How Can We Deal With The Income Cap?

Justin, My mother will be moving from assisted living to a nursing home later this month. When I met with the business office at the nursing home, they told me she needed Medicaid coverage to afford the facility costs but her income is over the Medicaid limit. What can I do?  – Frank

Frank, Medicaid is one of the best benefits available to help cover nursing home costs. The Medicaid program, though, has strict financial rules. A lot of people think they can’t qualify for Medicaid for several different reasons, but with the right planning, Medicaid is much more available than people expect.

You’ve hit on one of the most common Medicaid qualification problems – income that exceeds the coverage limit. The current income cap in Arkansas is $2,250 per month. Many people in need of nursing home care have income that exceeds that cap but is not enough to cover the private rates at the facility.

To address this problem, we often help our clients set up something commonly referred to as a Miller Trust. This is not the type of trust you’d use to protect your home from probate court when you die. Another name for this trust is an Irrevocable Income Trust, and all that ever belongs in this trust is a Medicaid applicant’s monthly income.

To use a Miller Trust, you must set up a system where each month the Medicaid applicant’s income is transferred from their regular checking account to an account opened in the name of the Miller Trust. Shortly thereafter, that income is transferred to the nursing home to cover the applicant’s patient liability before Medicaid benefits cover all remaining costs. When used properly, a Miller Trust can help you get around problems with the Medicaid income cap.

This is not something most families should do alone. If you need help with something like this, call one of our offices for a free strategy session. To read more about Medicaid planning, order a copy of You Need A Plan at YourPlanMatters.com.