How Does Income Affect “Nursing Home” Medicaid?

Most people assume that Medicaid eligibility is all about assets. They come into our office worried about bank accounts, investments, or whether they will lose their home. While assets are certainly an important part of the equation, there is another issue that catches many families by surprise: income.

We’ve had families sit across the table and tell us, “Mom only has Social Security and a pension. Surely she qualifies.” Then we discover that her gross monthly income is actually above the 2026 Medicaid limit of $2,982.00.  Medicaid adjusts the income limit on January 1 each year, so it’s important to be aware of the current limit when seeking Medicaid eligibility.

At first, this can be frustrating. After all, nursing home costs can easily exceed $9,000 per month, and even a seemingly comfortable retirement income may not come close to covering the full expense. Yet many people are surprised to learn that having income above Medicaid’s limit can create an eligibility issue.

Fortunately, being over the income limit does not necessarily mean that someone is disqualified from receiving Medicaid benefits.

In many situations, a tool known as a Qualified Income Trust, often called a “Miller Trust”, may provide a solution. A Miller Trust is designed to help certain Medicaid applicants whose income exceeds the allowable limit. Instead of being denied Medicaid solely because of income, the trust can be used to bring the applicant into compliance with Medicaid’s eligibility rules.  Indiana Family & Social Services Administration has instructions as well as a template for a Miller Trust that you can use on their website here.

This is where professional guidance becomes important. The trust must be drafted correctly, funded properly, and administered according to Medicaid requirements. Mistakes can lead to delays or denials of benefits at a time when families can least afford them.

Another common misconception is that income problems only affect wealthy individuals. In reality, we often see middle-class retirees run into this issue. A combination of Social Security, a pension, and perhaps a survivor benefit can sometimes push monthly income above the limit.

The good news is that there are often solutions available. Medicaid planning is rarely a one-size-fits-all process. Every family’s situation is unique, and the right strategy depends on income, assets, marital status, and long-term care needs.  If you or a loved one may need nursing home care, don’t assume that being over the income or asset limit automatically means Medicaid is off the table.  Contact our office at 812–423-1500 for a free consultation to discuss your case.