When people think about Medicaid covering nursing home costs, they often assume Medicaid, once eligible, pays for everything. Unfortunately, that’s usually not true. Medicaid recipients are expected to contribute most of their income, such as Social Security and pensions, to their care; this monthly contribution to the nursing facility is called a “patient liability”.
Here’s how it works:
During the Medicaid application process, patient liability is calculated based on the applicant’s monthly income (Social Security, pensions, rent/farm income, etc.) and minus allowable deductions. These deductions can include things like health insurance premiums and support for a spouse or dependent family member. In Indiana, each nursing home resident on Medicaid is allowed to keep $52.00 of his or her income for snacks, haircuts, etc.; this is called a “Personal Needs Allowance”.
The patient’s liability is what’s left of the income once these deductions have been made. The portion of the nursing facility bill that exceeds the patient liability is covered in full by Medicaid.
Here is an example of a liability calculation for a single/widowed individual in a nursing home:
Gross Income (income before any deductions, such as health insurance premiums or taxes):
Social Security: $1,400 per month
Pension: $200.00 per month
Total income: $1600
Minus Deductions:
Part B Premium: $174.70 per month (comes out of Social Security payment automatically)
Medicare Supplement Premium: $350.00 per month
Prescription Drug Premium: $55.00 per month
Personal Needs Allowance: $52.00 per month
Total Deductions $631.70
Monthly liability (amount owed to the nursing home each month): $968.30 ($1600 income minus $631.70 deductions = $968.30)
The monthly patient liability would be calculated by subtracting the allowable deductions from the gross income. In this scenario, the gross income of $1,600.00 would be reduced by the allowable deductions of $631.70. The result is a monthly patient liability of $968.30; this is the amount that would be due the nursing home each month, and Medicaid would cover the remaining balance at the facility.
Patient liability budgeting is similar for a married Medicaid recipient in a nursing home, except that the at-home spouse may be eligible to receive a “spousal allocation”. Check out my blog titled, “My Spouse is a Medicaid Recipient in a Nursing Home. Is My Income Protected?”
If you have questions about whether you or a loved one may qualify for Medicaid to help cover rising nursing home costs, please contact my office at 812–423-1500 to schedule a free consultation.