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Medicaid and Long Term Care for the Elderly
How to Qualify, Eligibility Requirements and Benefits
| Definition |
Qualifications |
Costs |
| Pros & Cons |
Benefit Types & Limits |
How to Apply |
| Overview of Medicaid | ||
- Medicaid has different names in different states (e.g. Medi-Cal, MassHealth, TennCare).
- Medicaid refers to more than one program. For this discussion we are referring Medicaid’s long term care services.
- Medicaid’s long term care services can be provided either in an institution, such as a nursing home, or in the home or community, where they are referred to as "Home and Community Based Services".
- Home and Community Based Services are also known as Waiver Funded Services, Medicaid Waivers or simply Waivers.
- Each state has its own Waiver programs and they have unique names. For example, Ohio has "PASSPORT" for home care and the "Assisted Living Waiver" for care in assisted living.
Eligibility Summary (Detailed Medicaid eligibility requirements)
To be eligible for Medicaid, one must be financially qualified; but to be eligible for Medicaid’s long term care services, one must also be medically qualified. Each state considers the following 3 factors for Medicaid’s long term care services:
1. Medical Necessity for Care – an individual is unable to care for him or herself and requires assistance with the activities of daily living or ongoing supervision.
2. Income – In some states, monthly income of the individual cannot exceed $2,022. In other states, his or her income can exceed that amount, provided that the cost of care exceeds the income.
3. Assets / Resources – "Countable Resources" limits, which exclude the car and home, vary from $1,000 to $8,000, but most commonly are $2,000.
If a senior’s financial assets exceed the Medicaid eligibility requirement, but his or her income does not cover long term care costs, he or she is considered to be in the "Medicaid Gap." In this situation, some seniors will "’spend down" their assets on their long term care costs (pay for their care costs out of pocket) until they become eligible.
Obtaining Medicaid and Medicaid Planning
Eligibility for Medicaid is very complex. It is determined differently by each state; and the rules change every year. The impact on the comfort of elderly, as well as the financial implications of not qualifying, can be devastating. For this reason, Medicaid Planners offer services to help families prepare their Medicaid applications to ensure the best possibility of acceptance into the program. Given that it can take 4 or more months to receive benefits, and the cost of care can be thousands of dollars every month, there is a strong incentive to use a Medicaid Planner.
Medicaid Planners serve another role in helping families who are "over asset" or "over income" to structure their financial resources to gain eligibility; this often referred to as asset preservation and one technique is to use pooled trusts. Many seniors and Medicaid officials seem to have fundamentally different views of Medicaid’s objective. Many seniors feel that they’ve worked their whole lives and paid into a system so that system would care for them in their later years. Medicaid officials view it as a program of last resort for the financially impoverished who cannot care for themselves or afford to have others care for them.
Medicaid Waivers
Once an individual is medically qualified they can choose to get a “Medicaid Waiver.” They “waive” their right to the institutional care for which they are qualified in order to live at home (or in the community) and receive care in those locations. These are called HCBS waivers, or Medicaid waivers, or just waivers. Medicaid officials like waivers because they help keep down the cost of care; and families like them because they allow their loved one to continue living at home or in greater comfort in Medicaid-contracted assisted living residence.
Medicaid Waivers and Cash and Counseling
Cash & Counseling is a Medicaid Waivers program available in many states. It allows recipients who are eligible to receive personal assistance services to choose their own home care agencies. In 15 states, family members can act as a “home care agency.” This means that a family member can receive payment for the personal assistance care he or she provides. Learn more about Cash and Counseling.
Skilled Nursing
In all states, Medicaid pays for most nursing home costs, provided the facility is Medicaid certified and the individual eligible.
Assisted Living
At the time of writing, in the following 25 states, Medicaid will pay for some senior’s assisted living fees by way of Medicaid Home and Community-Based Services Waivers. Be sure to check with your state Medicaid office to ensure this information is still valid in your state. The number of states offering assisted living waivers is increasing rapidly and will likely be available nationwide in the coming years.
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Adult Day Care
Medicaid, through Waivers, will pay for some adult day health care services,
provided the care center offers (and the individual requires) health care
instead of merely supervision.
In-Home Care
Medicaid pays for some in-home care services if the care provider is certified
and the individual requires health care, not supervision.
- In California, it is "Medi-Cal"
- In Massachusetts, it is "MassHealth"
- In Tennessee, it is "TennCare"
Medicaid Home and Community Based Services are also known as:
- Waiver Funded Services
- Waiver Programs
- Medicaid Waivers
- HCBS Waivers
- Waivers
Medicaid Income Limits
States use one of two approaches to determine if an individual meets their Medicaid income limits. There are income cap states which are said to have "categorically needy Medicaid" and non-income cap states which have "medically needy Medicaid".
Income cap states set a fixed income limit at 3 times the SSI payment amount. For 2012, this limit is $2,094 a month. The following states are income cap states: AL, AK, AZ, AR, CO, DE, FL, GA, ID, IA, KY, LA, MS, NV, NJ, NM, OK, OR, SC, SD, TN, TX and WY.
Non-income cap states consider an applicant’s income and their cost of care. If it is determined that the applicant cannot afford their cost of care, then he or she will likely qualify. It should be noted that often the family and the state disagree over whether the family can afford the cost of care.
Qualifying for Medicaid When One's Income Exceeds the Limit
When one's income exceeds Medicaid eligibility threshold, the excessive income can be allocated to a trust which then legally lowers their income level to meet the eligibility threshold. These trusts are referred to by several names including Income Cap Trusts, Miller Trusts or Pooled Income Trusts.
The process of creating or contributing to a trust is a complicated one; it is possible to disqualify oneself for Medicaid if not done correctly, therefore one should consult with a Medicaid Planning professional if they are considering this option.
Qualifying One Spouse for Medicaid
Often times, one spouse will require care in a residential facility the other remains healthy and living at home; the spouse living at home is known as the “community spouse”. Their income, if pooled, can disqualify the needy individual for Medicaid. However, it is possible to separate their incomes and allocate proportionally so that the needy individual qualifies for Medicaid and the community spouse maintains enough income to continue living independently. If done incorrectly, the community spouse may not have enough income to live on and the home could be forfeit to the state. For these reasons, it is strongly recommended that couples in this situation consult with Medicaid qualification expert.
Medicaid Asset Limits
Medicaid applicants' financial resources are also a major factor in eligibility. Resources can be referred to as "assets" or "countable assets." Most states' asset limit is $2,000 though the range is from $1,000 to $8,000. There are a considerable number of exceptions made when determining what qualifies as an asset. For example, the Medicaid applicant's home, vehicle, jewelry, clothing and furniture can all be considered "non-countable" or exempt assets.
Qualifying for Medicaid When One's Assets Exceed the Limit
It is quite rare for the total value of a Medicaid applicant's assets to be less than $2,000. Meeting the limit is a matter of structuring one's assets so they can be considered non-countable assets and / or placing excess assets into trusts. One cannot simply give away their excess assets as Medicaid looks into asset transfers as far back as 5 years prior to the application date.
How one structures their assets to gain Medicaid eligibility largely depends on the amount by which they exceed the asset limit. One simple and common technique when one exceeds the asset limit by less than $15,000 is to create a funeral trust. Given that funerals are inevitable, it is logical to allocate money in advance to cover the cost and by doing so it helps qualify for Medicaid. Learn more about establishing a funeral trust.
There are many other techniques that help families qualify for Medicaid even if their assets are $50,000 or more beyond the limit. Often times, when one spouse requires nursing home care and the other is healthy and living at home, preserving these assets is the only way to enable the healthy spouse to continue living in their home. For families in this situation, we strongly encourage them to consult with a Medicaid planner.
Working with a Professional to be Financially Eligible for Medicaid
As mentioned previously, the financial eligibility rules for Medicaid are very complex. There are approaches and strategies that help seniors gain eligibility. It is recommended that seniors consult with Medicaid experts prior to application. In addition to professional Medicaid planner, Area Agencies on Aging Case Managers and Geriatric Care Managers can provide assistance.
The Area Agencies on Aging have case managers and benefits counselors who can help with the application process for no charge. However, private Medicaid Planners have a much stronger incentive to ensure a senior’s acceptance into the program. Their fees are typically several thousand dollars, although they very quickly pay for themselves if they are able to help your family retain some assets or get you into the Medicaid program sooner. Even one month of out-of-pocket long term care costs can cover the Medicaid planning fees.
Medicaid applicants should be aware of Medicaid Assistance Estate Recovery (MAER), more commonly known as the Medicaid Death Tax. Should a Medicaid beneficiary have assets that were unavailable, for a variety of reasons, when the individual was receiving Medicaid benefits, the state may claim those assets after the individual passes away.
