Your Medicaid application has been approved. Fantastic! The approval notice mentions something about a “liability” owed to the nursing home each month. What is a liability and how did they arrive at this figure?
Once you’ve been approved for Medicaid, you will likely owe a portion of your monthly income to help cover nursing home costs; this is referred to as the liability to the nursing home. The monthly liability owed to the nursing home is calculated by reducing the gross income (income before any deductions are taken out, such as insurance and taxes) of the Medicaid recipient by the following monthly costs: health and dental insurance premiums, Medicare supplemental policy pemiums, spousal allocation (if applicable) as well as the $52.00 Personal Needs Allowance. You will be allowed to retain a portion of your monthly income in order to pay those expenses. The remaining portion of your income is known as the liability; this is the amount to be paid to the nursing home each month.
The spousal allocation applies if the at-home spouse, referred to as the Community Spouse, earns gross income of less than $1,967.00 per month. In such instances, a portion of the nursing home spouse’s, referred to as the Institutionalized Spouse, monthly income may be diverted to the Community Spouse so that he or she has income of at least $1,967.00. This amount may be increased to a maximum of $2,980.00 based on the monthly mortgage or rent expense, utilities, homeowner’s insurance and property taxes.
Beginning June 1, 2014, Indiana implemented a change to its Medicaid eligibility standards for those residing in nursing homes or receiving waivered services. The new rule limits the gross income of Medicaid recipients to $2,199.00 per month. This amount may be adjusted annually. To learn more about this income limit and to find out if you can qualify for Medicaid even if your income exceeds it, please visit my blog titled “Indiana’s New Income Limit Rule and Its Potential Impact on Your Medicaid Eligibility”.