Is Social Security Considered Income for Medicaid in New York?

Social security benefits are counted as income for purposes of Medicaid eligibility. It is not exempt from Medicaid. All types of Social Security benefits, including retirement, disability, and survivor benefits, are considered in Medicaid eligibility calculations. For this reason, the amount of Social Security benefits received can have a significant impact on Medicaid eligibility.

What is Included in Countable Income?

When determining Medicaid eligibility, the entire sum of Social Security benefits received, including both taxable and nontaxable portions, is considered as income. Social Security benefits include retirement, disability and survivor benefits. For instance, if an individual receives Social Security benefits from a deceased spouse or parent, such as widow(er)'s or children's survivor benefits, these are categorized as unearned income in the Medicaid eligibility calculation process. The incorporation of these benefits can significantly impact an individual's qualification for Medicaid coverage.

Supplemental Security Income (SSI)

SSI is a federal program that provides monthly cash payments to individuals with limited income and resources. To be eligible for SSI, an individual must meet certain criteria, such as having a disability, being blind, or being 65 years of age or older. SSI benefits are intended to help recipients meet their basic needs, such as food, clothing, and shelter.

SSI income is not counted towards Medicaid eligibility. Unlike Social Security benefits, Supplemental Security Income (SSI) is not considered as income when determining Medicaid eligibility. SSI benefits are designed to provide financial assistance to low-income individuals and are not counted as a resource for Medicaid purposes. In fact, in most states including New York, individuals who receive SSI benefits are automatically eligible for Medicaid coverage without a separate application process.

Income Not Counted by Medicaid

While most income sources are counted when determining Medicaid eligibility using the Modified Adjusted Gross Income (MAGI) method, there are some exceptions. Certain types of income are excluded from the MAGI calculation, which can help individuals qualify for Medicaid coverage even if they have additional income sources. These excluded income sources are not considered part of an individual's eligible income for Medicaid purposes. It is important to understand which income sources are not counted to accurately assess Medicaid eligibility and potential benefits.

In New York, the following income sources are not counted according to regulations and general principles of Medicaid eligibility:

• Supplemental Security Income (SSI) benefits
• Veterans Affairs (VA) benefits, such as Aid and Attendance benefits (but disability compensation and pension payments are included)
• Supplemental Nutrition Assistance Program (SNAP) benefits, also known as food stamps
• Housing assistance, such as Section 8 vouchers or public housing subsidies
• Federal income tax refunds
• Earned income tax credits (EITC), a refundable tax credit for low-income working individuals and families

Navigating the intricacies of Medicaid rules and regulations can be a daunting task, making the determination of Medicaid eligibility a challenging endeavor. To ensure a smooth and successful application process, it is imperative to seek the guidance of a skilled Medicaid planning attorney, such as those on our team, before submitting your Medicaid application. Should you need assistance, the Law Offices of Albert Goodwin are here for you. We are located in Midtown Manhattan, New York, NY. Call us at 212-233-1233 or email [email protected] to schedule a consultation.

How Income Affects Medicaid Eligibility

New York Medicaid has different income limits depending on the category of Medicaid and the size of the household. For non-MAGI Medicaid (used for the aged, blind, and disabled), the income limit in 2024 was approximately $1,732 per month for a single individual, with an additional $20 monthly disregard for unearned income.

If an individual's income exceeds the limit, they cannot qualify for Medicaid without using planning techniques. The most common technique for excess income is the pooled income trust, which allows the applicant to deposit excess monthly income into a trust account that pays the applicant's bills. Income deposited into the trust does not count for Medicaid eligibility purposes, allowing the applicant to qualify while still using the money for living expenses.

The Spend-Down Calculation

For individuals whose income exceeds the Medicaid limit, the spend-down works as follows:

1. Calculate the individual's total monthly income from all sources (Social Security, pension, rental income, etc.).
2. Subtract allowable disregards (the $20 unearned income disregard, certain medical expenses).
3. Subtract the Medicaid income limit.
4. The remainder is the "excess income" or "spend-down" amount that must be addressed each month.

The excess income can be addressed by paying medical expenses, contributing to a pooled income trust, or paying for services the individual would otherwise receive. The mechanics depend on the type of Medicaid (Community vs. Institutional) and the individual's specific circumstances.

The Income Spend-Down with a Pooled Income Trust

Most New York Medicaid applicants with excess income use the pooled income trust technique. The pooled trust is operated by a nonprofit organization under 42 U.S.C. § 1396p(d)(4)(C). The applicant joins the trust by signing a joinder agreement, deposits the excess income each month, and uses the trust funds to pay legitimate living expenses.

The pooled trust technique converts what would be a barrier to Medicaid eligibility into a manageable arrangement. The applicant qualifies for Medicaid while still using the excess income for their own benefit (rent, utilities, food, transportation, etc.). The pooled trust handles the bookkeeping and the relationship with Medicaid.

Different Rules for Institutional Medicaid

Institutional Medicaid (covering nursing home care) has different rules for income. The institutionalized individual must contribute all of their income (minus a small personal needs allowance and certain other allowed deductions) to the cost of care. The Medicaid program pays the difference between the individual's income and the actual cost of care.

For married couples, the community spouse is entitled to receive a portion of the couple's income up to the Minimum Monthly Maintenance Needs Allowance (MMMNA). The institutionalized spouse's income above what the community spouse needs (and after personal needs allowances) goes to the nursing home.

Veterans Benefits

The treatment of veterans benefits depends on the specific benefit:

• VA disability compensation is counted as income for Medicaid eligibility.
• VA pension is also counted.
• VA Aid and Attendance benefit (an enhanced pension for veterans who need help with daily activities) is generally not counted by Medicaid because it is intended to pay for the same care Medicaid would cover.
• Survivor benefits paid to veterans' families have varied treatment depending on the specific program.

Veterans with Medicaid eligibility questions should consult both a Medicaid attorney and a VA-accredited attorney to understand how the benefits interact.

The MAGI vs. Non-MAGI Distinction

Two different income calculation methods apply to different categories of Medicaid:

MAGI Medicaid. Uses Modified Adjusted Gross Income from federal tax returns. Applies to most working-age adults and families. There is no asset test for MAGI Medicaid. Income limits are higher than for non-MAGI Medicaid.

Non-MAGI Medicaid. Uses a separate income calculation for the aged, blind, and disabled. Includes both income and asset tests. Income limits are lower.

The relevant Medicaid category determines which income rules apply. Most clients with Social Security as their primary income source are in the non-MAGI category and face the stricter rules.

Tax Treatment of Income vs. Medicaid Treatment

An important point: how income is treated for federal income tax purposes is not the same as how it is treated for Medicaid purposes. A portion of Social Security benefits is non-taxable for federal income tax purposes, but the entire Social Security benefit is counted as income for Medicaid. Tax-free municipal bond interest is generally counted by Medicaid. Various other distinctions exist.

Medicaid applicants should not rely on tax treatment to predict Medicaid treatment. Each program has its own rules, and the rules sometimes conflict in counterintuitive ways.