Income Too High for a Medicaid Waiver? Options by State (2026)

If your parent's income is too high for a Medicaid waiver that would pay for care at home or in assisted living, the nursing-home fix you keep reading about may not be the answer. That's a hard thing to hear when you've finally found a plan that keeps Mom at home. But being over the limit often isn't the end. States handle an over-income waiver applicant in four different ways, and once you know which one your state uses, you know exactly what to ask its waiver agency.

In This Guide

• Why a Waiver Doesn't Follow the Nursing-Home Rule
• Income Too High for a Medicaid Waiver? The Four Ways States Handle It
• Approach 1: A Miller Trust Works for the Waiver Too
• Approach 2: No Spend-Down Into the Waiver
• Approach 3: A Second Test Above the Limit
• Approach 4: A Pooled Income Trust for Care at Home
• What Your Parent Keeps to Live on at Home
• Assisted Living: The Waiver Pays for Care, Not Room and Board
• What to Ask When Income Is Too High for a Medicaid Waiver
• Frequently Asked Questions

Why a Waiver Doesn't Follow the Nursing-Home Rule

You've probably already read that a Miller trust or a spend-down solves an income problem. For a nursing home, that's often true, and our guide to what to do when income is too high for nursing home Medicaid explains how both of those work. A waiver is a different door, though, and it has its own rules.

The Medicaid waivers this guide is about are Home and Community-Based Services waiver programs, usually called HCBS waivers. The federal rule behind the waiver eligibility group, 42 CFR 435.217, lets a state choose to cover people living in the community who would qualify for Medicaid if they were in an institution, who would otherwise need the level of care a hospital or nursing facility provides, and who receive waiver services. The Centers for Medicare & Medicaid Services (CMS) guide to this group says the group has no income test of its own. Instead, a state names the eligibility group or groups each waiver draws from, and your parent's finances are judged as if your parent lived in an institution.6

When a state uses the special income level for a waiver, only your parent's own income is compared with that limit, even if a spouse lives at home.6 The special income level group is optional for each state, and federal matching funds for it are available only when income before deductions is no more than 300% of the SSI benefit rate.7 In 2026, 300% of the SSI rate is $2,982 a month. Your state's own published limit is the one that applies, though, and it doesn't always read $2,982: Idaho lists $3,002 a month for home and community-based services.2

Federal sources do tie the Miller trust to waivers. An HHS primer on Medicaid home and community services says that when the waiver authority was created in 1981, states were allowed to extend the 300 percent option to waiver applicants, and that in states that limit higher-income people to that option, people with income above it may still qualify by diverting income into a Miller trust. In the waiver application each state files with CMS, the state has to say whether it is a Miller Trust State.1

Income Too High for a Medicaid Waiver? The Four Ways States Handle It

This is where it helps to know your state's rule before you pay anyone to draft a trust. We sorted the states we researched into four groups, based on each state's published rules. They're examples, not a complete list, and your state may not fit neatly into one.

Approach 1: A Miller Trust Works for the Waiver Too

In these states, a qualified income trust (QIT, also called a Miller trust) is written into the rules for waiver services, not only for nursing homes. If your state is one of them, the trust mechanics in our nursing-home income guide apply to home care too. The differences are in the details.

Indiana

Under Indiana rule 405 IAC 2-3-29, people in nursing homes or receiving home and community-based waiver services whose income is over the special income level (300% of the maximum SSI benefit) must create a Miller trust. Indiana's Medicaid agency says on its Miller trust page that anyone over that level won't be eligible without a valid trust. Each month, an Indiana Miller trust must receive at least the amount of income above the special income level, and its money must be held in its own account.8 See our guide to Indiana's waivers.

Kentucky

The Kentucky Department for Medicaid Services says in its QIT notice that a QIT lets someone whose income is over the standard become eligible when nursing facility or waiver services are needed. Know this before you budget: income in a Kentucky QIT isn't counted for eligibility, but it is counted when the state works out how much your parent pays toward services.9 More in our guide to Kentucky's waivers.

Tennessee

TennCare's Medicaid Income Cap is $2,982 a month in 2026. A person seeking nursing-facility care, TennCare CHOICES home and community-based services, or ECF CHOICES whose gross income is above the cap must set up a QIT to become income-eligible, and any income left outside the trust must itself be at or under the cap. Like Kentucky, Tennessee still counts the trust income when it figures your parent's share of the cost of home and community-based care.10 Our Tennessee Miller trust guide walks through the setup.

Texas

The Texas special income limit is $2,982 a month in 2026, and it applies to both nursing-facility and waiver eligibility. The Texas Health and Human Services Commission (HHSC) tests countable income, not gross income, so work out what counts before you assume a trust is needed. The Texas HHSC handbook says a QIT "can overcome" the limit for institutional or waiver services. A QIT isn't available to people in Community Attendant Services who are income ineligible, and it settles only the income test, not requirements like countable resources or medical necessity.2 See Texas waivers.

New Jersey

New Jersey Medicaid requires a QIT for an applicant whose income is above 300% of the SSI rate and who needs an institutional level of care, to get Managed Long Term Services and Supports (MLTSS). New Jersey's QIT page says the route covers people in a nursing facility, an assisted living facility or their own home.11 More in our guide to New Jersey Medicaid income limits.

Alabama: A Lower Limit for Some Waivers

The Alabama Medicaid Agency sets its limit for nursing-facility care and the Alabama Elderly and Disabled Waiver at $2,982 a month in 2026, and income above it can go into a QIT. Don't assume that figure governs every Alabama waiver, though. Alabama rule 560-X-25-.10 sets a far lower limit, the SSI federal benefit rate plus the $20 general disregard, for certain Alabama waiver recipients who qualify for Medicaid only because they need and receive waiver services.12 See Alabama waivers.

Approach 2: No Spend-Down Into the Waiver

This is the hardest answer to hear, so it's best to hear it early. In some states, a waiver's income limit is a line that medical bills can't get your parent under. In Michigan and Missouri, a spend-down that might work for a nursing home won't open the waiver.

Michigan

For the MI Choice Waiver, the Michigan Department of Health and Human Services (MDHHS) eligibility manual (BEM 106) applies a gross countable income limit of 300% of the SSI rate, $2,982 a month in 2026, and says income eligibility can't be established with a patient-pay amount or by meeting a deductible. So a MI Choice applicant whose gross countable income is above $2,982 a month can't spend down to qualify for the waiver. The no-spend-down rule applies to MI Choice only: Michigan's nursing-home Medicaid keeps a separate Group 2 (medically needy) path, so don't read the waiver answer as the nursing-home answer.12 Our MI Choice guide covers the rest of the program.

Missouri

Missouri's home and community-based (HCB) income standard is absolute. Per the Missouri Department of Social Services eligibility manual, the state compares only your parent's own gross income with the HCB maximum, and individuals can't spend down to become eligible under HCB criteria. If income is above the maximum, the state looks instead at the regular MO HealthNet for the Aged, Blind and Disabled spenddown. There is one trust exception. Income placed in a valid qualified income trust is left out of the HCB income test, but the Missouri Department of Health and Senior Services HCBS manual limits QIT use to nursing facility care or the Aged and Disabled Waiver.13 See Missouri waivers.

Approach 3: A Second Test Above the Limit

Some states don't stop at the special income level. They run a second calculation that can still bring an over-income applicant in, which is welcome news if you'd been bracing for a flat no.

Washington

Under Washington's rule (WAC 182-515-1508), income above the special income level can still qualify for waiver services authorized by Home and Community Services (HCS) at the Washington State Department of Social and Health Services (DSHS); the DSHS long-term care manual calls this route "Mega COPES." If a Washington applicant isn't eligible under a categorically needy program and income is above the special income level, Washington subtracts medically needy disregards, the average monthly nursing facility state rate, health insurance premiums other than Medicare, and outstanding medical bills spread over a 12-month certification period. If the income left after those Washington deductions is at or under the one-person medically needy income level, the applicant can still be income-eligible for a Washington HCS waiver. Two cautions apply. Washington's above-the-limit route doesn't apply to waivers run by the Developmental Disabilities Administration, whose income limit stops at the special income level. And a person who qualifies for a Washington HCS waiver this way pays toward the cost of care and room and board.14 See Washington waivers.

Minnesota

The Minnesota Elderly Waiver serves people 65 or older who need a nursing-home level of care but choose to live in the community. The Elderly Waiver's income limit is the special income standard, 300% of the SSI rate, but the state's eligibility manual says a person whose gross income is above that standard may still be eligible. For a Minnesota Elderly Waiver applicant above the special income standard with no spouse at home, Minnesota runs a community income calculation that may produce a medical spenddown, which can be met with the cost of the long-term care services themselves. For a Minnesota Elderly Waiver applicant above the standard who has a spouse at home, Minnesota uses a different calculation, the LTC income calculation.15 See Minnesota waivers.

Approach 4: A Pooled Income Trust for Care at Home

A pooled income trust is for a parent who is disabled, and it works differently from a Miller trust. Federal law at 42 U.S.C. 1396p(d)(4)(C) allows a pooled special needs trust run by a nonprofit association. Each person has a separate account, the accounts are pooled for investment, and they must be set up solely for disabled individuals. When the beneficiary of a pooled special needs trust dies, any money the trust doesn't keep goes to repay the state for the Medicaid it paid.10

Age matters here. The pooled-trust exception itself has no age limit, but the Social Security Administration warns in its program manual that putting resources into a trust for someone 65 or older may result in a transfer penalty.10 That's because the federal transfer-penalty exception for a trust set up solely for a disabled person's benefit covers only someone under 65. The penalty isn't automatic in every case, since another exception may apply on the facts, and the state Medicaid agency applies the Medicaid rule, so ask before any money moves.16 Our guide to special needs and pooled trusts goes deeper on the trust itself.

New York

New York has spelled out how this works for income. A New York Pooled Income Trust lets a certified-disabled New Yorker of any age whose income is above the Community Medicaid limit qualify for community-based long-term care without giving up the excess income as a spend-down. Income your parent places in a New York Pooled Income Trust during the same month it's received is left out of New York's community Medicaid income test, and under New York State Department of Health guidance, the local New York social services district reviews the pooled trust's activity at each renewal to confirm the income was deposited. For New York Medicaid, money a pooled income trust pays directly to someone else for your parent's benefit doesn't count as income; money it pays straight to your parent does. Your parent needs a disability certification: an existing Social Security disability determination counts, and otherwise New York makes its own.17

One big exception for married couples. New York's consumer notice on pooled trusts says that if your eligibility is determined under spousal impoverishment budgeting with post-eligibility rules, such as when you're enrolled in a Medicaid Managed Long Term Care plan, any income placed in a trust will count. So a married New York parent budgeted that way doesn't get the pooled trust's income break.17 Our New York pooled income trust guide covers the paperwork.

What Your Parent Keeps to Live on at Home

This is the question that keeps a lot of families up at night: if Mom's income goes toward her care, what's left for rent, groceries and the electric bill? At home, the answer comes from a different rule than in a nursing home.

In a nursing home, federal law guarantees a personal needs allowance of at least $30 a month, and a state may set it higher.4 Our personal needs allowance guide explains that floor.

For a parent who qualifies through the waiver eligibility group described above, the federal rule at 42 CFR 435.726 (or a parallel rule in some states) has the state deduct an amount for your parent's own maintenance needs before it figures what your parent pays toward waiver services. The state also deducts amounts for a spouse or family at home and for medical costs no one else pays, such as health insurance premiums. The state sets the maintenance amount at any level, as long as it's based on a reasonable assessment of need and stays under a maximum the state sets. In its waiver application, CMS lists choices that include the SSI standard, the medically needy income standard, the special income level, a fixed dollar amount, or a formula.3 Because each state picks its own amount, the number to ask for is your state's waiver maintenance allowance.

If your parent is married and the spouse stays home, federal law treats a waiver participant as an "institutionalized spouse" for the spousal impoverishment rules through September 30, 2027. So the spousal impoverishment protections for the spouse at home can apply to a waiver household during that period.3

Assisted Living: The Waiver Pays for Care, Not Room and Board

If assisted living is the plan, budget for this before anything else. Section 1915(c)(1) of the Social Security Act lets waivers pay for home or community-based services "other than room and board," and 42 CFR 441.310(a)(2) bars federal matching funds for room and board except in two narrow cases: respite care in a state-approved facility that isn't a private residence, and, in waivers that let personal caregivers provide services, the share of rent and food for an unrelated caregiver who lives in the same household, though not when your parent lives in the caregiver's own home or one the caregiver owns or leases. So a Medicaid waiver may pay for the personal care and supportive services an assisted living resident receives, but the resident remains responsible for the room-and-board portion of the cost.5

In practice, that means the housing and meals part of the monthly bill comes from your parent's own income, family help, or another source. Our guides to paying for assisted living and assisted living by state can help you plan that part.

What to Ask When Income Is Too High for a Medicaid Waiver

You don't have to work all of this out alone. Find your state's waiver agency through our guide to HCBS waivers by state, then ask these questions, ideally in writing:

1. Which waiver fits my parent's care needs, and what income limit does it use?
2. If my parent's income is over that limit, does this waiver accept a Miller trust, allow a spend-down, or use a separate test for income above the limit?
3. If a trust is accepted, does the income in the trust still count toward what my parent pays each month?
4. What is the waiver's maintenance allowance, the amount my parent keeps for living costs at home?
5. If my parent is married, how do the spousal rules apply?
6. Is there a waiting list, and what happens while my parent is on it?

If a trust is the answer, an elder law attorney who knows your state's waiver rules can draft it so it matches what the state expects.

Learn More

Chat with Brevy's care navigator about your parent's waiver income question 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.