Watch Your Language: Income

Orange City Iowa Estate Planning

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If you thought the IRS was hard on your income, look at how Medicaid treats it.

The Medicaid definition of "income" comes from federal law and reads as follows: Income is "[a]nything a person receives either in cash or in kind that can be used to meet the person’s basic needs of food, clothing, or shelter." [Read More]

The Medicaid definition of “income” comes from federal law and reads as follows:

Income is “[a]nything a person receives either in cash or in kind that can be used to meet the person’s basic needs of food, clothing, or shelter.”

It includes wages, salaries, pensions, and IRA withdrawals. It also counts passive income like interest, dividends, and rent received.

It includes all of your monthly Social Security payment PLUS the Medicare premium that is automatically withheld from that payment.

It counts gifts and inheritances. Life insurance. Prizes.

It even includes the total amount of any regular annuity payments, including the portion that the IRS treats as return of principal rather than taxable income.

If you receive a payment regularly, it’s going to count as income, and the Medicaid rules say you’ll have to pay that income toward your nursing home bill.

Unless you benefit from one of the exceptions built into the eligibility rules, that is.

Those exceptions are where Medicaid planning and nursing home planning become critical. Don’t let the distinction between the Medicaid definition and the IRS definition catch you off guard. Call (712) 737-3885 to schedule your Mutual Interview today, and let us help you address your financial stress.

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