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18.5.2 Trust Income Follow the specific terms of the trust as to which spouse is the payee and what percentage of the income belongs to him or her. If the percentage is unspecified, consider half the payment to belong to each spouse. If any trust income goes to dependent family members, attribute it to whom it is assigned; if it is not assigned to a specific family member, divide it equally between those who receive it. This page last updated in Release Number: 08-01 Release Date: 02/01/2008 Effective Date: 02/01/2008 18.6 Spousal Impoverishment Income Allocation 18.6.1 Spousal Impoverishment Income Allocation Introduction After an institutionalized person is found eligible, they may allocate some of their income to the community spouse and any dependent family members who live with the community spouse. Dependent family members are defined as follows: • Children under the age of 18, of either parent • Children of any age, of either parent, who are claimed as tax dependents under the Internal Revenue Code (IRC) • Siblings of either the institutionalized person or the community spouse who are claimed as tax dependents under the IRC • Parents of either the institutionalized person or the community spouse who are claimed as tax dependents under the IRC Income that is allocated to the community spouse must be given (or made available) to the community spouse each month for it to be allowed as a post-eligibility income deduction for the institutionalized person. Income that is allocated to a dependent family member does not have to be given to the dependent family member. Note Income allocated to the community spouse is countable income for the community spouse if they apply for health care. The institutionalized person must decide how much income to allocate to their community spouse. They may allocate an amount that brings the community spouse’s income up to the maximum allocation (see SECTION 18.6.2 COMMUNITY SPOUSE INCOME ALLOCATION) or they may choose to allocate a lesser amount. Since the institutionalized person may have medical costs that are not covered by Medicaid, they may need to keep some income rather than allocating the maximum allowable amount. Example 1 Finella is in a nursing home and open for Institutional Medicaid. Her husband Teddy lives in the community. Finella’s monthly income is $500. She incurs $80 in noncovered medical expenses each month. She decides to give $365 to Teddy, keeping only her $55 personal needs allowance (see SECTION 39.4.3 LTC POST-ELIGIBILITY ALLOWANCES) and $80 to pay for her medical expenses (see SECTION 27.7.7 MEDICAL OR REMEDIAL EXPENSES AND PAYMENTS FOR NONCOVERED SERVICES). These post-eligibility income deductions and allowances reduce her nursing home patient liability amount to $0.