State Residential Care and Assisted Living Policy: 2004. Family Supplementation

03/31/2005

Family members may be able and willing to help with room and board costs when the beneficiary is unable to pay them. As presented in Table 1-12, 21 states reported that they allow family supplementation, and nine states have not set a policy on this issue. Twelve states do not allow supplementation compared to fourteen in 2002 and eight in 2000. The remaining states either do not cover services in residential care settings or did not report whether they have a policy on supplementation.

Allow Supplementation No Policy Prohibit Supplementation
TABLE 1-12. Family Supplementation Policy
Arizona
Colorado
Florida
Georgia
Kansas
Idaho
Illinois
Iowa
Maine
Michigan
Minnesota  
Missouri
Montana
Nevada
New Jersey
New Mexico
New York
North Carolina  
North Dakota
Texas
Utah
Wisconsin
Alaska
District of Columbia  
Hawaii
Indiana
Massachusetts
Mississippi
New Hampshire
Wyoming
Connecticut  
Delaware
Indiana
Maryland
Nebraska
Oregon
Pennsylvania
Rhode Island
South Carolina  
South Dakota
Vermont
Washington

States set their own rules governing family supplementation. Since Medicaid does not pay for room and board in residential care settings, rules regarding supplementation in nursing facilities do not apply (e.g., families of nursing home residents may not supplement Medicaid payments, which cover room and board and services). Several states indicated that supplementation is permitted to allow beneficiaries to upgrade to a private unit.

While supplementation is not prohibited, it is considered in determining eligibility for SSI. Federal SSI regulations contain provisions for treating unearned income during the eligibility determination process. A family contribution paid directly to an SSI beneficiary is counted as unearned income. Consequently, supplementation can lead to a reduction in the SSI payment or the loss of SSI altogether, and with it, potentially Medicaid as well.

If, however, the family contribution is paid directly to a residential care facility 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, 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 (i.e., 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 $564 is $236. If the family pays $236 directly to the facility, then the individual's SSI benefit is reduced by one-third ($188) to $376. The family would then have to pay to the facility an additional $188. The consequence of the one-third reduction, then, is that the family must increase its supplementation from $236 to $424.

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

However, states that provide SSI supplements may choose to set a limit on in-kind payments. Florida, for example, limits the amount families may contribute to twice the amount of the combined SSI payment and state supplement, which is $643. Thus, families or other third parties can provide up to $1,284 directly to the facility, and the beneficiary will still receive a federal payment of $376 plus a $79 state supplement, and remain eligible for Medicaid. However, the state reduces the state supplement dollar for dollar for any payment above $1,284.

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.32 Beneficiaries who are eligible through spend-down or the 300 percent special income level might be affected if the supplementation raises their income above the medically needy income standard or the 300 percent level.

To prevent beneficiaries from losing Medicaid eligibility, states could explore submitting a state plan amendment 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 such less restrictive income and resource methodologies in determining eligibility for most Medicaid eligibility groups than are used by the cash assistance programs, such as SSI. States can elect to disregard different kinds or greater amounts of income and/or resources than the cash assistance programs, giving states more flexibility to design and operate their Medicaid programs.33

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