Residential Care and Assisted Living Compendium: 2007. Family Supplementation

11/30/2007

Family members may be able and willing to help with room and board costs when the beneficiary is unable to pay them. States set their own rules governing family supplementation.

As presented in Table 1-12, 25 states reported that they allow family supplementation, 12 states do not allow supplementation, and eight states have no policy. The remaining states either do not cover services in residential care settings or did not report whether they have a policy on supplementation.

Since Medicaid does not pay for room and board in residential care settings, rules regarding supplementation in nursing facilities do not apply (i.e., families of nursing home residents may not supplement Medicaid payments, which cover room and board and services). Several states indicated that they permit supplementation to enable beneficiaries to upgrade to a private unit.

In states that allow supplementation, family members need to understand that the amount of the supplement is considered in determining financial eligibility for SSI. Federal SSI regulations contain provisions for treating unearned income during the eligibility determination process. Because a family contribution paid directly to an SSI beneficiary is counted as unearned income, supplementation can lead to a reduction in the SSI payment or the loss of SSI altogether, and with it, potentially Medicaid as well.

TABLE 1-12. Family Supplementation Policy

  Allow Supplementation     No Policy     Prohibit Supplementation  
Arizona
Colorado
Connecticut  
Florida
Georgia
Kansas
Idaho
Illinois
Iowa
Maine
Michigan
Minnesota
Missouri
Montana
Nevada
New Hampshire  
New Jersey
New Mexico
New York
North Carolina
North Dakota
Texas
Utah
Washington
Wisconsin
Alaska
District of Columbia  
Hawaii
Illinois
Indiana
Massachusetts
Mississippi
Wyoming
Delaware
Indiana
Maryland
Michigan
Nebraska
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina  
South Dakota
Vermont

If, however, the family contribution is paid directly to a RCF on the beneficiary’s behalf, it is treated differently, as an “in-kind” payment, and reduces the monthly SSI benefit by one-third or, if documented, by the actual amount of support provided if it is lower than one-third of the federal benefit. The maximum reduction is one-third even if the payment exceeds one-third of the SSI payment.

For example, a facility may have a room and board rate of $800, and because the SSI payment is not high enough to cover the charge, family members agree to help pay the cost. If the payment is made to the resident, it is considered unearned income and the federal SSI payment is reduced $1 for every $1 in unearned income, after a $20 per month exclusion. If the payment is made directly to the facility, the amount of the payment is considered “in-kind,” and the one-third reduction rule applies, that is, the federal benefit is reduced by one-third (or less if documented).

If the room and board rate is $800, the difference between that rate and the SSI benefit of $623 (in 2007) is $177. If the family pays $177 directly to the facility, then the individual’s SSI benefit is reduced by one-third of the SSI payment (i.e., $207). The family would then have to pay the facility an additional $207. The consequence of the reduction rule for in-kind payments, then, is that the family must increase its supplementation from $177 to $384.

Because the federal rule states that the SSI payment will be reduced by up to one-third, there is no limit on the amount of money that can be paid to a facility on behalf of an SSI beneficiary. If a family chooses, they could pay for room and board in a more expensive facility without jeopardizing an individual’s eligibility for SSI.

Family supplementation also has implications for Medicaid eligibility. Since Medicaid income and resource rules follow SSI rules, payment to a residential care setting would be considered in-kind income to the beneficiary. If the individual still receives SSI, and therefore remains a Medicaid beneficiary, there is no impact.31 Beneficiaries who are eligible through spend-down or the 300 percent of SSI special income level might be affected if the supplementation raises their income above the medically needy standard or 300 percent of SSI.

To prevent beneficiaries from losing Medicaid eligibility, states could amend their state plan, with approval from CMS, to exempt in-kind income that supports a person’s accommodations or services not covered by the Medicaid payment in residential care settings. Section 1902(r)(2) of the Social Security Act allows states to use less restrictive income and resource methodologies in determining eligibility for most Medicaid eligibility groups than are used by SSI. States can elect to disregard different kinds or greater amounts of income and/or resources than SSI, giving states more flexibility to design and operate their Medicaid programs.


31. Payments in 209(b) states might affect Medicaid eligibility since it is not linked to SSI eligibility.

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