt of any Medicaid notices, or upon a change in your income or resource level so that the matter can be reviewed, and proper action can be taken, if necessary.
-- Michal Lipshitz, Esq. and Nancy Burner, Esq.