Applying for MedicaidApplying for Medicaid

One of the biggest challenges people face when looking to apply for Medicaid, is the seemingly unending minutiae of terms and expressions related to the application process.

In this article, I hope to break down some of the more common terms to help you better understand their meanings and relevance.


This refers to any and all resources which are considered in the Medicaid application process and which may, or may not preclude the applicant from being financially eligible (and pursuant to individual state regulations).

Excludable Assets

This is also known as Non-accountable Assets or Exempt assets. These are assets which do not factor into the equation in determining financial eligibility. Examples of excludable assets include irrevocable trusts, burial plots and spousal exemptions.


This refers to the transfer of funds within the State’s 5 year look back period, which is deemed to be at less than fair market value, or in a manner that would suggest a divestment for the sole purpose of achieving eligibility under the cap. This is referred to as a ‘gifting’ issue, which is tantamount to misappropriation and will cause a penalty.

Gift Penalty

A penalty refers to a period of Medicaid ineligibility due to the funds which were misappropriated.


This refers to any available funds which are received on a continual (typically monthly) basis, which impacts financial eligibility. Typical income may include things like social security, pensions and alimony.

Monthly Maintenance Needs Allowance

This refers to a specific (minimum) amount of money which Medicaid determines is necessary for a living spouse to survive on in the community. If the spouse’s income is below this MMNA, then the shortfall is supplemented with the institutionalized spouse’s income (and those funds, which are otherwise designated for the facility, are no longer available to them).

Penalty Divisor Rate

This is the rate used to tabulate the duration of the penalty period for any Medicaid deferment due to misappropriation of funds/income. The actual calculation reflects the amount that was gifted, divided by the average costs of nursing care in that particular area.

Personal Needs Allowance (PNA)

This refers to the specially allocated funds reserved for the resident once they have achieved Medicaid eligibility. These funds are managed by the resident and the social worker and are typically spent on personal effects and discretionary purchases.

Prepaid Irrevocable Funeral Trust

This refers to an irrevocable trust which is established by the applicant for the sole purpose of paying for their funeral. Irrevocable, refers to the reality that this trust cannot be altered, or dissolved. As a result, it is de-facto considered to be spent already and is not factored into the criteria for determining financial eligibility, nor is it considered to be an inappropriate form of spending down. Therefore, this is often used as a technique to qualify for Medicaid in the event that one’s assets are in excess of the State requirement.

Qualified Income Trust (QIT)

This is also known as a “Miller’s Trust.” This is a special trust that is established to help the applicant meet their Medicaid eligibility criteria, when their monthly income amount exceeds the state minimum threshold (assuming they are financially eligible in every other respect, save for their monthly income). Therefore, the trust allows them to place the surplus amount in the dedicated account until they meet the income cap.

For example, the State of New Jersey allows a monthly income of $2,199.00. Now suppose an applicant earns $4,000.00 every month, they would be ineligible by $1801.00, which would therefore need to be assigned to this special trust in order to bring them within the allowable limit. The money in this account is not considered to be a Medicaid determining asset and is not regarded as income. The QIT money is then designated to the Medicaid provider to help defray the cost of care.

Spend Down

This refers to the process of divesting oneself of one’s assets in order to achieve financial eligibility under Medicaid guidelines (the criteria varies from State to State and only certain methods are allowed)

Judah Gutwein, LNHA, is the Director of Admissions, Administration, Marketing, Social Media for Regency Nursing and Post-acute Rehabilitation Centers, NJ. The Regency organization has become synonymous with the best in senior healthcare and has garnered a well deserved reputation for its unsurpassed commitment to its patients and residents. The Regency Nursing and Rehabilitation Centers and Facilities throughout New Jersey have achieved numerous industry ‘gold standard’ benchmarks an have received accolades from all corners of the HealthCare community.


  1. Leon daniels September 11, 2015 Reply

    Trying to learn something

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