What Income Qualifies You For Medicaid?

If you want Medicaid to cover things like expensive nursing home bills in Indiana, then you’ll need to show that you qualify. One of the major qualifications relates to your income. If you have too much income, you may be ineligible for benefits and have to pay for your long-term care out of pocket. The elder law attorneys at Hawkins Elder Law explain more about income limits for long-term care Medicaid and how we can help you get qualified if your income is a problem.

What Is The Medicaid Income Limit?

There are multiple types of Medicaid benefits, and each type has its limits for income. If you apply for Medicaid nursing home benefits or Medicaid waivers (home and community-based services), and you are single, you cannot have more than $2,382 each month in income. If you are married, and one of you applies for benefits, then the person applying cannot make more than $2,382 each month. The other spouse is not limited regarding their monthly income. If you and your spouse apply for benefits, each spouse is entitled to $2,382 each month. It is important to note that Medicaid considers income to include what you receive from social security income, social security disability income, IRA withdrawals, stock, pension payments, employment wages, and more.

What Is Income?

Under Indiana Medicaid, income consists of social security, pensions, retirement accounts, annuities, rental property income, mortgage interest, and loan interest. Income also consists of dividends from bonds and stocks, CDs, bank accounts, and other investments. But interest from I Bonds and Series E/EE Savings Bonds is not considered income and the interest on Zero-Coupon Bonds is considered income only upon maturity.

About Capital Gains, Capital Appreciation

Suppose you have received a capital gain distribution from a mutual fund or real estate investment trust. In that situation, it is considered income regardless of whether you reinvest the dividends or take it as cash. If you received a 1099-DIV, then there is a good chance this is considered income for Medicaid purposes. However, if you incurred a capital gain because you sold real estate or a mutual fund, then that gain is regarded as an increase in the value of the resource. It is also important to note that capital appreciation is not income.

Life Insurance

If you are a beneficiary of a life insurance policy, the money you receive is considered income in the month you receive it. However, Medicaid does not consider dividends that you receive from a life insurance policy to constitute income. It does consider income to be interest on the dividends that you receive from a life insurance policy.

Periodic Income, Non-Periodic Income

Medicaid considers you to have periodic income or nonperiod income. Periodic income means that you receive income regularly (e.g., once a month), which may be the case with your annuities, IRA withdrawals, and pensions. If you receive an inheritance or an award, or another one-off type of payment, this is considered income in the month it becomes available to you.

Annuities

Suppose you receive regular distributions from your annuity or individual retirement income. That is considered income for Medicaid purposes regardless of whether the payment you receive constitutes your principal or interest. But if you take out the entire principal in a lump sum, Medicaid considers this a resource instead. It is important to remember that qualifying for Medicaid also involves you having no more than the state limit for resources, so be careful with executing transactions such as lump-sum payouts without first discussing your situation with an attorney.

What If My Income Is Above Medicaid Income Limits In Indiana?

If your income is above the Medicaid income limits, then you could be denied benefits. There are several ways to avoid this outcome, though, so it is important to discuss your situation with an elder law attorney for guidance. One of the potential solutions may be to park your excess income in a Miler Trust, explained below. Also, if you are married and apply for Medicaid benefits, but you make too much money each month to qualify, then it is possible to direct some of your income to your spouse through a Minimum Monthly Maintenance Needs Allowance. However, your spouse would have to make less than $2,177.50 per month for this to work.

How Does A Miller Trust Work?

A Miller Trust is also known as a Qualified Income Trust, and it can enable you to get approved for Medicaid nursing home care if you make too much money. You place the amount of your income that exceeds state limits into this irrevocable trust, and the amount in the trust is not counted against you for eligibility. In limited circumstances, the trust might be able to pay for your medical expenses. Also, when you die, the state of Indiana is named as the beneficiary of the trust.

Indiana Medicaid Attorney

To learn more about qualifying for Medicaid in Indiana, speak with an elder law lawyer. Click here to learn more about Indiana Medicaid planning strategies.

About The Authors

Jeff R. Hawkins and Jennifer J. Hawkins co-author this blog with Thomas E. Hynes, a lawyer admitted to practice in Pennsylvania, New Jersey and Florida who has a background in estate planning and elder law. Jeff and Jennifer are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers. They are also active members of the Indiana State Bar Association and the Indiana Chapter of the National Academy of Elder Law Attorneys (NAELA). Jeff is also a member of the Illinois NAELA Chapter.

Both Hawkins are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois.

Jeff is a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation. He is also a member of the Illinois State Bar Association and he served as the 2014-15 President of the Indiana State Bar Association.

More Information

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