Reed: Qualifying for Medicaid with excess income

Sandra W. Reed
Special to the Reporter
Sandra Reed

Harold has had a debilitating stroke leaving him with the need for 24-hour care in a nursing home. Harold and Maude’s monthly income is $5,100. Maude reviews the Medicaid qualifications stating a couple is limited to a monthly income of $4,698.00. She determines Harold would be denied if he applied for Medicaid and drops any attempt to obtain Medicaid. Is she right?

Solution when Medicaid applicant exceeds income limit

Maude has reached a wrong conclusion. Harold can meet the income requirement for Medicaid through a qualified income trust, commonly called a Miller Trust. The income deposited into the Miller Trust is disregarded for qualification purposes. The applied income is paid to the nursing home and Medicaid picks up the difference between the income and the cost of care.

If Howard applies for Medicaid without a Miller Trust, he will be denied. The Medicaid worker is prohibited from informing him about the Miller Trust because that would be giving legal advice. Therefore, before applying, Medicaid applicants should consult an attorney knowledgeable in Medicaid qualification.

How the Miller Trust works

Before the funds in the Miller Trust are paid to the nursing home, a small allowance to the Medicaid recipient (currently $60 a month), Medicare premiums and medical expenses not covered by Medicaid or Medicare are deducted.

Resource limits for Medicaid qualification

Having solved the income problem, Harold is not out of the Medicaid woods yet. He must meet the resource or asset limitation, as well. He and Maude cannot have more than $2,000 in countable assets. They should consult an attorney to determine whether they meet this criterion. The attorney will assist them in assessing which of their assets are countable.

For starters, equity in their home up to $603,000, along with household furnishings, one car of any value, a $1,500 life insurance policy and a prepaid burial policy are non-countable assets. If assets are over the $2,000 amount, the attorney can work with them to determine strategies, such as converting countable assets into non-countable ones, to qualify for Medicaid.

Sandra W. Reed practices Elder Law in Somervell County, handling probating of estates, drafting of wills, trusts, powers of attorney and deeds as well as estate and Medicaid planning.  She lives on beautiful Chalk Mountain and can be reached at 254.797.0211; 817.946.2809 or at sreed@kbzlaw.com.