Medicaid Planning: The Ins & Outs of MMMNA – Part One

Part of planning for a married Medicaid applicant is figuring the minimum monthly maintenance needs allowance, which is the minimum income allowance for the community (or well) spouse.  Medicaid law says that the income of the Medicaid applicant in excess of the limits must be used toward the cost of care. But if the applicant has a spouse, Medicaid, through the concept of the minimum monthly maintenance needs allowance (“MMMNA”), allows the community spouse to keep some or all of their income. 

Medicaid considers the gross income of the community spouse.  If the community spouse’s income is in excess of the MMMNA, then under the federal rules, 25% of the community spouse’s income must be used for cost of care. While New York is currently the only state that enforces that provision, we must be aware of the federal rules because it is probably only a matter of time before other states are assessing the 25%.

Now if the community spouse’s income is less than the MMMNA, then income from the applicant will be diverted to the community spouse to try to get the community spouse’s income up to the MMMNA.  If the community spouse’s income is still below the MMMNA, then assets needed to generate sufficient interest to fill the income up to the MMMNA are exempt. This is what we call the assets to income rule.

But there's a little more to it than that. The federal law says there’s a minimum and there’s a maximum MMMNA.  The states are allowed to set the MMMNA for the community spouse.  But the federal government says the states can’t set a MMMNA below $1938.75 (we will call it $1,939 to keep the math easy) or above $2,931. So your state’s MMMNA will be somewhere between those two numbers.

States vary in how they set the MMMNA.  About half of the states are what we call “max states.” They set the MMMNA at the maximum end of the range and say that the community spouse can keep up to $2,931 in gross monthly income.   Other states are “range states.”  That is the MMMNA can fall somewhere between both the maximum and minimum range the feds allow for the MMMNA.  In a range state, if the community spouse's income is less than $1,939, then the community spouse can take the institutionalized spouse’s income up to that minimum. And what happens if the community spouse’s income was more than the minimum but less than the maximum? Then the income of the community spouse would be the MMMNA. 

Let’s consider the following examples to show you what I mean.

I had a community spouse who had $1,000 of income. The applicant, the husband, was the predominant income earner, and the community spouse had $1,000 of income. In a max state, the law says the community spouse could keep the first $2,931, regardless of whom it came from. So if the wife had $1,000 of income, she would be able to keep the first $1,931 of the income of the husband, who’s in the nursing home. And if the husband didn’t have $1,931, then the assets to income rule would come into play. That means the law would say that, if the total income between the institutionalized spouse and the community spouse does not equal the MMMNA, then the community spouse can exempt additional assets needed to generate the income to get the community spouse up to the MMMNA. So again, if this is a max state, the threshold is $2,931. If the community spouse had $1,000 and the husband had $3,000 of income, the community spouse would be able to keep $1,931 of the applicant’s income.

In a range state, the community spouse is allowed to keep the minimum, but if the income is below $1,939, then the community spouse gets to take income from the institutionalized spouse to get to the $1,939 limit. For instance, if a community spouse’s income was $1,000, she could take $939 from the husband’s income. If she had income of $2,500, then her MMMNA would be $2,500 because her income is below the maximum and above the minimum MMMNA. And if a community spouse earns more than the maximum MMMNA, then 25% of that amount in excess would have to be contributed toward the cost of care. Those are the federal rules. But remember, as of now only New York applies the 25% rule. Most states allow the community spouse to keep any income in excess of the MMMNA.

We will continue to delve into MMMNA in future posts on this blog, to help you understand the nuances and work through the complexities of this issue.

David J. Zumpano, Esq, CPA, Co-founder Lawyers With Purpose, Founder and Senior Partner of Estate Planning Law Center