Medicaid Long-Term Care Overview
The Medicaid Program is a joint federal and state government program that provides help in paying for medical services for individuals with limited assets and low income. Many people think of Medicaid benefits for disabled or low-income adults. Still, Medicaid also has a program that helps aging individuals who need long-term care (“ Medicaid for Long-Term Care ”).
To qualify for Medicaid generally, there are certain requirements, such as proof of U.S. citizenship and residency in the state of the application. Additional medical and financial requirements must be met to qualify for Medicaid for Long-Term Care.
Medicaid coverage for Long-Term Care services is set on the federal level. Still, each state has significant flexibility in how it chooses to implement Medicaid for Long Term Care. As a result, Medicaid rules vary considerably state-by-state. For example, states are required to offer nursing home services, but they may choose whether or not also to provide assisted living services. Not every long-term care facility can accept Medicaid as a form of payment.
To determine whether you qualify for Medicaid Benefits for Long-Term Care, your state must first evaluate whether you are medically in need of long-term care. Then your state will evaluate your income and assets to confirm you meet the financial eligibility requirements.
NOTE: Not all Nursing Homes accept Medicaid, and many have limited beds for Medicaid funding.
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A Medicaid nursing home is defined as an institution that receives government funding to provide skilled nursing to its nursing home residents. Nursing homes are different than Skilled Nursing Facilities (commonly referred to as SNF) in that Medicare does not typically pay for them, and nursing home residents must either qualify for Medicaid or private pay.
Many believe Medicare will cover the costs if they need long-term care services. However, Medicare will only pay for long-term care in certain circumstances and only if you meet certain requirements. For example, for Medicare to cover your nursing home stay, you must be hospitalized for medically necessary inpatient hospital care for at least three consecutive days, not counting the day of discharge, and be admitted to the nursing home within 30 days after the date of discharge from the hospital. Even then, Medicare will only cover your nursing home stay for a maximum of 100 days. Typically Medicare pays for skilled nursing facility or short-term rehabilitation care, but it does not cover long-term nursing home care.
Medicare’s coverage is even more limited if you do not require a nursing home stay but require long-term care services either at home or in an assisted living facility. If you are living at home, Medicare will cover some health care expenses, but eligibility requirements are strict, and typically it will only cover 4-10 hours of help per week. Medicare does not cover non-medical care services such as assisted living or non-medical home care.
Medicaid Services and Types of Care
Nursing Home Care Services: All states are required to cover nursing home care services for Medicaid recipients. Medicaid coverage for Long-Term Care will pay all nursing home costs (usually minus a monthly co-pay), which includes room, board, and all nursing and medical assistance care costs (also known as “skilled care” services). It is important to understand how Medicaid services work, as the average nursing home cost for a private room in the United States in 2017 was $8,121. The Center for Medicare & Medicaid Services also outlines personal care services (or “custodial services”), which are non-skilled services such as bathing, dressing, eating, getting in and out of bed, moving around, and using the bathroom. This is one of the main differences between Medicare and Medicaid, as Medicare does not cover the cost of personal care services except in specific circumstances (outlined above), but is designed for health care services. An individual must determine if the nursing home accepts Medicaid Long Term Care payments, as not every nursing facility does.
Click here for a list of nursing homes in your state that accept Medicaid.
Assisted Living: States are not required to allocate Medicaid funds to cover assisted living care services, but many do. Assisted living care services are defined differently by each state, so it is important to check with your particular state to see what type of services are considered assisted living services; States will often refer to “assisted living services” as residential care, adult foster care, personal home care, or supported living. Typically, assisted living services are for those who need assistance with everyday life but do not require the high, intensive level of care offered at a nursing home. Coverage for medication administration, medical assistance (of the type typically covered in a nursing home), chore and homemaker services and recreational activities varies by state. Medicaid does not cover room and board for recipients of assisted living services coverage. If an individual is living in an assisted living facility, the facility must be Medicaid Certified; Coverage of assisted living services are often provided through the state’s waiver programs, such as the Home and Community-Based Service program (outlined below), so it is important to check your state’s requirements for those programs.
To read more about the Assisted Living services offered in your state, visit your state Medicaid website.
Home & Community-Based Services (“HCBS”): An individual is considered “in the community” if they are living at home rather than in a nursing home, and they may be eligible for community-based services. Medicaid can pay for certain services (both skilled and personal) at home or in an assisted living facility if you qualify. The basic test is whether you would otherwise require the level of care provided in a hospital or nursing facility. However, eligibility standards are set by each state, so it is important to check your state’s guidelines. For example, even if you don’t require that level of care, you may still qualify after an independent medical assessment by the state.
The state has wide latitude in setting the scope of the HCBS program. For example, states can limit the geographic area in which they provide HCBS and target certain populations. States also set the venue where you receive these services. In some states, HCBS will cover services rendered at home, whereas others will cover services in an assisted living facility. The cost of room and board for HCBS recipients is never covered. In general, HCBS will cover the following services: case management, personal care services (custodial care), in-home healthcare, including nursing care and physical therapy, respite care service, adult day health services (companionship services, etc.), homemaker services (cooking, cleaning laundry, etc.) and meal delivery services.
To read more about the Home and Community-Based Services (HCBS) offered in your state, visit your state Medicaid website.
Medicaid Eligibility: Overview
Every state requires an applicant to receive a medical assessment by a doctor that certifies they need long-term care to qualify for the Medicaid program. Each state has its own standard for assessment. As part of the assessment, the medical specialist will determine the type of long-term care the person needs, whether it is nursing home care, assisted living, or if they are a candidate for home or community-based services. The need for long-term care is generally measured by the individual’s ability to perform the six activities of daily living (ADL), which include, but are not limited to, bathing, dressing, using the toilet, transferring to the bed or chair, caring for incontinence, and self-feeding.
You must meet certain financial requirements to qualify for Medicaid for Long-Term Care. Each state evaluates your monthly income and countable assets according to its own eligibility requirements, so it is important to check your state’s guidelines. The financial requirements vary depending on what type of service you require (for example, whether you are applying for coverage of long-term care in a nursing home or for coverage of another type of assisted living service, if available in your state). Additionally, monthly income and asset limits are different for single individuals and for those who are married. You can check the specific guidelines for your state here. It may also make sense to speak with an elder law attorney or Medicaid Planner if you don’t currently meet the Medicaid eligibility financial guidelines. You can learn more about that here.
Generally, if your income is above the set cap in an income-cap state, you cannot qualify for Medicaid for Long-Term Care. However, in these states, you may be able to put your excess income (that is above the cap) into a Qualified Income Trust or Miller Trust. This type of trust sets aside excess income to be used specifically for medical expenses such as paying a nursing home bill. Qualified Income Trusts or Miller Trusts allow you to meet the income eligibility requirements in your state despite having income above the cap.
In a medically needy state, an individual can qualify for Medicaid for Long-Term Care as long as their medical expenses exceed their monthly income and they meet the other eligibility requirements. Sometimes these states have income “limits,” but they still allow individuals to qualify even if their income exceeds the limit, as long as their medical costs exceed their income.
Income Eligibility for Single Individuals
As mentioned above, if an individual is in an income cap state, their income must be under the cap or they can put excess income into a special kind of trust. The state sets the income cap, so it is important to check the rules in your state, which you can do here. In most states, the income cap is set at $2,205 monthly.
In a medically needy state, an individual must pay all their income to their medical costs, and Medicaid for Long-Term Care will cover the remaining expense. Typically, they will be allowed to keep a small amount of their income as a personal allowance. The amount of this allowance is set by the state and ranges from anywhere between $50-$100 per month.
Income Eligibility for Married Couples
If you are married and seeking coverage from Medicaid Long-Term Care, you may be in one of two situations.
The first situation is if you and your spouse are entering a nursing home and seeking coverage. In that case, you must meet the same income eligibility requirements as a single individual, but the income limits you must meet might vary somewhat.
If instead, one spouse is entering the nursing home and applying for coverage and the other is not, the spouse that does not apply for coverage is called the “Community Spouse.”.
Initial eligibility rules: Initially, Medicaid only considers the income of the spouse who is entering the nursing home. The income of the other spouse (the Community Spouse) is not factored into the income assessment.
Post eligibility rules: Once a married person in the nursing home becomes eligible for coverage, the income eligibility rules change. The person in the nursing home can keep only a small amount of personal allowance (mentioned above). However, the spouse in the nursing home can shift some of their income to the Community Spouse. The Community Spouse is entitled to a “Minimum Monthly Maintenance Needs Allowance” (MMMNA), which is a number set by the state, ranging between $1,991 and $2,981. If the Community Spouse does not have an income that exceeds the state’s MMMNA, then the spouse in the nursing home can shift their income to the Community Spouse until that number is reached. Suppose both spouses rely heavily on the institutionalized spouse’s social security. In that case, it is very important to make sure you get the MMMNA calculation correct so that you can protect some income from high nursing home costs.
Each state sets a different limit on the number of assets an individual or married couple is allowed to have to qualify for Medicaid for Long-Term Care. However, not all assets are treated the same. Medicaid treats some assets as “noncountable,” which are excluded from your asset eligibility assessment, whereas others are “countable” assets, which will be included in your eligibility determination. Noncountable assets include items such as your primary residence, personal property, household belongings, burial plots, pre-paid funerals, and life insurance policies with a face value of less than $1,500 (or burial fund for the same amount if you don’t have a life insurance). Countable assets include any amount in your checking or savings account, stocks and bonds, and any residence other than your primary residence. s For a more comprehensive list of considered countable or noncountable assets, please visit here.
Asset Eligibility for Single Individuals
Single individuals applying for Medicaid for Long Term Care are allowed a maximum of $2,000 in countable assets. A single person can keep their primary residence, although the home’s value must fall below a state-set limit of between $560,000 and $840,000, depending on the state. Many states also require an “intent to return” in writing, stating your intent to return to your place of residence if you no longer require nursing home facility care.
Asset Eligibility for Married Couples
Unlike a state’s income assessment of a married couple, states will evaluate a married couple’s assets together. If both spouses are applying for coverage simultaneously, most states set the combined asset limit at $3,000. If, instead, one spouse is applying for coverage, the nursing home spouse is allowed to keep $2,000 in assets (the same as the rules for an individual). In that situation, the Community Spouse can keep a protected amount known as the “Community Spouse Resource Allowance” (CRSA). The federal government sets the maximum CRSA amount for 2022 is $137,400. Therefore, a couple can keep the amount of the CRSA + $2000.
Some states allow a Community Spouse to keep no more than 50% of the couple’s total joint countable assets (50% states), with a CRSA minimum of $27,480 and a maximum of $137,400. Other states allow the Community Spouse to keep 100% of the total countable assets, up to the maximum amount of $137,400 (100% states). You can review the state CSRA rules here.
Additionally, some states look at the couple’s assets on the date the spouse entered the nursing home, even if they applied for Medicaid months later (“snapshot” states). Other states, called “Valuation Upon Application States,” will evaluate the couple’s countable assets at the date of the application.
The home is not a countable asset as long as the Community Spouse still resides in the home. The Community Spouse can also keep automobiles, furniture, and other household appliances.
If an individual or married person does not meet their state’s asset eligibility requirements, they can reach the limit by “spending down.” Many spend-down strategies involve transforming a “countable asset” to a “noncountable asset.” Please click here to see a list of “spend down” strategies.
The Look-Back Period, Asset Transfers, and Gift Penalties
Medicaid does not allow an individual to transfer an asset for below market value to reduce their assets to meet the asset eligibility limit. To enforce this, Medicaid will look at the applicant’s financials during the previous five years (which is called the look-back period) to ensure no such “gift” has taken place. Suppose an applicant has transferred an asset for below market value (for example, transferred ownership of their house to their children) during the past five years. In that case, the Medicaid office will impose a penalty period before the applicant will be eligible for Medicaid for nursing care. The penalty period is determined by a computation that is set by the state. Generally, the larger the asset, the longer the penalty period will be.
Some gifts or transfers within the 5-year look-back period are considered valid and do not cause any delay in coverage. For example, an applicant may transfer an exempt asset, such as personal belongings or a car, to anyone during this time.
- Caregiver Child: an applicant may convey their home to an adult child who has been living in the home for two years before the applicant enters a nursing home, during which time the child provided the applicant with the care that allows the applicant to stay at home;
- Sibling: an applicant may convey their home to a sibling that already has an ownership interest in the home and has lived there for at least a year before the Medicaid application;
- Blind, disabled or minor child: an applicant may convey their home to a blind, disabled or minor child.
- Spouse: an applicant can transfer home to their Community Spouse as long as that spouse lives in the home;
- Blind, disabled or minor child: an applicant may convey their home to a blind, disabled or minor child.
Medicaid Estate Recovery
Upon the death of an individual whose Medicaid Long-Term Care is covered, the state must seek to recover all of the money it spent on behalf of the now-deceased Medicaid recipient from the recipient’s estate.
The amount a state can recover from an individual’s estate depends partially on how the state defines “estate.” Some states define it narrowly only to include assets in the deceased individual’s “probate estate,” which would exclude assets that pass by beneficiary designation (such as life insurance policy, annuity, IRA, joint bank account, jointly owned real estate or other property that passes by operation of law automatically to the surviving owner by right of survivorship). However, a state may choose to adopt an expanded definition of “estate,” which could include assets that would be conveyed to a survivor or heir in other more expansive ways.
If the nursing home spouse dies first, the state cannot file for estate recovery until after the surviving spouse dies. Many states will indeed pursue the deceased spouse’s estate once the Community Spouse dies.
If the Community Spouse dies first, it is possible the Community Spouse’s assets might transfer to the spouse who resides in the nursing home. If this happens, the nursing home spouse would immediately be disqualified from Medicaid.
The Partnership Program
The Partnership Program for Long-Term Health is a joint federal-state policy initiative to promote private long-term care insurance purchases. The program encourages the purchase of private long-term care insurance by providing an added benefit. The benefit is a dollar-for-dollar asset disregard or “spend down” protection. This means that if you receive a $100,000 benefit from a partnership-qualified insurance policy, Medicaid will disregard $100,000 of your assets when evaluating whether you qualify for Medicaid Long-Term Care.
How To Apply to a Medicaid Nursing Home
If you are confident you meet all the financial requirements of Medicaid Long-Term Care, then you will need to contact the nursing home you intend to move into and learn about their availability to provide skilled nursing care. It is also important to note that different facilities provide different services. For example, a facility might not cater to patients with Alzheimer’s disease because they do not have memory care capabilities, so you must ensure the facility can handle your needs. Suppose you do not meet the financial requirements, but you are close. In that case, an Elder Law Attorney or Medicaid Planner can help you become eligible and handle the application process on your behalf. Suppose you do not require help becoming eligible financially and confirm that you meet the level of care necessary to move into a facility. In that case, the next step is to contact your local Medicaid office and ask for an application. You can also apply online in many states. You can learn more about state-specific resources here.