Applicability

• Individual states decide how they will administer their Medicaid program. States may use one of a number of options when determining eligibility. As of 2010, Alabama, Arkansas, Colorado, Delaware, Idaho, Missouri, Nevada, New Mexico, South Carolina, South Dakota and Wyoming were "income cap" states.
  
  

Significance

• In an "income cap" state, the participant would otherwise be categorically eligible for Medicaid but for his or her income level. In these states, he or she may use an income level up to three times the benefit amount for a person living at home.
  
  

Income Trusts

• In states that are "income cap" states, if an applicant's income is above the "cap," he or she may be able to create an income cap trust to reduce the amount of income counted toward eligibility. A trust essentially holds money for the benefit of a beneficiary for use at a later time but the money cannot be accessed at the present time.