When a single person is in the nursing home on Medicaid, the income and asset rules are fairly straitforward. Find the applicant's gross income, subtract $105 for the personal needs allowance and pay the remainder to the nursing home as part of the patient's responsibility. Income can be a little more complicated when there is a spouse at home.
Rather than requiring a couple to reduce their joint income to poverty level, Florida law permits the community spouse (the spouse at home) to maintain a higher income for self-support if his or her income falls below the minimum monthly maintenance needs allowance (MMMNA). In 2018, for example, Florida allows the community spouse to keep at least $2,030.00 in monthly income, or up to $3,022.50 in certain cases as discussed below. First, any income the community spouse receives in his or her own name—Social Security, pension, or dividend income, for example—may be retained fully by the community spouse. Very importantly, no portion of the community spouse’s own income is required to be assigned to Medicaid or diverted to cover the cost of care for the institutionalized spouse. As a result, the community spouse’s income could exceed the allowed minimum of $2,030. In fact, the community spouse's income can be unlimited. It is only the community spouse's assets that affect the institutionalized spouse's Medicaid.
If, however, the minimum allowance of $2030/month cannot be met by the community spouse’s income alone, Florida allows the institutionalized spouse to divert income to the community spouse to close the gap. This situation may occur, for example, when a husband with greater income is the institutionalized spouse and a wife with a smaller income is the community spouse. In such cases, income that is paid to the institutionalized spouse (such as Social Security and pension income, for example) may be diverted to and retained by the community spouse to assist with his or her basic income needs. The transfer of income from the institutionalized spouse to the community spouse is referred to as the spousal diversion. Calculating income can be confusing but remember that the government is not trying to impoverish the spouse at home and take away all of his or her income. Legal policy is that the government wants to provide a minimum level of support to the community spouse.
Example of the Community Spouse Income Diversion
For example, assume that Sharon and Randy are a senior couple, living in Florida on Randy’s monthly $500 pension and $1,700 Social Security benefit, and Sharon’s $900 monthly Social Security benefit. Randy’s health has declined severely and he needs to be in the nursing home on Medicaid for long-term care assistance. Because Sharon’s own income is less than the MMMNA, she will be able to retain $1,130 of Randy’s monthly income; almost all of Randy’s remaining income will be directed to paying for his LTC need as his patient's responsibility. (Sharon's income of $900/m plus the $1,130/m equals the MMMNA of $2,030/m)
Raising the Spousal Diversion above the Minimum Allowance
In addition to the Minimum Monthly Maintenance Income Allowance of $2,030/m (until 06/30/18), the income diversion to the community spouse can be increased to the Maximum Monthly Maintenance Income Allowance of $3,022.50/month (until 06/03/18). Medicaid rules allow the income to be increased to the maximum level only through calculating the community spouse’s excess shelter costs. Basically, if the community spouse rents their home, has a mortgage, or the housing costs are above a certain level, the spouse can keep more of the institutionalized spouse’s income. The rules are generally as follows:
- Housing costs must exceed the community spouse housing allowance of $609/month (2018).
- Housing costs include mortgage payments, rent, insurance, condo maintenance fees and utilities.
- Once the community spouse's shelter costs exceed the allowance of $609/month, the community spouse can start to divert more of the institutionalized spouse’s income, up to the maximum level of $3,022.50/month.
Calculating the Community Spouse's Excess Shelter Costs
This will be demonstrated further below and with the worksheet, but this language is extracted from Florida's Medicaid manual:
Step 1 - Add the community spouse’s monthly housing expenses. Allowed expenses are limited to rent or mortgage payment (including principal and interest), taxes, insurance (homeowners or renters), maintenance charges if a condominium and mandatory homeowner’s association fees.
Step 2 - To the total obtained above, add the current food stamp standard utility disregard ($347/m for 2018). Allowed utilities are limited to water, sewage, gas, and electric. This basically gives a credit of $347/m for utilities, but if utilities are higher than this, you can raise above the $347.
Step 3 - To determine what portion of the total shelter costs is excess, subtract $609 from the total costs. The difference is the community spouse’s excess shelter costs.
Best Example of the Calculating the Spousal Diversion
This can all be pretty confusing, even to elder law attorneys, so hopefully the following helps. Here, Dad is in the nursing home (the institutionalized spouse) and mom is doing well at home (as the community spouse). They own a home with a mortgage of $800/month. Dad's income is $2,000/month and Mom's income is $1,000/month. Total assets are below $123,600 or they hired an elder law attorney (like us!) to help protect assets over this level.
Without any excess shelter costs, Mom will be able to keep $1,030/month of the husband's income as the Minimum Monthly Maintenance Nncome Allowance (MMMNA). Dad will keep $105/month as the personal needs allowance and the rest goes to the nursing home as part of the patient's responsibility.
To try to get Mom more income diverted from Dad's own income, we can calculate the excess shelter costs:
- $ 800/m (mortgage)
- +$ 150/m (property tax)
- +$ 100/m (insurance)
- +$ 347/m (Standard Utility Allowance)
- =$1,397/m (Total)
- - $ 609/m (normal standard housing costs)
- =$ 788/m (excess housing costs for the community spouse)
This means we raise the $2030/month minimum by $788/month. Mom will now keep $2,818/month as she had housing costs exceeding the normal $609/month. The husband keeps $105/month and the nursing home is paid only $77/month! ($3,000 total gross income minus the $2,818 minus the $105 = $77)
See our Worksheet!
Please see the link to our Florida Medicaid Spousal Diversion Worksheet. We have reprinted this webpage along with a standalone worksheet for you to do your own calculations, allowing you put proverbial pen to paper to assist you and your loved ones calculate spousal diversion and the patient's responsibility for Medicaid purposes.
How does a Qualifed Income Trust come into this?
If the institutionalized spouse's gross income exceeds the income cap ($2,250/m in 2018), then a qualified income trust ("QIT") will have to be established to lower the income to below the cap. Your elder law attorney would walk you through the use of the QIT and how it works with the spousal diversion.
What if the spouse cannot live on the Diversion Amount?
If there is court ordered support against an institutionalized spouse (for monthly support income for the community spouse), the community spouse's monthly income allowance cannot be less than the amount ordered. A good elder law attorney can work with the family to go to court to increase obtain a court order for spousal support.
If you want to learn more:
- My loved one just went to the nursing home - what happens next?
- Attend one of our free monthly seminars on Medicaid and Estate Planning
- Download a copy of my book, the Top 20 Rules to Protect Your Florida Estate