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Medicaid Case Study: No Deduction for Garnished Income



The Indiana Family and Social Services Administration (FSSA) considers an applicant's income and resources toward Medicaid eligibility. Household income includes earned income (such as wages from a job) and unearned income (such as Social Security). The income is the amount before taxes, not your take-home pay.


Recently, a nursing home resident named Lance Patterson applied for Medicaid to cover his long-term care. His only income was Social Security Disability Insurance (SSDI) benefits in the amount of $1,236. However, each month $730.80 of his income was garnished for child support arrearage. Only $502.60 was actually deposited into Lance's bank account.


Indiana FSSA found Lance eligible for Medicaid. When FSSA calculated Lance's total income, it counted the total SSDI benefits without regard to the garnishment. It notified Lance that he was responsible for paying $1,181 to the nursing home per month. Lance sought judicial review of FSSA's decision, arguing that the garnished portion should not have been included in determining his Medicaid liability (i.e. the amount he owes to the nursing home).


The circuit court ruled in favor of Lance, concluding that the garnished portion of his SSDI payment should be excluded. It ruled that Lance's nursing home costs should not be based on the total SSDI amount since the garnished portion was not income received by Lance.


FSSA appealed the circuit court ruling and the Indiana Court of Appeals reversed. It stated that FSSA's income calculation for determining patient liability includes all income, even income subject to garnishment.


Hoosiers must keep in mind that even garnished income is included in the consideration of an applicant's Medicaid eligibility. If your loved one is in a nursing home or you think a nursing home stay may be imminent, schedule an appointment with one of our experienced attorneys. We can answer your Medicaid eligibility questions and help you become eligible if you are not already.


Source: Indiana Family and Social Servs. Admin. v. Patterson, 2019 WL 237368 (Ind. App. Jan. 17, 2019)

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