Deductions from LTC Countable Gross Income

Certain deductions are allowed from countable gross income in the LTC income calculation. Deductions, like income, count in the month in which they occur.

Allowable LTC Income Deductions

Verify deductions at each request for MA payment of LTC services, at renewal, and when a change is reported.  

Note: Do not close or deny eligibility for failure to provide verifications needed to determine deductions. Do not allow a deduction when verification is not provided.

Allow deductions according to the order listed in this section to arrive at the LTC spenddown Amount of income an enrollee is responsible for paying toward the cost of LTC services as determined by a LTC income calculation. or waiver obligation The amount of income over the maintenance needs allowance that people eligible for SIS-EW must contribute toward the monthly cost of waiver services..

Deduct the following from the gross earned and unearned income in the LTC income calculation in the order listed below:

1. Special Supplemental Security Income (SSI) Deduction.

2. Special Personal Allowance from earned income.

3. Medicare premiums paid by the enrollee.

4. Applicable LTC Needs Allowance.

5. Fees paid to a guardian, conservator, or representative payee.

6. Community Spouse Income Allocation.

7. Family Allocation.

8. Court-ordered child support.

9. Health insurance premiums, co-payments and deductibles.

10. Remedial Care Expense.

11. Medical expenses.

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1. Special Supplemental Security Income (SSI) Deduction

Deduct SSI payments received by an enrollee when the Social Security Administration (SSA) A federal agency which administers the SSI, RSDI and Medicare programs. approves continued community level SSI benefits for an LTCF Long-Term Care Facility. A place such as a skilled nursing facility, Intermediate Care Facility for the Developmentally Disabled (ICF/DD) or medical hospital in which the individual receives skilled nursing services. Group Residential Housing (GRH) and Housing with Services Establishments are not long-term care facilities. resident because either:

l  The person is expected to reside in the LTCF for less than three months and continues to maintain a home in the community; or

l  The person had 1619(a) or 1619(b) Provisions of the Social Security Act which allow certain employed people who would otherwise be ineligible to retain SSI status. The Social Security Administration certifies people for 1619(a) and 1619(b) eligibility. People with 1619(a) or 1619(b) status retain their MA eligibility under the SSI-related category if they received MA the month before certification for 1619(a) or 1619(b). status in the month prior to the first full month of LTCF residence. These payments only apply for the first two full months of LTCF residence.

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2. Special Personal Allowance from Earned Income

Deduct the Special Personal Allowance from the earned income of a person who is:

l  certified disabled by SSA or the State Medical Review Team (SMRT) A unit at DHS that determines disability in consultation with medical professionals appointed by the commissioner.; and

l  employed under an Individual Plan of Rehabilitation; and  

l  residing in an LTCF Long-Term Care Facility. A place such as a skilled nursing facility, Intermediate Care Facility for the Developmentally Disabled (ICF/DD) or medical hospital in which the individual receives skilled nursing services. Group Residential Housing (GRH) and Housing with Services Establishments are not long-term care facilities..

Deduct the following in the order listed:

Note:  Do not reduce earned income to less than $0.

l  The first $80 of earned income.

l  Actual FICA Social Security payroll taxes that are collected under the authority of the Federal Insurance Contributions Act (FICA). tax withheld.

l  Actual transportation costs.

l  Actual employment expenses, such as tools and uniforms.

l  State and federal taxes if the person is not exempt from withholding.

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3. Medicare Premiums Paid by the Enrollee

Deduct Medicare premiums incurred by the enrollee that are not subject to payment by a third party.  

Do not deduct Medicare premiums that are:

l  reimbursed to the enrollee as cost effective health insurance.

l  paid through the Medicare Buy-In.

l  paid through Medicare Part D Extra Help.

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4. Applicable LTC Needs Allowance

One of the following LTC needs allowances may be deducted in the monthly LTC income calculation. Allow only one of the four allowances in a given month.

Clothing and Personal Needs Allowance (PNA)

Use the clothing and personal needs allowance (PNA) when the enrollee is not eligible for any of the other LTC needs allowances. The PNA is adjusted annually on January 1 of each year. See LTC Allowances for exact figures.

Veteran’s Improved Pension

The $90 veteran’s improved pension is available to people who are:

n  veterans, but who do not have a spouse or dependent child(ren).

n  the surviving spouse of a veteran who does not have a dependent child(ren).

Example:

Charles resides in an LTCF. In June, he receives notification that he has been approved for a veteran’s improved pension. He will receive $90 a month beginning in July.

Action:

Deduct the $90 veteran’s improved pension of $90 in the LTC income calculation instead of the PNA beginning in July.   

Home Maintenance Allowance

The home maintenance allowance is equal to 100% of the federal poverty guidelines (FPG) for a household size of one. Allow the home maintenance allowance when a person:

n  resides in an LTCF; and

n  is expected to be discharged from the LTCF within three full calendar months from the month in which MA payment of LTC services is requested to begin; and

n  has expenses to maintain a residence (owned or rented) in the community; and

n  meets one of the following conditions:

m The person did not reside with a spouse, a child under age 21, or a person who could be claimed as a dependent of the person for federal income tax purposes at the time he or she was admitted to an LTCF.

m The person resided with a spouse at the time he or she was admitted to an LTCF, and the person’s spouse was admitted to an LTCF on the same day.

Only one spouse can receive the home maintenance allowance when both spouses reside in an LTCF. Determine which spouse will receive the home maintenance allowance based on what is most advantageous to the clients. Do not allow the home maintenance allowance for the spouse remaining in an LTCF if one spouse is discharged back to the residence.  

Example:

Henry and Margaret request MA payment of LTC services. They were admitted to an LTCF on the same day. They both meet the criteria to be eligible for the home maintenance allowance. Henry does not have enough income to deduct the full amount of the deduction, but Margaret does.  

Action:

Only one spouse can receive the home maintenance allowance. Deduct the home maintenance allowance from Margaret’s income as it is most advantageous to the clients.

Example continued:

Margaret returns to the couple’s home in the community two months later.

Action:

Re-determine Margaret’s eligibility for MA using a community income calculation. Do not allow the home maintenance allowance as a deduction in Henry’s LTC income calculation. Determine if a community spouse allocation can be deducted in his LTC income calculation.

Eligibility for the home maintenance allowance is based on the anticipated discharge date at the time eligibility for MA payment of LTC services is being determined. The anticipated discharge date is indicated on line 11a in the Physician Certification form (DHS-1503).

n  Do not delay an eligibility decision to determine if the person will actually be discharged on the anticipated discharge date.

n  Do not retroactively adjust the LTC income calculation by removing this allowance if the person meets the criteria to be eligible for the allowance at the time eligibility for MA payment of LTC services is made. This is true even if it is discovered that the person remained in an LTCF longer than three full calendar months from the month in which MA payment of LTC services was requested to begin.

When a person meets the eligibility requirements to use the home maintenance allowance at the time eligibility for MA payment of LTC services is being determined, allow the home maintenance allowance for each month that uses an LTC income calculation through the month of anticipated discharge. The home maintenance allowance is available for up to three consecutive calendar months.

A person must be discharged from an LTCF for a full calendar month before the home maintenance allowance may be used again.   

The home maintenance allowance is adjusted annually on July 1 when the FPG standards are increased. See LTC Allowances for exact figures.

Example:

Susanna was admitted to an LTCF in March following hospitalization for a stroke. She anticipated remaining in the LTCF for a nine-month rehabilitation program through November 15.  She intends to return to her home upon discharge from the LTCF. Susanna requests MA payment of LTC services in August when she can no longer pay for her LTCF charges. Susanna has a mortgage payment that includes her insurance and property tax payments. The Physician Certification Form (DHS-1503) confirms that Susanna’s anticipated date of discharge is November 15.   

Action:

Deduct a home maintenance allowance from Susanna’s income for the months of August, September, and October.

SIS-EW Maintenance Needs Allowance

Use the SIS-EW maintenance needs allowance in the LTC income calculation for persons who have income at or below the SIS Special Income Standard. An income standard equal to three times the Federal Benefit Rate (FBR). It is used to determine eligibility for some elderly waiver (EW) clients..

The SIS-EW maintenance needs allowance is updated annually in July. See LTC Allowances for exact figures.

Do not use the SIS-EW maintenance needs allowance for a person with income above the SIS.

When an SIS-EW enrollee is moving to or from an LTCF Long-Term Care Facility. A place such as a skilled nursing facility, Intermediate Care Facility for the Developmentally Disabled (ICF/DD) or medical hospital in which the individual receives skilled nursing services. Group Residential Housing (GRH) and Housing with Services Establishments are not long-term care facilities.:

n  Use either the PNA or veteran’s improved pension allowance beginning the month following the month the SIS-EW enrollee moves into an LTCF.

n  Use the SIS-EW maintenance needs allowance beginning the month following the month an LTCF resident is discharged from the LTCF and begins receiving EW services.

Example:  

Marge, a SIS-EW enrollee, is admitted to an LTCF in November after breaking her leg. She expects to return home in January and resume receiving EW services. Marge lived alone in her home before entering the LTCF and was responsible for paying property taxes, homeowners insurance, and utilities.  

Action:

Deduct the home maintenance needs allowance for the months of December and January instead of the SIS-EW maintenance needs allowance. Deduct the SIS-EW maintenance needs allowance beginning in February if Marge begins receiving EW services when she returns home in January.

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5. Fees Paid to a Guardian, Conservator, or Representative Payee

Allow a deduction in the LTC income calculation of 5% of the enrollee’s gross monthly income, up to a maximum of $100, for fees paid to all guardians, conservators or representative payees. Do not deduct amounts paid in excess of this limitation even if allowed by the Social Security Administration (SSA) A federal agency which administers the SSI, RSDI and Medicare programs. or a court.

Note:  Do not allow a deduction for more than the actual amount paid.

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6. Community Spouse Income Allocation

An income allocation may be made to a community spouse A person who does not reside in an LTCF or receive waiver services (including EW, CAC, CADI, DD or TBI) who is married to an LTC spouse. A community spouse may or may not receive MA. A spouse who is separated from a LTC spouse is still a community spouse. Marriage only ends with divorce or the death of one spouse. when the community spouse’s income is insufficient to meet his or her monthly maintenance needs.

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7. Family Allocation

In addition to the community spouse allocation, allocations may be made to certain other family members. Deduct a family allocation in the LTC income calculation in each month where:

l  there is a family member eligible to receive an allocation at any time during the month; and

l  the calculation of the allocation results in a need.

Deduct the family allocation regardless of whether or not it is made available to the family member.

Note:  Count a family allocation as unearned income to a family member who is an MA or MCRE enrollee if the allocation is available to that family member.      

The family member must provide verification of income at the time of the request for MA payment of LTC services and at each renewal.

Do not allow a deduction for a family allocation if verification of income is not provided.

Recalculate the family allocation when a change is reported between renewals.

Inform clients that they must report changes in the income of the family member but do not require the family member to report income monthly.

Who May Receive a Family Allocation?

There are two types of family allocations:

n  A family allocation to a minor child, who does not live with a community spouse A person who does not reside in an LTCF or receive waiver services (including EW, CAC, CADI, DD or TBI) who is married to an LTC spouse. A community spouse may or may not receive MA. A spouse who is separated from a LTC spouse is still a community spouse. Marriage only ends with divorce or the death of one spouse..

n  A family allocation to certain relatives who live with a community spouse:

m A child under age 21.

m A child age 21 or older who is claimed as a tax dependent.

m Parents who are claimed as tax dependents.

m Siblings who are claimed as tax dependents.

See Family Allocations for instructions on how to calculate the two types of family allocations.

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8. Court-Ordered Child Support

Deduct court-ordered child support that is garnished from income up to a maximum of $250 per month. The garnishment can be for current child support or arrearages.  

Exception:  This deduction does not apply when a family allocation is deducted for the child for whom the court-ordered child support obligation is due unless the calculated family allocation is less than $250. The difference between the calculated family allocation and $250 may be deducted.

Example:

Simon is court-ordered to pay $500 per month in child support for his daughter, Paula. This amount is being garnished from his disability insurance payment. A family allocation in the amount of $150 is being deducted in Simon’s LTC income calculation for Paula.  

Action:

Deduct an additional $100 from Simon’s LTC income calculation as court-ordered child support because only $150 of the maximum $250 deduction was used in the family allocation.    

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9. Health Insurance Premiums, Co-payments and Deductibles

Deduct the cost of health insurance premiums, co-payments and deductibles incurred by the client that are not subject to payment by MA or a third party. Health insurance includes Medicare Advantage plans, dental and LTC insurance policies. Only allow that portion of the premium that reflects coverage for the client. Allow this deduction even if the coverage is not cost-effective.

Do not deduct any portion of the Medicare Advantage plan paid by Extra Help.

Do not deduct Medicare Part D co-payments incurred by the enrollee that are subject to payment by a third party, such as Extra Help.

Do not deduct the cost of premiums if:

l  the county agency pays the premiums or reimburses the client for the cost of the premiums; or

l  the client is subject to a combination LTC/Medical spenddown (health insurance premiums will be used to meet the client’s medical spenddown).

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10. Remedial Care Expense

EW enrollees who reside in a Residential Living Arrangement Community living arrangements such as group residential housing (GRH), board and lodge, and corporate and foster care settings that provide supportive services. may be eligible to deduct the remedial care expense deduction.

11. Medical Expenses

Deduct allowable medical expenses incurred by the client.

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