How Does Medi-Cal Treat Income?

The basic Medi-Cal rule for nursing home residents is that they must pay all of their income, minus certain deductions, to the nursing home. The deductions include a $60-a-month personal needs allowance (this amount may be somewhat higher or lower in your state), a deduction for any uncovered medical costs (including medical insurance premiums), and, in the case of a married applicant, an allowance for the spouse who continues to live at home if he or she needs income support. A deduction may also be allowed for a dependent child living at home.

In determining how a Medi-Cal applicant's income affects his or her eligibility for nursing home coverage, most states use what is known as the "medically needy" or "spend-down" approach.  These states allow the applicant to spend down their income on their care until they reach the state's income standard for eligibility, at which point Medi-Cal/Medicaid will begin covering their care.  In this way, those with incomes that exceed Medi-Cal's/Medicaid’s thresholds can still qualify if they have high medical expenses, assuming they meet Medi-Cal's/Medicaid’s other requirements.

But some states set a hard limit on the income permissible to qualify for Medi-Cal/Medicaid -- no spend-down is allowed.  In these states, known as "income cap" states, eligibility for Medi-Cal/Medicaid benefits is barred if the nursing home resident's income exceeds $2,349 a month (for 2020), unless the excess income above this amount is paid into a "(d)(4)(B)" or "Miller" trust. If you live in an income cap state, contact your attorney to set up a trust. The income cap states as of this writing are: Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Nevada, New Mexico, New Jersey, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, and Wyoming.

For Medi-Cal applicants who are married, the income of the healthy spouse living in the community (the “community spouse”) is not counted in determining the Medi-Cal applicant's eligibility. Only income in the applicant's name is counted in determining his or her eligibility. Thus, even if the community spouse is still working and earning, say, $5,000 a month, he or she will not have to contribute to the cost of caring for his or her spouse in a nursing home if the spouse is covered by Medi-Cal.

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