Georgia Medicaid Book, Chapter 3 – Financial Eligibility in General

(Last Updated 9/9/2021)

Categorical and medical eligibility is covered in Chapter 2. Here we begin an aerial fly-over of financial eligibility. In this chapter we are painting with a broad brush. Subsequent chapters will examine financial eligibility and planning techniques in more detail.

In reviewing financial eligibility, it is important to know which class of assistance the applicant is seeking. Medicaid eligibility can be divided into three broad classes of assistance, each having it own financial criteria: (a) mandatory categorically needy; (b) optional categorically needy; and (c) medically needy. A State must allow an individual eligible for more than one class of assistance to have eligibility determined for the category he  or she selects. 42 C.F.R. § 435.404.

Federal law defines Mandatory categorically needy at (42 U.S.C. § 1396a(A)(10)(A)(i)) and defines Optional categorically needy at (42 U.S.C. § 1396a(a)(10)(A)(ii)). At the State’s option, Medically Needy individuals may also be served. (42 U.S.C. § 1396a(a)(10)(C)). Mandatory coverage is also listed in 42 C.F.R. Part 435, Subpart B, § 435.100 through 435.172 (listing Mandatory Coverage).

Nursing Home Medicaid (and HCBS Waivers)

In evaluating financial eligibility for Medicaid, both monthly income and resources must be considered. The basic rule is everything having value is an asset. 42 U.S.C. § 1396p(h)(1). This includes monthly income and resources. Income includes both earned and unearned income. 42 U.S.C. § 1396p(h)(2) incorporates by reference the definition of income found at 42 U.S. Code § 1382a. 42 U.S.C. § 1396p(h)(5) incorporates the definition of resources found at 42 U.S. Code § 1382b without regard to the exclusion described in subsection (a)(1) of that section. An asset cannot be considered income and a resource in the same month. Georgia ABD Manual section 2300-2. See also POMS SI 00810.010 – Relationship of Income to Resources. As shown in later chapters, this distinction is important when planning for eligibility.

Income

On the income side, there are three pathways to Medicaid eligibility for nursing home residents. First, SSI recipients are almost always eligible. Second, in most States, if the resident’s income does not exceed 300% of the federal poverty level ($2,523 in 2022), then he or she qualifies for Medicaid under a “special income level.” Third, medically needy residents (AMN) who are 65 or older, blind or disabled receive Medicaid. Medically needy residents achieve eligibility by spending down (paying medical bills) until their net monthly income falls below $2,523 (2022). Since the monthly cost of nursing home care almost always exceeds the resident’s income, most nursing home residents either meet the income criteria for Medicaid eligibility, or can spend down to meet that criteria.

Georgia terminated its AMN program for nursing home residents as of September 1, 2004. Since then, an income cap applies to most long-term care classes of assistance including the nursing home and CCSP (now called the Elderly Disabled Waiver Program) classes of assistance. The income cap is three-times the SSI benefit rate, which is adjusted annually. In 2022, the income cap is $2,523 (based on an SI benefit rate of $794 per month). If the applicant’s income is below the income cap, then there is no income eligibility hurdle. However, if the applicant’s income equals or exceeds the income cap, then a qualified income trust (a/k/a Miller Trust or QIT) is necessary to become income eligible. See 42 U.S.C. § 1396p(d)(4)(B). If there is a community spouse, the community spouse’s income is not relevant for purposes of determining whether a qualified income trust is necessary.

42 U.S.C. 1396r-5(h)(1) defines an “institutionalized spouse” as a married individual  who is in a medical institution or nursing facility. A community spouse is the spouse of an institutionalized spouse.

Income includes almost anything received during a particular month unless it is expressly excluded. This means Social Security, pension, retirement,  required minimum distributions, annuity payments, payments under promissory notes, and payments from any other source count when determining eligibility. The POMS. which apply in SSI-States such as Georgia and Tennessee, exclude from income certain third-party payments for medical care, personal services, proceeds from the sale of an exempt resource, rebates or refunds, income tax refunds, credit life and credit disability payments (when paid to the lender), proceeds from a loan, payment of bills by a third party (other than food clothing and shelter), and certain non-cash items. However, when shelter and food are provided for an SSI beneficiary (and sometimes a Medicaid beneficiary), in-kind income may be counted. With respect to SSI, in-kind support and maintenance may result in a one-third reduction of the benefit amount paid.

Medicaid is a cost-share program with respect to income. Unless a permissible diversion applies, nursing home residents pay their monthly income toward the cost of care before Medicaid pays the balance of the nursing home expense. (Click here for charts showing how income is used).

Medicaid Income eligibility - initial questions

Income of the Community Spouse

Common myths include the following: (1) the Community Spouse’s income must be used to pay nursing home bills, (2) that the Community Spouse’s income is combined with the applicant’s income to determine whether a qualified trust is necessary; and (3) that the applicant is not eligible because the Community Spouse has high income. Each of these myths is wrong.

42 U.S. Code § 1396r–5(b)(1) provides that except with respect to jointly-owned income producing property where there is no designation regarding which spouse is paid, no income of the Community Spouse shall be deemed available to the institutionalized spouse. In cases where a contract or trust instrument specifies which spouse is paid, the name on the check rule applies. In other words, the income belongs to whichever spouse’s name is on the check.

The only purpose for examining the Community Spouse’s income is to determine whether the Community Spouse has low-income and is entitled to keep some or all of the institutionalized spouse’s income. 42 U.S. Code § 1396r–5(d) establishes income protection rules for a low-income Community Spouse. At this time, those rules provide as follows:

(d) Protecting income for community spouse

(1) Allowances to be offset from income of institutionalized spouse
After an institutionalized spouse is determined or re-determined to be eligible for medical assistance, in determining the amount of the spouse’s income that is to be applied monthly to payment for the costs of care in the institution, there shall be deducted from the spouse’s monthly income the following amounts in the following order:

(A) A personal needs allowance (described in section 1396a(q)(1) of this title), in an amount not less than the amount specified in section 1396a(q)(2) of this title.
(B) A community spouse monthly income allowance (as defined in paragraph (2)), but only to the extent income of the institutionalized spouse is made available to (or for the benefit of) the community spouse.
(C) A family allowance, for each family member, equal to at least ⅓ of the amount by which the amount described in paragraph (3)(A)(i) exceeds the amount of the monthly income of that family member.
(D) Amounts for incurred expenses for medical or remedial care for the institutionalized spouse (as provided under section 1396a(r) of this title).

At this time, a Georgia Applicant’s personal needs allowance is $70 per month. In Georgia, a Community Spouse with less than $3,259.50 (2021) is entitled to a spousal income diversion to raise the Community Spouse’s income to that level; in Tennessee, a Community Spouse with less than $2,177.50 (2021) is entitled to a spousal income diversion to increase the Community Spouse’s income to that amount, but may also be entitled to an excess shelter allowance of up to $653.25 (2021). Incurred Medical Expenses (IME’s) are health insurance premium and unpaid medical expenses incurred within the three months prior to filing the Medicaid application.

In subparagraph (C), the term “family member” only includes minor or dependent children, dependent parents, or dependent siblings of the institutionalized or community spouse who are residing with the community spouse.

(2) Community spouse monthly income allowance defined
In this section (except as provided in paragraph (5)), the “community spouse monthly income allowance” for a community spouse is an amount by which—

(A) except as provided in subsection (e), the minimum monthly maintenance needs allowance (established under and in accordance with paragraph (3)) for the spouse, exceeds
(B) the amount of monthly income otherwise available to the community spouse (determined without regard to such an allowance).

(3) Establishment of minimum monthly maintenance needs allowance

(A) In general
Each State shall establish a minimum monthly maintenance needs allowance for each community spouse which, subject to subparagraph (C), is equal to or exceeds—

(i) the applicable percent (described in subparagraph (B)) of 1⁄12 of the income official poverty line (defined by the Office of Management and Budget and revised annually in accordance with section 9902(2) of this title) for a family unit of 2 members; plus
(ii) an excess shelter allowance (as defined in paragraph (4)).
A revision of the official poverty line referred to in clause (i) shall apply to medical assistance furnished during and after the second calendar quarter that begins after the date of publication of the revision.

(B) Applicable percent
For purposes of subparagraph (A)(i), the “applicable percent” described in this paragraph, effective as of—

(i) September 30, 1989, is 122 percent,
(ii) July 1, 1991, is 133 percent, and
(iii) July 1, 1992, is 150 percent.

(C) Cap on minimum monthly maintenance needs allowance
The minimum monthly maintenance needs allowance established under subparagraph (A) may not exceed $1,500 (subject to adjustment under subsections (e) and (g)).

(4) Excess shelter allowance defined

In paragraph (3)(A)(ii), the term “excess shelter allowance” means, for a community spouse, the amount by which the sum of—

(A) the spouse’s expenses for rent or mortgage payment (including principal and interest), taxes and insurance and, in the case of a condominium or cooperative, required maintenance charge, for the community spouse’s principal residence [emphasis added], and
(B) the standard utility allowance (used by the State under section 2014(e) of title 7) or, if the State does not use such an allowance, the spouse’s actual utility expenses, exceeds 30 percent of the amount described in paragraph (3)(A)(i), except that, in the case of a condominium or cooperative, for which a maintenance charge is included under subparagraph (A), any allowance under subparagraph (B) shall be reduced to the extent the maintenance charge includes utility expenses.

(5) Court ordered support
If a court has entered an order against an institutionalized spouse for monthly income for the support of the community spouse, the community spouse monthly income allowance for the spouse shall be not less than the amount of the monthly income so ordered.

(6) Application of “income first” rule to revision of community spouse resource allowance
For purposes of this subsection and subsections (c) and (e), a State must consider that all income of the institutionalized spouse that could be made available to a community spouse, in accordance with the calculation of the community spouse monthly income allowance under this subsection, has been made available before the State allocates to the community spouse an amount of resources adequate to provide the difference between the minimum monthly maintenance needs allowance and all income available to the community spouse.

42 U.S. Code § 1396r–5(e)(2)(B) also provides: “If either such spouse establishes [at a fair hearing] that the community spouse needs income, above the level otherwise provided by the minimum monthly maintenance needs allowance, due to exceptional circumstances resulting in significant financial duress, there shall be substituted, for the minimum monthly maintenance needs allowance in subsection (d)(2)(A), an amount adequate to provide such additional income as is necessary.” Unfortunately, there is virtually no case law supporting administrative revision of the income allowance.

As discussed in later chapters, the Medicaid default allowance can be modified by Court order. 42 U.S. Code § 1396r–5(d)(5) provides that the Community Spouse “monthly income allowance for the spouse shall be not less than the amount of the monthly income so ordered” once an order for support is entered.

Resources

As a general rule, all countable resources owned by the Institutionalized Spouse are considered available to pay his or her nursing home bills. It does not matter whether the resource is co-owned with someone else unless co-ownership makes it impossible to liquidate the resource. Georgia ABD Manual § 2300 states that resources include cash, other personal property and real property that the applicant or ineligible spouse or parent own under the following conditions:

  • The owner has the right, authority, or power to convert the asset to cash (if not already cash).
  • The owner is not legally restricted from using the asset for his/her support and maintenance.

Not all resources count toward eligibility, but the Medicaid recipient cannot have more than $2,000.00 in countable resources. If there is a Community Spouse, then he or she is entitled to an allowance out of the countable resources. The allowance is adjusted each year. In 2021, the maximum resource allowance for a Community Spouse is $130,380. Some States, such as Georgia, allow the Community Spouse to keep the maximum allowance. Other States, such as Tennessee, allow the Community Spouse to keep one-half of the marital estate between the minimum resource standard and the maximum resource standard. In 2021, the minimum resource standard is $26,076.

Examples of exempt resources include:

See also 42 U.S. Code § 1382b (listing resources exempt under the SSI statute). Of note, the rule relating to income-producing property essential to self-support changed effective May 1, 1990 pursuant to Chief Judge Bulletin CJB 08-04 REV. Effective May 1, 1990, property essential to self-support used in a trade or business is excluded from resources regardless of value or rate of return. See POMS SI 01130.501.A.2.

Resources - Exempt v. Countable

For the applicant, the resource limit continues to apply after eligibility is established. Different rules, explained below, apply to a Community Spouse because deeming terminates once the Applicant establishes eligibility. For applicants, the resource threshold remains at $2,000 and is reviewed during each annual review or when a change in circumstances is reported. Thus, an infusion of cash (e.g., an inheritance or malpractice recovery) will create an eligibility problem. Therefore, if nursing home resident Mary inherits $50,000 from Paul, Mary must report her change in financial condition within ten days. Medicaid will treat that money as income (in most instances) during the month of receipt; If Mary retains any of that money, then whatever she retains is treated as a resource, subject to the $2,000 limit, on the first day of the following month. Mary would be ineligible for Medicaid if her resources totalled even one cent more than $2,000 beginning on the first day of the month after receipt.

Deeming

The SSI regulations describe deeming as the process of considering another person’s income or resources to be your own. See 20 CFR § 416.1160 (income) and 20 CFR § 416.1202 (Resources). Prior to the time Medicaid is approved, all marital resources are deemed available to the Applicant. See 42 U.S. Code § 1396r–5(c)(2)(A). However, 42 U.S. Code § 1396r–5(c)(4) provides that deeming terminates after eligibility is established. Specifically it provides: “[d]uring the continuous period in which an institutionalized spouse is in an institution and after the month in which an institutionalized spouse is determined to be eligible for benefits under this subchapter, no resources of the community spouse shall be deemed available to the institutionalized spouse.” This means that, initially, it does not matter which spouse owns property; all of it must be taken into account when determining eligibility. After eligibility is established, the Community Spouse could win the lottery and it would not impact the Applicant’s eligibility.

Default Community Spouse Resource Allowance

A Community Spouse is entitled to a resource allowance in addition to the income allowance. 42 U.S. Code § 1396r–5(f)(1) and (2) provide:

(1)  In general
An institutionalized spouse may, without regard to section 1396p(c)(1) of this title, transfer an amount equal to the community spouse resource allowance (as defined in paragraph (2)), but only to the extent the resources of the institutionalized spouse are transferred to (or for the sole benefit of) the community spouse. The transfer under the preceding sentence shall be made as soon as practicable after the date of the initial determination of eligibility, taking into account such time as may be necessary to obtain a court order under paragraph (3).

(2) Community spouse resource allowance defined
In paragraph (1), the “community spouse resource allowance” for a community spouse is an amount (if any) by which—

(A) the greatest of—

(i) $12,000 (subject to adjustment under subsection (g)), or, if greater (but not to exceed the amount specified in clause (ii)(II)) an amount specified under the State plan,
(ii) the lesser of (I) the spousal share computed under subsection (c)(1), or (II) $60,000 (subject to adjustment under subsection (g)),
(iii) the amount established under subsection (e)(2); or
(iv) the amount transferred under a court order under paragraph (3);
exceeds

(B) the amount of the resources otherwise available to the community spouse (determined without regard to such an allowance).

As of 2022, the minimum resource standard is indexed at $27,480 and the maximum resource standard is indexed at $137,400. At this time, Georgia allows the Community Spouse to keep the maximum resource standard.

Changing the Default Rules for a Community Spouse

As with the income rules, the resource defaults may be changed. First, if all of the Applicant’s income has been diverted to the Community Spouse and the monthly income available to the Community Spouse still does not reach the minimum monthly maintenance needs allowance, then 42 U.S. Code § 1396r–5(e)(2)(C) provides an administrative remedy for increasing the resource allowance to generate income: “If either such spouse establishes that the community spouse resource allowance (in relation to the amount of income generated by such an allowance) is inadequate to raise the community spouse’s income to the minimum monthly maintenance needs allowance, there shall be substituted, for the community spouse resource allowance under subsection (f)(2), an amount adequate to provide such a minimum monthly maintenance needs allowance.”

Second, if an order for support was entered against the applicant, then 42 U.S. Code § 1396r–5(f)(3) provides: “If a court has entered an order against an institutionalized spouse for the support of the community spouse, section 1396p of this title shall not apply to amounts of resources transferred pursuant to such order for the support of the spouse or a family member (as defined in subsection (d)(1)).” This strategy was used in Blumberg v. Tennessee Department of Human Services. The Tennessee legislature attempted to close down Blumberg-type actions with the revision of T.C.A.§ 71-5-121.

Transfer Penalties

Medicaid beneficiaries cannot “fix” eligibility by giving away resources. A transfer of resources without receipt of fair market value will trigger calculation of a transfer penalty. “The penalty for an institutionalized individual consists of ineligibility for certain services for a period or periods of ineligibility that equal the number of months calculated by taking the total, cumulative uncompensated value of all assets transferred by the individual or spouse on or after the look-back date discussed in §3258.4, divided by the average monthly cost to a private patient of nursing facility services in the State at the time of application” See HCFA Transmittal 64, § 3258.5.D. In plain English, the penalty is roughly equivalent to the amount of nursing home care the applicant could have purchased with the funds that were given away. For this reason, Medicaid Planning should not be attempted by anyone who is not intimately familiar with the Medicaid program.

Currently (in 2021) the look-back period is sixty months. Therefore a transfer for less than fair market value made within sixty months prior to a Medicaid application will be penalized. Transfers that occured more than sixty months prior to the Medicaid application are ignored.

Transfers for less than fair market value may be subject to penalty whether made by the applicant, the applicant’s spouse or by any person or entity acting for the applicant or spouse. For example, HCFA 64, Section 3257.B states:

[A]ssets include all income and resources of the individual and of the individual’s spouse. This includes income or resources which the individual or the individual’s spouse is entitled to but does not receive because of any action by:

  • The individual or the individual’s spouse;
  • A person, including a court or administrative body, with legal authority to act in place of or on behalf of the individual or the individual’s spouse; or
  • Any person, including a court or administrative body, acting at the direction or upon the request of the individual or the individual’s spouse.

For purposes of this section, the term “assets an individual or spouse is entitled to” includes assets to which the individual is entitled or would be entitled if action had not been taken to avoid receiving the assets.

Medicaid Planning

Medicaid planning is discussed in more detail in subsequent chapters. Planning is the process of restructuring an estate in a legal manner to accelerate Medicaid eligibility. Often, the purpose is to protect the Community Spouse or a disabled child, but it can be done to protect a family inheritance. Planning has the effect of shifting the cost of nursing home care to someone else (e.g., the Medicaid program or long-term care insurance) before assets are depleted. The net result, if done with the Elder’s best interests in mind, will be a Medicaid-plus package. Medicaid will pay first dollars and assets that are preserved will be used to pay for care not otherwise provided by Medicaid.

Medicaid Planning is a process. It begins by gathering information about the applicant and the applicant’s income and resources (and, where applicable, those of the Community Spouse). That information is used to analyze options and develop strategies for achieving eligibility within the framework of the program.

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