Nursing Home Resident at a Nursing HomeNursing home residents who qualify for Medicaid are entitled to a personal needs allowance of $60 per month. $15 a week is certainly not a lot of money, but it can help enhance the resident’s quality of life by paying for extras that are not provided by the nursing home, such as salon services, candy and other goodies, or pampering items like creams and perfumes.

Where Does the Allowance Come From?

In order to qualify for Medicaid to pay for a nursing home, a senior must meet financial eligibility limits. In 2020, the income limit for an individual over 65 was $2,349 per month. If a senior’s income is below that amount, they will qualify for Medicaid to pay the difference between their income and the cost of the nursing home. All of the senior’s income must go to pay the nursing home, except for the $60 monthly allowance. The senior can also maintain a savings account of no more than $2000.

Can We Use Money From a Trust?

If the senior has assets in a Medicaid Asset Protection Trust (established five years or more before admission to the nursing home), he or she cannot access that money for their own needs once Medicaid is paying for a nursing home. This trust is designed to protect assets for heirs after the senior passes away. While putting assets into the trust ensured that the senior would qualify for Medicaid, it also barred the senior from being able to spend those assets. If the senior still had access to those funds, he or she would not qualify for Medicaid. Medicaid trusts are generally created for people with significant assets that they want to protect for their heirs.

If the senior’s income just exceeded the allowed amount, they might set up a Qualified Income Trust (QIT). This trust holds the income so that the senior does not have access to it, and the trustee must pay a portion of the nursing home care out of the trust. The trustee will also pay the $60 allowance out of the trust. Upon the senior’s death, any assets remaining in the QIT will be paid to the state to reimburse Medicaid.

Protecting Your Assets Requires Advanced Planning

For seniors who do not have enough personal assets to pay for quality nursing home care, Medicaid can be a lifesaver. However, many seniors have too much income to qualify, but not enough to pay the average $5,000-$10,000 monthly cost of a nursing home. Before you or your elderly parent needs a nursing home, it’s smart to talk to an Elder Law attorney to plan for the possibility. Contact the Medicaid Planning team at Ross & Shoalmire to get the facts about paying for a nursing home in Texas or Arkansas.