What Can an Income Diversion Trust Pay For in New Mexico?
New Mexico's income diversion trust rule (8.281.510.11(C) NMAC) doesn't list monthly payments. The monthly amounts come from the state's general nursing-facility rules: after a personal needs allowance, any community spouse or family allowance, and health premiums and non-covered medical costs, the remainder (the "medical care credit") is paid directly to the facility. Every item below is cited to HCA's own published rules; where HCA says nothing about an item, this page says so instead of filling the gap. This guide is informational only and is not legal or financial advice.
Income goes into a New Mexico Income Diversion Trust each month, and the trustee may pay it out only for the purposes HCA allows. Paying for anything else can put eligibility at risk. Here is the list, with the HCA source for each item.
What HCA's rules allow
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Personal needs allowance
$97 a month.
Source: HCA Eligibility Pamphlet (effective January 1, 2026)
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Community spouse allowance
The community spouse monthly income allowance, deducted only to the extent the income is actually contributed to the spouse.
Source: 8.281.500.22 NMAC
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Family members
An allowance for each eligible family member, equal to one-third of the maintenance standard minus the family member's own income.
Source: 8.281.500.22 NMAC
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Children, when there is no spouse
An allowance for each child of up to the current TANF standard of need.
Source: 8.281.500.22 NMAC
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Health insurance and medical costs
Medicare and other health insurance premiums, deductibles or coinsurance, and necessary medical or remedial care not covered by Medicaid, subject to reasonable limits.
Source: 8.281.500.22 NMAC
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Court-ordered support
The full amount of court-ordered child or spousal support.
Source: 8.281.500.22 NMAC
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Medical care credit to the facility
The remaining income, which the resident pays directly to the institution.
Source: 8.281.500.22 NMAC
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Burial, at death
Upon the beneficiary's death, the trustee may pay burial or cremation expenses up to the amount then authorized under Medicaid law, to the extent other resources aren't designated for them.
Source: 8.281.510.11(C) NMAC
The order payments are made in
For a married nursing-facility resident, New Mexico applies the deductions in order: the resident's personal needs allowance, the community spouse allowance, an excess shelter allowance, family allowances, then health insurance premiums and non-covered medical expenses (8.281.500.22 NMAC). The trust rule itself sets no order.
Trustee and bank fees
New Mexico's income diversion trust rule says nothing about trustee or bank fees.
What the trust can't be used for
Only distributions to the person, or to a third party on their behalf, that could be used for the person's food or shelter count as available income (8.281.510.11(C) NMAC). Expenses for cosmetic or elective procedures (unless prescribed) and for care denied coverage as not medically necessary are not allowed as deductions (8.281.500.22 NMAC).
Timing, and money left over
The rule contemplates income accumulating in the trust and sets no monthly payout deadline. The medical care credit is determined prospectively, month by month (8.281.500.22 NMAC).
Keeping the monthly record
The trustee is the one who has to show that the trust paid only these items. A month-by-month record of every deposit and every payment, checked against the bank statement, is what makes that easy to show when HCA asks.
Related: who can be the trustee in New Mexico, what happens to the money at death, and the Miller Trust trustee guide for how the monthly cycle works in every state.
Trust not open yet? The account comes first
None of these payments can start until the trust account exists, and most branches have never opened one. Free one-pager: the questions to ask before you drive to a branch, emailed now. Then 4 more short emails over the next 10 days — then we stop.