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A friend of mine, for whom I am POA, is 65, had a stroke, and is living in assisted living. She is receiving NJ medicaid and just discovered that she has a pension from her previous employer of around $400/month. Does she report this to medicaid? Can she keep the pension?
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She cannot simply keep the pension. She HAS to report it to Medicaid/her case worker. Databases feed together, former employer reports pension to federal government, this is provided to state government. If she does not report it, it will get found out and she could get in a lot of trouble for it. It's considered fraud not to report assets and income for Medicaid and other public (state/federal) benefits. The Medicaid folks will recalculate her benefits, but she cannot simply "keep the extra money". If it puts her over the income limit for the state, there are various trust options so that she can stay qualified for Medicaid. Please don't cause both of you problems by trying to hide money from state agencies. It never turns out well, and pensions that are paid and not reported will be found out when she is re-certified for benefits at Medicaid review.
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fyi - most states have an "qualifying income trust" or earned income trust. this isn't about the life insurance (though I think it is reasonable that that money be used for a parent's care - you would likely cash it in to help pay for their care if you didn't get medicaid). This is about the "maximum income". My mom has qualified for medicaid in 2 states - while her income has been higher than the maximum. The key is if your parent qualifies for long term services based on her need of help with activities of daily living. If medicaid screens your parent and they are seen as needing care that costs far more than their income and assets - medicaid will usually approve - you just have to set up a trust that manages all money for the parent's care. Google "income cap trust" or "qualifying income trust". I did these on my own with no lawyer with zero problem. It isn't hard (and your bank can help you set up the trust account). You can usually get the template online. In any case - unless your parent has tons of assets they want to pass on to someone or those assets are needed to protect a current spouse or disabled child -- do not bother with a lawyer (imo). It is a pain in the a** but you can do it on your own. Lawyers were quoting me 2500 to even answer a QUESTION about the trust stuff - and I was able to do it on my own for the cost of a notary. I am not usually someone who feels comfortable doing that type of stuff - but since my mother didn't have any extra assets, was only not qualifying b/c of basic monthly income, I felt comfortable doing it. And, again just my opinion, but medicaid will end up paying thousands of dollars a month to help take care of your parent. It would not be fair for them not to ask for any and all assets to help pay that (again, assuming there is no spouse or disabled child that needs the asset) - as you would have to tap into that asset anyway to take care of a parent who needed care of upwards of 6-10K a month, and you would spend through it very quickly.
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Do they take pension as well and social security when applying medicaid. 
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If you apply for Medicaid, all sources of income - pension, social security, 401K, etc. are used to pay nursing home. If the total of income puts you over Medicaid limit, you can see about setting up a trust for the balance. You will only be able to keep a personal needs allowance (PNA) of between $60-$100 depending on the state.
IF you are married, the rules are different. A community spouse will have different amounts that can be kept for the spouse in the community. This more complicated scenario needs a lawyer or someone well versed in the rules and paperwork for Medicaid planning.
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My husband qualified for Medicaid (he is in a care facility) but he has since been awarded a benefit through the VA, which puts his monthly income (SS and VA money) over the state limit. How will this affect us?
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First, it depends on the nature of the VA award. Pension or Compensation. 100% of compensation is considered countable income towards Medicaid eligibility limits. How Pension is treated depends on the state in which you live. Some states will count only the "Basic" portion of the award as income, the rest will not be counted towards the income limit but will be counted when determining Patient Responsibility and the Community Spouse Resource Allowance. Other states do not apply the Pension award to the income limit but, again, it will be counted in determining Patient Responsibility and the Community Spouse Resource Allowance.

Once the above is determined you will then have discover how your state treats countable income exceeding the $2,205 Medicaid eligibility income limit.

Some states require that an Irrevocable Qualified Income Trust be established. A bank account is then opened in the name of the trust and the amount over the Medicaid income limit of $2,205 per month is diverted to the trust each month. The diverted funds in the trust's bank account are then used to meet the Medicaid recipient's Patient Responsibility (the amount paid to the nursing home) or go to the Community Spouse as a resource allowance.

Other states simply look at the Medicaid recipients total countable income vs. cost of care and as long of the cost of care exceeds countable income the recipient continues to qualify. The Community Spouse resource allowance may also be increased if there is an increase in income.

Another consideration is any lump-sum retroactive award that may be received. Again, depending on the state, it may be considered income in the month received or as an asset. How to handle this aspect of the award and maintain eligibility can also become quite complicated.

Much of this information can be found online however it will probably be easier to contact a professional.
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I have a disabled daughter that draws a retirement check from her ex husband. We have put her in a nursing home pending medicaid. As of now we are paying out of pocket because she cannot walk or stand and we cannot lift her. We are 69 and 70. Will medicaid take her military retirement check she receives each month which is under $1000 to help pay for her nursing home care. We have spent so much money on her care the last few years.Glenna
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Glenna69...All of her gross monthly income, regardless of the source, minus a Personal Needs Allowance which varies by state (in Florida, for instance, it is $105) will be paid to the nursing home as Patient Responsibility.
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As an aside, it is common in these posts for folks to ask "...will Medicaid take...".
Please remember that nobody is "taking" anything from anyone.
Medicaid is a public benefit program from which we are requesting assistance.
We are being asked to pay our fair share and we are voluntarily doing so.
That's reasonable, isn't it?
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