The Question: I created an irrevocable trust to protect my assets in the event I needed nursing home care in the future. The trust was funded over five years ago so I know that the Medicaid look-back period is not a problem. However, I am concerned about the income I receive from the trust. Is it true that the trust income I receive will be taken into consideration by Medicaid when determining if I am eligible for benefits?
The Answer: The short answer to your question is YES. Since Medicaid is a needs-based program, your eligibility 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 income when making a determination as to whether you are eligible to receive benefits.
Medicaid looks at all of the income you receive, at the source of that income and at your medical expenses to determine your Net Available Monthly Income or NAMI. Medicaid does not consider expenses other than medical expenses when calculating your NAMI. If your monthly medical expenses equal or exceed your NAMI, Medicaid will deem you “income eligible”. 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. Assuming you are single, you will be allowed to keep all exempt income you may receive, an additional $50/month in non-exempt income, plus the cost of your supplemental medical insurance premiums. If you are a veteran, your monthly non-exempt income allowance is $90. NAMI in excess of $50 (or $90 for veterans) plus the cost of insurance premiums must be paid to the nursing home. If you are married and your spouse is well and continues to live in the community (the “community spouse”), the amount of income you may keep is the same as for an unmarried individual. However, your spouse, as the community spouse, is allowed a monthly income of $2,749 to help cover living expenses. If the community spouse has income in excess of that amount, Medicaid will apply a percentage of the community spouse’s excess income to the cost of the institutionalized spouse’s care in the nursing home.
This article first appeared in the April 28, 2011 issue of the Times Beacon Record Newspapers.
Linda M. Toga of The Law Offices of Linda M. Toga, P.C. is an East Setauket, New York attorney with a general law practice focusing on estate planning, real estate, marital planning, small business services and litigation.