CurrentMontana Department of Public Health & Human ServicesPolicy N/A
Post-Eligibility Treatment of Income (PETI) for institutionalized Medicaid recipients
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Rules for applying an institutionalized individual's income, after allowable deductions, toward the cost of institutional care for aged, blind, and disabled Medicaid recipients in Montana; covers treatment of deductions, spousal/community allowances, medical expense deductions, and notice requirements.
Policy Summary
PayerMontana Department of Public Health & Human Services
PolicyPost-Eligibility Treatment of Income (PETI) for institutionalized Medicaid recipients
Policy CodePolicy N/A
Change TypeNo material changes
Effective DateJul 1, 2026
Last ReviewJul 1, 2026
Next Review Date
Key ActionSend notice to the institutionalized individual (and spouse if married) detailing applicable deductions and allow appeals; notify the facility of the client's cost of care liability.
SourceLink
POLICY UPDATE CHANGES
No material clinical or coverage changes in this revision.
$50Personal needs allowance per month
$65Maximum gross earned income exclusion
$4,067Max CSIMA (01/01/2026)
$2,705Basic needs standard (07/01/2026)
3 monthsMedical expense timing window
Allowable Deductions and Treatment of Income
Allowable deductions, rules, and limitations
Allowable deductions and rules when Medicaid contributes to the cost of institutional care (PETI):
Apply the institutionalized individual's gross monthly income minus allowable deductions toward cost of care; total deductions cannot exceed the individual's gross income. Blind/disabled work expenses are not used in PETI.
Income exclusions and basic allowances
- Gross earned income exclusion: up to $65 of gross earned income may be excluded.
- Personal needs allowance: $50 per month (or remaining income if less than $50).
- Veterans: in addition to the $50 personal needs allowance, allow up to $90/month of VA pension income as excluded; any VA pension amount over $90 is countable.
Spousal and family allowances (married individuals only)
- Community Spouse Income Maintenance Allowance (CSIMA): the lesser of $4,067 (effective 01/01/2026) minus the community spouse's total gross monthly income, OR a calculation of community spouse shelter expenses over the $811.50 basic shelter allowance (effective 07/01/2026) plus a $2,705 basic needs standard (effective 07/01/2026) minus the community spouse's total gross income. Changes must be reported within 10 days.
- Family maintenance allowance: permitted only for dependents (children, parents, siblings) living with the community spouse and claimable as tax dependents; HCBS waiver recipients or institutionalized family members are ineligible. Each additional dependent may receive up to one-third of the difference between the $2,705 basic needs standard (effective 07/01/2026) and the dependent's gross income.
Home maintenance allowance (unmarried individuals only)
ANY of the following
- Month of entry: individual entered the facility after the first day of the month (including entry from a hospital when hospital entry was from the community).
- Up to six months: individual intends to return home within six months of entering the nursing home; requires a physician statement confirming possible return within six months.
- Month of discharge: individual returns home before the last day of the month.
Incurred medical or remedial care expenses (medical expense deductions)
- Medical expenses (including health insurance and Medicare premiums where applicable) may be deducted if they meet timing and verification rules: incurred within the three months immediately preceding the institutional care Medicaid application or coverage request, or are current payments on older expenses; unpaid at application; recognized by State law; not payable by a third party; and not previously used to meet/reduce a spend-down or offset cost of care.
- Medicare Part B premiums must be entered as a medical expense for nursing home residents who receive Medicare but are not QMB or SLMB. Life insurance premiums are not deductible as medical expenses. Medical expenses incurred during an asset transfer penalty month are not allowed.
- Items included in Medicaid payment to a nursing facility (Medicaid-covered services) cannot be separately billed to the resident or deducted even if purchased elsewhere; services from non-participating providers are not allowable; providers have up to one year to enroll and bill. Medical expenses incurred after application must be reported within 10 days of knowledge and verified within the application/request processing period or within three months of coverage request date, whichever is later.
Court-ordered support
- Court-ordered child support actually paid may be deducted (see CMA 601-1).
- Court-ordered spousal support actually paid may be deducted (see CMA 601-1).
Shelter and utility rules for CSIMA
- Allowable shelter expenses include rent or mortgage (principal and interest), prorated property taxes and homeowner's insurance (notice must show prorated amount), condo/HOA fees, and utilities if paid separately.
- Utility treatment: use the SNAP Standard Utility Allowance (SUA) when community spouse is responsible for major heating/cooling; use the SNAP telephone allowance when not responsible for heating/cooling but has a telephone. Actual utility expenses are never used.
Family contribution and facility payments
- An additional amount paid directly to the facility to upgrade the client to a private room is not considered vendor/in-kind income for shelter; expenses paid directly to the residential facility are medical expenses.
Procedural and notice requirements
- When the institutionalized individual is married, both spouses must each receive a notice detailing the institutionalized spouse's applicable deductions and each may appeal the allowance determination. An unmarried individual or their authorized representative must receive the same notice.
- A notice must also be sent to the medical facility stating the client's cost of care liability, even when it is zero.
Limitations and exclusions
- Medical expenses incurred during an asset transfer penalty month are not allowable. Expenses previously used to meet a spend-down cannot be reused. Blind/disabled work expenses are excluded from PETI.
Operational parameters
- CSIMA maximum $4,067 (effective 01/01/2026); basic needs standard $2,705 and basic shelter allowance $811.50 effective 07/01/2026. Community spouse must report income and shelter changes within 10 days.
Notice, Appeals, and Administrative Actions
Documentation Required
Send required notices and allow appeals
When the institutionalized individual is married, send both spouses a written notice detailing the institutionalized spouse’s applicable deductions and informing them that each spouse may appeal the allowance determination. For an unmarried individual, send the same notice to the individual and/or their authorized representative. Also send a notice to the medical facility stating the client’s cost‑of‑care liability (including when the liability is zero).
- Both spouses must each receive the notice and have appeal rights when the institutionalized individual is married.
- Unmarried individuals or their authorized representatives must receive the same notice.
- A notice must be sent to the medical facility stating the client’s cost of care liability, even if it is zero.
Key Definitions
inv-03: PETI — Post-Eligibility Treatment of Income (definition)
DefinitionPost-Eligibility Treatment of Income (PETI): When Medicaid contributes to the cost of institutional care, the institutionalized individual's gross monthly income, less allowable deductions, must be applied to the cost of care (Step 2 of the institutional budget).
ScopeApplies to both married and unmarried institutionalized individuals; total deductions cannot exceed the individual's gross income. Blind/disabled work expenses are not used in PETI.
PurposeCalculates spend-down and the individual's liability to the facility when Medicaid is contributing to cost of care; a different method is used when Medicaid is not contributing.
inv-04: Home maintenance allowance (unmarried) — definition and circumstances for allowance equal to MNIL
DefinitionHome maintenance allowance (unmarried): an allowance equal to the Medically Needy Income Limit (MNIL) for one month allowed in specified circumstances to maintain a home while institutionalized.
When allowed — Month of EntryAllowed if the individual entered the facility after the first day of the month (including entry from a hospital stay if they entered the hospital from the community).
When allowed — Intent to ReturnAllowed for up to six months if the individual intends to return home/to the community within six months of entering the nursing home; requires a physician's statement confirming the possibility of return within six months.
When allowed — Month of DischargeAllowed in the month of discharge if the client returns home/to the community before the last day of the month.
inv-05: CSIMA — Community Spouse Income Maintenance Allowance definition and formula
DefinitionCommunity Spouse Income Maintenance Allowance (CSIMA): an amount to maintain the community spouse's income needs when the other spouse is institutionalized.
Primary formulaThe lesser of: (1) $4,067 (effective 01/01/2026) minus the community spouse's total gross monthly income; or (2) community spouse's shelter expenses above the $811.50 basic shelter allowance (effective 07/01/2026) plus $2,705 basic needs (effective 07/01/2026) minus the community spouse's total gross income.
Gross income treatmentTotal gross income includes all income from all sources (including gross SSI); most income deductions, exclusions, exemptions or disregards do not apply except narrow statutory exceptions (e.g., certain Native American income, tax stimulus payments).
Reporting requirementCommunity spouse must report changes in income or shelter expenses to the Department within ten (10) days of knowing of the change.
Policy Summary
PayerMontana Department of Public Health & Human Services
PolicyPost-Eligibility Treatment of Income (PETI) for institutionalized Medicaid recipients
Policy CodePolicy N/A
Change TypeNo material changes
Effective DateJul 1, 2026
Last ReviewJul 1, 2026
Next Review Date
Key ActionSend notice to the institutionalized individual (and spouse if married) detailing applicable deductions and allow appeals; notify the facility of the client's cost of care liability.
SourceLink
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