Medicaid and Income Limits: What You Need to Know

When applying for Medicaid, understanding income limits is crucial, especially in states like Texas and 12 others with income-stated limits. These limits determine whether you qualify for Medicaid benefits and require careful planning to navigate effectively.

The Income Limit Rule

In Texas, as of January 1, 2018, the individual income limit for Medicaid is $2,205 per month. If you earn more than this amount, you are disqualified from Medicaid benefits unless you set up a Qualified Income Trust (QIT), commonly referred to as a Miller Trust.

Key Considerations

1. Marital Status Matters

   • Income limits and rules can vary depending on whether you are married or single.

   • For married couples, Medicaid considers the "name on the check" rule, which attributes income to the spouse whose name appears on the payment source.

2. Social Security Income

   • It’s essential to calculate total income accurately. Social Security benefits, annuities, and even interest payments may count toward the income limit.

   • Remember to include withheld amounts for taxes, Medicare premiums, or supplemental insurance in your calculations.

3. Qualified Income Trust (Miller Trust)

   • If your income exceeds the limit, establishing a QIT can help you become eligible for Medicaid.

   • A QIT allows you to redirect excess income into a trust account, ensuring compliance with Medicaid requirements.

Why Accurate Income Calculation is Essential

Many families underestimate how much their loved ones earn. For example:

• Social Security payments often include deductions for Medicare premiums and taxes, which can obscure the actual income amount.

• Additional sources of income, such as pensions, annuities, or investment interest, may inadvertently push you over the limit.

This is why working with an elder law attorney is essential. They can ensure that all income sources are accounted for and that appropriate strategies, such as establishing a QIT, are implemented.

Common Mistakes to Avoid

1. Misunderstanding Income Sources

   • It’s not just about what your parent "receives" but what they "make" in total.

   • For instance, annuities and interest payments are often overlooked as income.

2. Failing to Plan for Income Fluctuations

   • If monthly income is near the limit (e.g., $1,800), additional income sources may unexpectedly disqualify your loved one.

3. Applying Without a QIT

   • Many applicants assume they are under the limit, only to discover later they’ve exceeded it. A QIT should be set up proactively if there’s any doubt.

Working with an Elder Law Attorney about Medicaid

Navigating Medicaid’s income rules and limits can be complex. An experienced elder law attorney can help you:

• Assess Total Income: Review all potential sources of income, including Social Security, pensions, and interest payments.

• Establish a QIT: Ensure compliance with Medicaid’s requirements to avoid disqualification.

• Shift Income Strategically: In certain situations, income can be shifted between spouses to meet eligibility requirements.

Conclusion

Medicaid’s income limits can be a significant barrier for families seeking benefits. Understanding these rules, accurately calculating income, and utilizing tools like a Qualified Income Trust can make the process smoother and more successful.

If you’re navigating Medicaid eligibility for yourself or a loved one, consult with an elder law attorney to ensure you fully understand the requirements and make informed decisions.