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Aged, Blind and Disabled Manual Section: Institutional Medicaid Policy Manual Number: 125.020 Chapter: Post-Eligibility Treatment of Income

July 1, 2026 Division of TennCare 4 iii. Court-Ordered Bankruptcy Bankruptcy is a legal procedure by which a debtor seeks relief from all or part of his debt. When a debtor, who has regular income, files a petition through a bankruptcy court, he may propose a plan to repay his creditors over a period of time, usually three to five years. The debtor must begin making plan payments to the trustee within 30 days after filing the bankruptcy case, even if the plan has not yet been approved by the court. Payments are made directly to the trustee or through payroll deduction. Payments made by an institutionalized individual as a part of a repayment plan may be deducted when determining patient liability until the individual is released from all dischargeable debts provided for by the plan. iv. Court-Ordered Child Support Payments A child support payment is a payment from a parent to or for the child to meet the child’s needs for food and shelter. In order to be allowed as an expense, child support must be court-ordered. When an individual verifies that he is paying court-ordered child support for a child who is not living in his household, the amount actually paid, up to the full court-ordered obligation is deducted as a mandatory expense. A child support arrearage payment is a payment that was past due, but not paid in a timely manner for the appropriate period. The arrearage is being paid to comply with an unfulfilled past obligation to support the child. If the individual is making a payment that includes both current support and an amount applied toward arrears, the entire amount may be allowed as a deduction, as long as the arrears were also part of the court-ordered support order when incurred. A deduction for court-ordered child support is not allowed for the same child for whom a DIMA is allowed in the post-eligibility budget. v. Court-Ordered Alimony Payments Alimony is a payment for a spouse or former spouse under a divorce or separation instrument. Alimony expenses do not include voluntary payments. The payments must be in cash, including checks and money orders, to be considered alimony. Alimony is an expense to the payer of the alimony and is allowed when alimony is paid. When an individual verifies that he is paying court-ordered alimony to a spouse or former spouse, the amount actually paid, up to the full court-ordered obligation is deducted as a mandatory expense. A deduction for court-ordered alimony is not allowed for the same spouse for whom a CSIMA is allowed in the post-eligibility budget.