Part 1 of this Medicaid blog series generally discussed the Medicaid program and its eligibility requirements. Part 2 discussed the Assisted Living Waiver program, and Part 3 addressed the PASSPORT program. This post will refer to all three programs collectively as “long-term care” Medicaid.
While each of these programs has a specific set of eligibility criteria, some criteria apply to all three programs. Income eligibility for the long-term care Medicaid programs is the same, but the individual’s patient liability for his or her care varies between the programs.
To be eligible for the long-term care Medicaid programs, an individual’s gross monthly income must be less than three times the current Supplemental Security Income rate ($750 in 2018). This is known as the “Special Income Level,” which is currently $2,250.
Gross income is your total pay before taxes, medical insurance, or other items are deducted. Most times, an individual’s gross income is higher than the amount deposited into his or her checking account.
If an individual’s gross monthly income is below the Special Income Level, he or she will be income-eligible for long-term care Medicaid. If an individual’s gross monthly income exceeds the Special Income Level, he or she must create a Qualified Income Trust to be eligible for long-term care Medicaid.
Qualified Income Trust
When an individual’s gross monthly income exceeds the Special Income Level, he or she must create a Qualified Income Trust, also known as a Miller Trust, to be income-eligible for long-term care Medicaid.
It is important to note that a Qualified Income Trust (QIT) can only be used to obtain eligibility for one of the long-term care Medicaid programs. A QIT cannot be used to obtain MAGI eligibility (see Part 9) or Community Medicaid (See general discussion in Part 1).
A QIT is a trust designed to hold only income of the individual. Each month, the excess income above the Special Income Level must be deposited into the QIT. By doing this, the excess income is disregarded for Medicaid eligibility purposes and the individual will be considered to have gross income below the Special Income Level.
The QIT is a legal document that will be signed by the Grantor and the Trustee. The Grantor will be either the individual or someone acting on the individual’s behalf. The Trustee can be the individual if he or she is capable of managing the funds in the QIT. If the individual cannot be the Trustee, often the spouse or adult children will serve as Trustee.
The Trustee opens a separate checking account into which the excess income will be deposited. The funds in the QIT account will still be used to pay for the individual’s expenses, so the individual will still have full use of his or her entire monthly income. The QIT does limit the types of expenditures that can be made, but most often the individual’s medical expenses and patient liability (see further discussion below) will be paid from the QIT. Other expenses can be paid from the individual’s personal account.
This drawing illustrates how the QIT works:
More information about QITs, including sample QIT templates, are available on the Ohio Department of Medicaid’s website.
After an individual qualifies for Medicaid, he or she will owe a patient liability (sometimes referred to as “share of cost”) toward the cost of his or her care. During the Medicaid application process, the caseworker obtains information about the individual’s gross monthly income and calculates the individual’s patient liability. The individual pays the amount of his or her patient liability to the facility or in-home caregiver under the PASSPORT program. Medicaid pays the remaining cost of care for the month. (Note: the Medicaid reimbursement rate for facilities is usually much lower than the private pay rate for individuals.)
The patient liability is calculated as follows:
Gross monthly income, less each of the following
The result is the patient liability, which is paid to the facility or caregiver each month the individual receives Medicaid.
Health Insurance Premiums
An individual will be allowed to keep enough of his or her income to pay the cost of the individual’s and spouse’s health insurance premiums each month. This includes Medicare and any private insurance premium.
Spousal and Family Allowances
The individual’s spouse and family (if there are minor or disabled children) may be entitled to keep a portion of the individual’s income to help pay household and family expenses each month. More discussion on these allowances will be discussed in Part 7.
Personal Needs Allowance
The individual is also entitled to a Personal Needs Allowance each month. This amount differs across the long-term Medicaid programs.
If an individual is in a nursing home, he or she will be entitled to keep $50 each month for personal needs. Most often, this allowance is used to pay for haircuts and other personal services provided by the facility but not covered by Medicaid. The Personal Needs Allowance in the nursing home does not change.
In an assisted living facility, the Personal Needs Allowance is $50, plus the cost of room and board. The room and board charge is set each year, and in 2018, room and board is $700. To qualify for the Assisted Living Waiver program, the individual must have enough income to pay his or her room and board. See Part 2 for further discussion.
If an individual is residing at home and receiving PASSPORT services, he or she is entitled to keep up to $1,463 (in 2018) of his or her income. Because the individual is residing at home, he or she is likely to have additional living expenses (utilities, insurance, taxes, etc.) that an individual does not have in a nursing home or assisted living setting. Accordingly, the PASSPORT Personal Needs Allowance changes each year to account for cost of living adjustments.
$15 QIT Fee
Because QIT accounts do not tend to accumulate (income comes in and gets spent each month), banks may charge an account fee or a low balance fee. Under the QIT regulations, the individual is allowed to reduce his or her patient liability by the cost of that fee, up to $15 per month. If a bank charges a fee in excess of $15, the caseworker has the authority to approve a higher reduction in patient liability. Those decisions are made on a case-by-case basis.
Unpaid Past Medical Expenses
If an individual has medical expenses that have gone unpaid, those unpaid expenses may be able to be deducted from the individual’s patient liability. If you are working with a caseworker, elder law attorney, or someone at the long-term care facility, you may hear this referred to as “Act 52.” Act 52 is a reference to the old rule that allowed for this deduction.
Many times, individuals have been unable to pay their medical expenses but have not yet qualified for Medicaid. In that situation, the caseworker will obtain verification of the unpaid past medical expense (UPME) and divide it by the individual’s patient liability. The result is the number of months it will take to pay off the UPME.
For example, let’s assume that using the above calculation for patient liability, the individual will owe $1,250 to the facility each month. The individual also has an outstanding balance of $10,000 the facility. After going through the UPME process, the caseworker determines that it will take eight months ($10,000 ÷ $1,250) to pay off the outstanding balance. For the next eight months, $1,250 is deducted from the individual’s patient liability, bringing it to $0.
Because the individual’s patient liability is $0, Medicaid pays the entire cost of care for the month. The individual then has $1,250 of his or her income to pay to the facility. After eight months passes, the UPME is paid in full. At that time, the UPME is no longer deducted from the patient liability, and the individual owes $1,250 to the facility each month. Medicaid pays the remaining monthly cost. In practice, the individual sees no difference – he or she pays $1,250 to the facility each month. Behind the scenes, Medicaid pays the current monthly cost and the individual’s payments are applied to the outstanding balance.
Income eligibility and calculating patient liability are crucial parts of the Medicaid application process. The rules about these items are complicated, and an individual’s Medicaid eligibility often hinges on his or her income. It is important that you fully understand the income eligibility processes and information, so we encourage you to seek proper legal advice if you have questions concerning these topics.