Medicaid Policy
Medicaid Policy
Determine if income belongs to the individual, the individual's spouse, or someone else in the individual's family. Count income as belonging to the person for whom the income is paid. If the individual is a child, income received by the child's parents is deemed (some or all is counted) to the child for eligibility purposes. The amount of income from a child’s parent that is counted varies depending on what program the child will be eligible for.
Note: References to "individual" or "individual's spouse" in this policy manual are not meant to exclude the parents of a disabled child.
A. Income from Trusts
1. Trusts established before August 11, 1993
If the trust was set up before August 11, 1993, and has not been amended after that date, do not count the money as both income and an asset in the same month. Decide if the trust counts as an asset (512).
a. Medicaid Disqualifying Trusts:
i. If the maximum potential disbursement from the trust is counted as an asset, any payments actually received are not countable income.
ii. If the sole beneficiary of the trust is a resident of an institution for the care of the mentally retarded and the trust was established before April 7, 1986, do not count the trust as an asset. Trust payments received by the individual must be counted as unearned income.
b. Other Trusts:
i. If the trust does not meet the criteria of being a Medicaid Disqualifying Trust, decide if the trust is countable as an asset. If the trust counts as an asset, do not count payments made from the trust as income.
ii. If the trust does not count as an asset, count payments made from the trust to the individual as income. If the individual or the individual's spouse receives income from a trust, read the trust agreement carefully. If the trust agreement explains who owns the income, accept the terms of the trust agreement.
iii. If the trust agreement does not specify the amount of payments for each person and the payer does not divide the income, then count income as follows:
· If the payment is made in one person's name, count the income as belonging to that person.
· If the payment is made in the names of both the individual and the spouse, count ½ of the payment for each of them.
2. Trusts Established on or after August 11, 1993
a. Follow policy in 512-2 for trusts set up on or after August 11, 1993, to decide if the trust counts as an asset.
b. Trusts set up before this date, but substantially amended after this date may be subject to this policy, too. Ask the Program Specialist if you have questions about which policy applies.
c. A trust set up on or after August 11, 1993 can count as an asset and payments made from the trust can count as income in the same month.
d. Count payments made from the trust to, or for the benefit of, the individual or the individual's spouse as income in the month the payment is made.
i. If the payment is made in one person's name or for one person's benefit, count the payment as income for that person.
ii. If the payment is made in both names or for the benefit of both, count ½ for each of them, unless the trust has specific provisions to do otherwise.
iii. Payments for the benefit of the individual or spouse only count as income if Medicaid policy counts such benefits as income (i.e., in-kind payments for shelter.)
e. Count payments made from the trust to a third party, not for the benefit of the individual, as a transfer of an asset (575).
B. Income Not from a Trust
In most cases, income belongs to the person in whose name it is given.
1. Current child support payments belong to the child for whom it is paid (415-5).
2. Child support arrearage payments (child support paid for past months) are income for the person who provided the support to the child during the time current payments were not being paid. This will usually be the parent with whom the child lived.
3. Social Security, Railroad Retirement, and Black Lung benefits belong to the person for whom the payment is made even when the payments are sent to a guardian or representative payee.
4. Pensions, or retirement benefits, usually belong to the person for whom the payment is made. However, if the individual claims that part of the pension benefit includes a payment for a spouse, request verification of this or check with the pension plan administrator to verify. Use the following rules to decide how to count the income.
a. If the pension is a Civil Service annuity, refer to 415-3.
b. Social Security benefits are paid for the individual. The benefits payable to one member of a married couple cannot be divided as marital assets when the couple divorces. Federal law prohibits the division of Social Security benefits as a marital asset because unlike private pensions, the individual does not have an ownership interest in Social Security benefits. An individual may be ordered to pay alimony to an ex-spouse; but the alimony cannot be deducted from income to determine the individual's eligibility for Medicaid.
c. In the case of a divorce, some pension or retirement benefits may be divided between the two spouses as part of the division of marital assets. Check the divorce decree if the person states that part of a pension payment, or retirement account, belongs to an ex-spouse. (See 415-3 on Qualified Domestic Support Orders, or QDROs.)
5. In some cases, though, income in one person's name may include benefits that belong to the individual's spouse or another family member. For example, VA benefits may be based on the number of dependents the veteran has. Some of the benefit is income for the individual, but the rest is income for the other family members (415-2).
6. Income issued in the name of the individual's legal guardian or conservator, or a individual's representative payee for the benefit of the individual is income for the individual.
7. When income is issued in more than one name, or when the individual states that some of the income is for another family member, find out how much income belongs to the individual and how much belongs to any other persons by contacting the person or agency making the payment. If that person or agency divides the income, accept ownership of the income according to the division made.