Posts Tagged ‘personal needs allowance’

Medicaid Beneficiary’s Alimony Payments Allowed to Continue


When someone in a nursing home qualifies for Medicaid, he or she will usually still have to pay a portion of the nursing home bill. In some cases this can mean that the resident must pay more than his or her income—or risk eviction from the nursing home.

Unmarried Medicaid recipients are expected to turn over nearly all their income to the nursing home. They are permitted to hold back a small amount monthly for personal needs (in Arizona the amount is currently $84.60). Premiums for Medicare Part B and other insurance coverage can also be withheld. Everything else usually must be paid to the nursing home.

Take Ervin Mulder, for example. The South Dakota man was receiving $701 per month from Social Security when he entered the nursing home. Medicaid officials ordered him to pay $671 to the nursing home each month (South Dakota only permits Medicaid beneficiaries to retain $30 for personal needs).

Mr. Mulder had gotten divorced a few years earlier, and his ex-wife had a court order directing him to pay $180 per month in alimony. In fact, that amount was being automatically deducted from his checking account each month as soon as the Social Security check arrived. Mr. Mulder simply could not pay $671 to the nursing home each month—he didn’t have it.

Mr. Mulder appealed the Medicaid agency’s determination, but the agency pointed to federal law and regulations. The federal government simply doesn’t provide for deduction of spousal support, for example, from the amount to be turned over. A trial judge ordered Mr. Mulder to pay the higher amount or face eviction from the nursing home.

South Dakota’s Supreme Court disagreed. In a 3-2 vote, the Justices decided that the Medicaid agency’s application of federal regulations was arbitrary and capricious. Mr. Mulder had no choice but to pay his ex-wife’s alimony, and he could not be required to pay the same money to both his wife and the nursing home.

The two dissenting Justices were unmoved. In their view, Mr. Mulder could go back to the state courts to reduce his alimony—though they did not suggest who might pay for those legal proceedings. If that didn’t work, they said, Mr. Mulder’s daughter should be required to come up with the $180 out of her pocket. Mulder v. South Dakota Department of Social Services, January 28, 2004.

Arizona rules are very similar to those in South Dakota. With no court case like Mr. Mulder’s, Arizona Medicaid (ALTCS) recipients are prevented from paying alimony or other debts. Although the result in Mr. Mulder’s case is (and we recognize the pun) appealing, it should not be relied on as precedent in other states.

It must be noted that the rules are different for married couples. A spouse living in the community can usually retain more of the nursing home resident’s income, with the precise amount varying in each case. The rules are also different—and considerably more complicated—for ALTCS recipients who reside in assisted living facilities, adult care homes or their own homes.

Guardianship Fees Deducted From Patient’s “Share of Cost”


Mary Perry was admitted to a Massachusetts hospital in 1991. After treatment was completed, the hospital sought her discharge to a nursing home that November. Unfortunately, Ms. Perry lacked both capacity and resources.

The Massachusetts court appointed a guardian to make placement decisions for her, and she was promptly placed in an appropriate nursing home. A Medicaid application was completed, and Ms. Perry qualified for government assistance with her nursing home expenses.

Once Ms. Perry’s care was arranged and eligibility obtained, the Medicaid agency turned to the question of how much Ms. Perry would need to contribute (from her monthly Social Security check) toward her care. Ms. Perry’s “share of cost” was calculated, and payments began.

Meanwhile, Ms. Perry’s guardian sought approval of the fees and costs incurred in securing the guardianship, making (and implementing) the placement decisions and applying for Medicaid coverage. The Massachusetts court approved the guardian’s fees, and ordered that payments could be made from her monthly Social Security check.

Unfortunately, Ms. Perry’s personal needs allowance (the state Medicaid program was leaving her only a small amount each month) was insufficient to both provide for her personal needs and pay the accumulated guardianship fees. Ms. Perry’s guardian therefore applied for a reduction in the “share of cost” amount to permit the guardian’s fees to be paid. In support, the guardian argued that the fees were required to obtain medical care, and that medical expenses may be deducted from the share of cost amount.

Massachusetts’ Medicaid agency denied the request, citing HCFA (Health Care Financing Administration) regulations categorizing guardianship expenses as not related to medical costs. The guardian appealed to the state courts.

The Massachusetts judge has now ruled that guardianship costs are “necessary medical expenses” when they are required to obtain consent to medical treatment. Under the law of informed consent, Ms. Perry’s treatment could not be undertaken without approval from a surrogate; since she had made no provision for surrogates herself (such as by executing a power of attorney for health care), the guardianship was required before treatment decisions could be made. Perry v. Bullen, Mass. Super. Ct., May 31, 1996.

Arizona law is similar to Massachusetts’ provisions, and a similar result might be expected. ALTCS regulations provide that the share of cost may be reduced by a “noncovered medical or remedial expense” incurred during the three months before application, but then makes a list of allowable expenses. Not surprisingly, guardianship (or legal) fees are not included. ALTCS does permit “other non-covered medically necessary services which the member petitions AHCCCS for and which the Director approves,” (ALTCS Eligibility Policy and Procedure Manual §1016.2.C.2.b.vii) but it seems unlikely that would quickly concede the point.

Nonetheless, guardianship may legitimately be required before nursing home placement can be secured and an ALTCS application completed. How can these expenses be paid if the ward has no assets? One obvious choice is to make a referral to the Public Fiduciary’s office, but if family are actively involved they may be instructed to initiate their own proceeding. If family members are reluctant (or have insufficient resources to pay for the guardianship themselves), the facility may find itself at an impasse.

Relying on the logic of the Perry case, an argument can be made that the costs of securing the guardianship should be paid from the patient’s ultimate share of cost calculation. While this result might not be easily obtained, Perry gives valuable support.

MMMNA Increased

MAY 9, 1994 VOLUME 1, NUMBER 24

The 1994-1995 figure for the Minimum Monthly Maintenance Needs Allowance (or MMMNA) has been announced. Beginning July 1, 1994, community spouses of ALTCS patients will be entitled to retain sufficient income to guarantee at least $1,230 in total monthly income.

The new figure represents an increase of $51 per month over the previous level. Prior to the increase, a community spouse was permitted to retain $1179 of the total community income each month.

In addition to the MMMNA, the community spouse may be entitled to an excess shelter allowance of up to $369 per month. This also reflects an increase, from a maximum of $354 in fiscal year 1993-1994. In addition, the community spouse may retain excess income for extraordinary or exceptional costs, with a new cap on the total amount retained of $1817.

While the community spouse is permitted to retain as much of the institutionalized spouse’s income as necessary to reach the monthly maintenance needs allowance (between $1230 and $1817), the institutionalized spouse is also permitted to retain a personal needs allowance. In fact, the personal needs allowance is available to every institutionalized ALTCS patient. This allowance, which is also fixed by federal law, is set at 15% of the maximum monthly SSI benefit, which translates to $66.90 for calendar year 1994.

Numbers, Numbers …

As long as we’re talking about numbers, let’s review a few other important ones.

Income Eligibility

Of course, the most infamous of all long-term care numbers is the income eligibility limit. If an applicant for ALTCS benefit receives more than $1338 per month in income from all sources, he will simply not be eligible.

Two important variations on this hard-and-fast rule need mentioning. If the applicant is married, and “his” income exceeds $1338 per month but the total community income does not exceed $2676, he will still be eligible. And even if his (or their) income is too high, it may be possible to establish a “Miller”-type trust to permit eligibility.

The income eligibilty number changes with each calendar year. The 1993 number was $1304.


The Community Spouse Resource Allowance is the value of available assets the community spouse is allowed to retain and still have the institutionalized spouse obtain ALTCS benefits. This figure is one-half the value of available community resources held at the time of admission to the hospital or nursing home, with an upper and lower limit.

No matter how little a couple is worth, the community spouse is permitted to retain at least the first $14,532. And wealthier couples are not permitted to retain more than $72,660 as the community spouse’s “half.” This area is particularly complex, and care must be taken not to overlook techniques (many of them quite simple) for maximizing the community spouse’s “share.”

Average Cost of Care

The primary significance of this figure is in determining the penalty period suffered by ALTCS applicants who have made gifts during the previous three years. The estimate of typical nursing home care costs is divided into the total amount of gifts to determine the number of months of ineligibility.

Currently, the figure for Pima and Maricopa counties is $2406.30; for all other Arizona counties it is $2321.10. This despite the fact that long-term care actually costs as much as $3500 per month.

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