Protecting Income While Qualifying for Medicaid Home Care

Protecting Income While Qualifying for Medicaid Home Care

Q: My father is 80 years old and wants to remain at home as long as possible. He currently needs assistance with activities of daily living, and our family is considering Medicaid home care. The problem is that his monthly income exceeds Medicaid's income limit. We rely on that income to pay household expenses. Does this mean he won't qualify for Medicaid home care?

A: No. Many families are surprised to learn that exceeding Medicaid's income limit does not disqualify someone from home care benefits. A Pooled Income Trust allows individuals to qualify for Medicaid home care while continuing to use their income to pay household and miscellaneous expenses.

In 2026, New York's Community Medicaid program, which covers home care, including services through Managed Long-Term Care (MLTC) and the Consumer Directed Personal Assistance Program (CDPAP), limits applicants to $1,836 in monthly income and $33,038 in countable resources.

If your father's monthly income exceeds $1,836 a month, he is considered to have “excess income.” Instead of paying the excess income over to Medicaid, your father’s excess income gets deposited into a Pooled Income Trust each month. That deposited income is not counted toward Medicaid's income limit.

A Pooled Income Trust is administered by a nonprofit organization on behalf of many beneficiaries, each of whom has a separate sub-account. After the excess income is deposited, those funds can be used to pay approved household and other personal expenses on the beneficiary’s behalf.

This includes, but is not limited to, rent, mortgage payments, real estate taxes, utilities, homeowners’ insurance, cable, internet, phone service, food, clothing and more. Bills are submitted to the trust administrator, who pays the expense directly from the funds in the trust.

Income cannot be used to cover expenses already covered by Medicaid or for any expenses unrelated to the beneficiary.

If your father were to enter a nursing home down the line, the income rules would change. Nursing Home, or Institutional, Medicaid has no income cap, but it also has no pooled trust option for income.

Instead, nearly all of the resident's income above a $50-per-month Personal Needs Allowance must go directly to the nursing facility. This is referred to as the Net Available Monthly Income, or NAMI.

This changes slightly if there is a “well” spouse involved. Some or all of your father’s income could instead be diverted to his spouse, depending on the spouse’s current income.

Because the Pooled Income Trust exists to pay expenses on your father's behalf, you should be careful not to let funds accumulate unnecessarily in the trust. Any balance remaining at his death does not pass to his heirs but stays with the nonprofit administrator.

If monthly deposits regularly exceed what is being spent on approved bills, that surplus is effectively lost.

Before setting up a trust, it is worth running the numbers. Compare your father's monthly income with his actual monthly expenses to confirm that Medicaid home care and the trust produce a better outcome than paying for care privately or through other means.

As long-term care costs continue to climb, families often assume they must choose between Medicaid eligibility and keeping the income they depend on. For home care, that is usually a false choice.

Because the rules diverge so significantly between home care and nursing home Medicaid, and because income limits, resource limits and allowances are updated annually, consulting an experienced elder law attorney is the best way to determine whether a Pooled Income Trust fits into your father's specific care plan. By Alma Muharemovic, Esq.

Alma Muharemovic, Esq. is an associate attorney at Burner Prudenti Law, P.C., focusing her practice on estate planning. Burner Prudenti Law, P.C. serves clients from New York City to the East End of Long Island.