Arizona Medicaid Personal Needs Allowance (2026): What You Keep

The Arizona Medicaid Personal Needs Allowance is $149.10 a month in 2026: the money a nursing home resident keeps for personal spending after most of their income goes to the facility. That figure comes from Medicaid rules as Arizona applies them. The state's Medicaid agency, the Arizona Health Care Cost Containment System (AHCCCS), runs long-term care through ALTCS, and it sets the allowance at 15% of the federal Supplemental Security Income (SSI) benefit rate.1

In This Guide

• What the Allowance Is and Who Gets It
• Arizona's Figure vs the Federal Floor
• How the Money Is Held
• Where the Allowance Fits in Your Share of Cost
• What the Facility Cannot Bill to Your Allowance
• If You're a Veteran: The VA Pension Rule
• Frequently Asked Questions
• Learn More

What the Arizona Medicaid Personal Needs Allowance Is and Who Gets It

When someone lives in a nursing facility and Medicaid is paying for that care, almost all of their monthly income, from Social Security, a pension, or another source, is expected to go toward the cost of the facility. But the rules do not take everything. Every resident is allowed to keep a small, fixed monthly amount for their own use. That amount is the Personal Needs Allowance, and in Arizona it is $149.10 a month for 2026.1

The allowance exists because a nursing home resident still has personal expenses that the facility does not cover. Think of a haircut at the on-site salon, a phone plan, stamps and cards, clothing, snacks, a magazine subscription, or a small gift for a grandchild. The Personal Needs Allowance is the money set aside so a resident has some dignity and independence in those choices, rather than depending on family for every dollar.

Who gets it? In Arizona, the allowance applies to residents of a nursing facility whose long-term care is covered through ALTCS, the Arizona Long Term Care System, which is the part of AHCCCS that pays for nursing-facility and home-based long-term care. The figure discussed throughout this guide is the nursing-facility allowance. The $149.10 applies only for a month in which the resident lives in a long-term care medical facility for the entire calendar month. For any month in which the person lives, even for part of the month, in their own home or a home and community-based services (HCBS) setting, AHCCCS sets the allowance at 300% of the federal benefit rate instead, which is $2,982 for 2026.1

One point worth settling early: the allowance is not a benefit the state pays you. It is a slice of your own income that you are permitted to keep. The state is not handing you $149.10; it is declining to claim that portion of what you already receive.1

How Arizona's Medicaid Personal Needs Allowance Compares to the Federal Floor

Federal law sets a minimum Personal Needs Allowance, then leaves each state free to be more generous. Under 42 U.S.C. 1396a(q)(2), the floor is at least $30 a month for an institutionalized individual and at least $60 for an institutionalized couple when both spouses are aged, blind, or disabled and their incomes are considered available to each other. That $30 figure has been unchanged since the rule took effect in 1988.2

States may set their allowance anywhere at or above that floor, as Tennessee does at $70.2 Arizona ties its figure to a moving benchmark rather than a flat dollar amount: the state sets the nursing-facility Personal Needs Allowance at 15% of the SSI federal benefit rate. Because the SSI benefit rate rises with the annual cost-of-living adjustment, Arizona's allowance rises with it.4 For 2026 that calculation produces $149.10 a month.1

The practical takeaway is that Arizona sits well above the federal floor, and because its figure is pegged to the SSI benefit rate, you can expect it to tick upward most years rather than sitting frozen the way the $30 federal minimum has.1,2

How the Money Is Held: The Resident Trust Fund

Once the allowance is set aside, where does it actually sit? A resident has the right to manage their own money and can keep their personal funds in their own bank account if they prefer. Federal nursing-facility rules at 42 CFR 483.10(f)(10) are clear that a facility may not require a resident to hand personal funds over to it.5

Many families find it simpler to let the nursing home hold the money in what is usually called the resident trust fund, or resident trust account. When a resident chooses this and gives written authorization, the facility takes on a fiduciary duty and has to follow strict handling rules under the same federal regulation:5

• For a Medicaid resident, it must deposit any personal funds over $50 into an interest-bearing account that is separate from the facility's own operating accounts.5
• It cannot commingle resident money with facility money, and it has to keep a full, separate accounting of each resident's funds.
• It must give the resident a quarterly statement and make the record available on request, so a resident or family member can check the balance and see every deposit and withdrawal.
• It must notify a Medicaid resident when the account balance reaches $200 less than the SSI resource limit for one person, and warn that going over that limit, counting the resident's other countable resources, could cost them Medicaid or SSI eligibility.
• It has to secure the funds with a surety bond or an equivalent protection.
• When a resident is discharged, evicted, or dies, the facility must turn over the remaining balance and a final accounting within 30 days: to the resident, or after a death to the person or the probate court handling the estate.

The reason to know these rules is simple: this is your family member's money, and you are entitled to see how it is being handled. Ask for the quarterly statement, and if something looks off, you have every right to question it.5

Where the Allowance Fits in Your Share of Cost

To see why the allowance matters, it helps to understand what happens to the rest of a resident's income. When Medicaid pays for nursing-facility care, the resident is expected to contribute most of their monthly income toward that care. In Arizona this contribution is called the share of cost, and it is worked out through a deduction process. The Personal Needs Allowance is the first and most familiar of those deductions.2

Here is the order in plain terms. The state starts with your total monthly income. It subtracts your $149.10 Personal Needs Allowance, which you keep. It subtracts certain other allowed amounts, such as a monthly income allowance for a spouse still living at home and premiums you pay for health insurance like Medicare. Whatever is left is your share of cost, and that amount goes to the nursing facility each month. Medicaid then pays the facility the difference between your share and what the care actually costs.1,2

Two Arizona-specific wrinkles are worth flagging. First, Arizona is an income-cap state: under the ALTCS gross income test, monthly income must not exceed $2,982 in 2026, which is 300% of the SSI federal benefit rate. Someone whose income is above that line is not automatically shut out. AHCCCS says an Income-Only Trust, sometimes called a Miller trust or income-cap trust, can let them qualify when eligibility is determined under that 300% gross income test; the trust can only be funded with the applicant's income. AHCCCS also says the trust cannot help when the Net Income Test is used, so ask the ALTCS eligibility worker which test applies before setting one up.1

Second, if the resident is married and a spouse remains at home, some of the resident's income may be diverted to that community spouse rather than the facility, through a community spouse monthly income allowance. AHCCCS deducts that allowance only when the resident actually gives the monthly amount to the spouse. Those spousal protections sit alongside the resident's Personal Needs Allowance, not instead of it; the dollar figures behind them are covered in our guide to Arizona Medicaid spousal impoverishment rules.1

What the Facility Must Provide and Can't Bill to Your Allowance

A common worry is that the nursing home will nickel-and-dime the allowance away with charges for everyday care items. Federal rules guard against exactly this. Under 42 CFR 483.10(f)(11)(i), a set of routine items and services is already included in the daily rate that Medicare or Medicaid pays the facility. During a covered stay, the facility must not charge the resident for them, which means they cannot be billed against the Personal Needs Allowance.6

The regulation lists seven protected categories:6

• Nursing services, food and nutrition services, and an activities program.
• Room and bed maintenance.
• Routine personal hygiene items and services, such as a comb, brush, bath soap, razor and shaving cream, toothbrush and toothpaste, denture adhesive and cleaner, moisturizing lotion, towels and washcloths, and over-the-counter drugs.
• Hair and nail hygiene services, bathing assistance, incontinence care and supplies, and basic personal laundry.
• Medically-related social services.
• Hospice services the resident has elected, when paid for under the Medicare hospice benefit or by Medicaid.

So the allowance is meant for genuinely personal, discretionary things a resident chooses, not for the basic care and daily necessities the facility is already paid to provide. The bar is not absolute. A facility may charge a resident's funds for items outside the covered rate, such as a phone, a television, personal clothing, reading matter, cosmetic and grooming services beyond what Medicaid or Medicare pays for, privately hired aides, or a private room that isn't therapeutically required. It may do so only if the resident requested the item, the item isn't needed to meet the goals of the care plan, the facility said beforehand there would be a charge, and Medicare or Medicaid isn't paying for it.6 If you ever see a charge to the trust account for something on the covered list, or for an item nobody asked for, that is a billing error worth challenging. You can raise it with the facility, and if it is not resolved, the Arizona Long-Term Care Ombudsman Program investigates and resolves complaints made by or on behalf of nursing home residents.7

If You're a Veteran: The $90 VA Pension Rule

A veteran receiving a VA pension faces a specific rule when they enter a nursing home on Medicaid. Under 38 U.S.C. 5503(d)(2), when a veteran who has neither a spouse nor a child is covered by Medicaid for nursing-facility services, the Department of Veterans Affairs (VA) reduces the pension to no more than $90 a month for any period after the month of admission.3 VA's own regulation, 38 CFR 3.551(i), words the start differently: the cap applies for any period after the month in which the Medicaid payments begin. When Medicaid is approved months after admission, those are different months, so confirm with VA which month the reduction starts from rather than working out a figure yourself. If VA fails to make the reduction on time, the veteran is not liable to repay the excess, unless the delay came from willfully concealing the information VA needed.3

At first glance that sounds like a loss, but the second half of the rule works in the resident's favor. The same federal law says the Medicaid payment to the nursing facility may not be reduced by any of the pension the veteran is allowed to keep. In practical terms, the retained $90 is not offset against what Medicaid pays the home.3

What that statute does not decide is whether the $90 comes on top of the state Personal Needs Allowance or takes its place. That is set by state rule, and states answer it both ways: some substitute the capped pension for the state allowance, others leave the resident holding both.3 So we can't tell you that a single, childless veteran on ALTCS ends up with the $149.10 allowance and the $90 pension together, and you shouldn't assume it.1 Ask the Arizona Long Term Care System eligibility worker how Arizona treats the capped pension, or check the share-of-cost notice, before planning around a number.

This $90 cap reaches a veteran with neither a spouse nor a child on Medicaid nursing-facility care, and the same rule applies to a surviving spouse with no child and to a surviving child entitled to pension. A veteran with a spouse or a dependent child is treated differently, so if there is a family situation involved, it is worth confirming the details with a VA-accredited representative before assuming the cap applies.3

The cap is specific to the kind of facility, too, and that part is easy to read past. The same subsection defines which nursing facilities it covers, at 38 U.S.C. 5503(d)(1)(B), and that definition leaves out a state home for which the VA makes per diem payments for nursing home care. A single, childless veteran whose Medicaid-covered care is in a state veterans home receiving those VA per diem payments is not subject to the $90 cap, and it should not be applied to that stay. Ask the home's business office whether the VA pays a per diem for your family member's nursing home care before treating $90 as the number.3

Learn More

Find personalized help understanding the Arizona Medicaid Personal Needs Allowance at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.