Too much income to qualify for Medicaid for nursing home care?

I have been told my loved one has too much income to qualify for Nursing Home Medicaid; what do I do?

As an Elder Law attorney, this one of the questions we are asked most frequently, and with good reason. South Carolina is an income cap state; meaning SC Medicaid rules are clear: a person wanting to qualify for Nursing Home Medicaid in South Carolina cannot have more than $2,199 per month in gross income. On some level, this is a ridiculous rule. If I have, for example, $2,500 per month in income, how does that justify or equate to the fact that I can pay privately for a nursing home that costs $7,000 per month? Obviously, that math does not make sense, and Medicaid recognizes that does not add up.

As such, even though SC Nursing Home Medicaid has an income cap of $2,199 per month in gross income, they have created a way to circumvent the income cap rule by allowing an applicant to redirect his or her excess income to what is known as an “income trust.” SC Medicaid actually has a form “Income Trust Agreement” they require to establish the trust. To create an Income Trust, the applicant (or his or her POA)  signs the “Income Trust” form, designates a Trustee (who cannot be the applicant), gets a Tax ID Number for the Income Trust and establishes a bank account in the name of the Trust. Then the applicant’s income or a portion of his or her income is redirected to be direct deposited into the new trust account.

In South Carolina, Medicaid applicants have the choice of either directing all or a portion of their income into the income trust account. However, the amount redirected must bring the amount non-redirected portion under the income cap. For example, if an applicant has $1800 per month in Social Security and a pension check in the amount of $600 per month, that applicant would have total monthly income of $2,400, which is over the income cap. In that circumstance, the applicant could choose to redirect either his Social Security OR his pension into the income trust account. He would not need to redirect both. Redirecting either one would bring his or her monthly income that under the cap of $2,199 per month.

Please keep in mind that Income Trusts do not shield the income from Medicaid’s patient liability rules. Meaning, in most circumstances the applicant’s full income will still go to the nursing home to pay for their care when Medicaid calculates the person’s “patient liability.” The Income Trust is just an additional step that allows a person who has income in excess of the cap to still qualify for Medicaid.

If you are married, there may be other ways to deal with excess income, but to understand more about how the system works, we recommend consulting with an attorney that regularly deals with this system.

The specifics of how an income trust may work for your loved one’s needs is a very individualized discussion. If you would like more information on Nursing Medicaid eligibility rules in South Carolina, including questions regarding income trusts, please do not hesitate to call our office and schedule a FREE consultation, or click here to use our online scheduling calendar

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