Medicaid and Long Term Care for the Elderly

Page Reviewed / Updated - Jan. 2014

Read This First

 Medicaid can be very confusing. Keep the following information in mind when reading this page.

  • Medicaid refers to more than one program. On this webpage, we discuss Medicaid long term care for the elderly or disabled.  
  • Medicaid has different names in many states (e.g. Medi-Cal, MassHealth, TennCare, MaineCare).  
  • Medicaid long term care is provided either in an institution (such as a nursing home) or in the home or community in which case it is called "Home and Community Based Services" or HCBS.
  • Home and Community Based Services are also referred to as Waiver Funded Services, Medicaid Waivers or simply Waivers.
  • Each state has its own Waivers and they have unique names. For example, Ohio has "PASSPORT" for home care and the "Assisted Living Waiver" for care in assisted living.

Definitions

Medicaid - Medicaid Long Term Care is a jointly funded state and federal insurance program for low income seniors and disabled individuals. It provides medical care and support services. If a senior is financially and medically qualified, Medicaid will pay nearly all of his or her long term care costs.

Medicaid Waivers - Also called HCBS Waiver and 1915 Waivers, these are state specific Medicaid programs that provide care and support to individuals outside of nursing homes, usually at home, in assisted living or in adult day care environments. Unlike Medicaid nursing home care, Medicaid Waivers are not entitlements, these programs have enrollment caps and often waiting lists.

Cash and Counseling - Cash & Counseling is a specific type of Medicaid Waiver program available in many states. Although the phrase is somewhat dated, it is still used to describe a program in which the recipients receive funds for care and are given the flexibility to select their own care providers.  Sometimes family members can be "hired" as care providers, meaning they can be paid for the personal assistance they provide.

Medicaid's Eligibility Requirements

To be eligible for Medicaid long term care, one must be both financially qualified and have a medical need for care. Eligibility requirements are specific to the state and Medicaid program or waiver which means there are, quite literally, 100s of different sets of eligibility rules for Medicaid long term care services.  Having said that, there are some general rules which apply.

Medical Qualifications

The medical requirements for Medicaid long term care differ by state, but generally speaking, any person that requires skilled nursing, is mentally impaired with Alzheimer's/dementia or is unable to care for him or herself will qualify.  If skilled nursing is not required, then many Medicaid programs tie eligibility to the number of ADLs (activities of daily living) required by the individual, such as dressing, bathing, cooking etc.

Financial Qualifications

When determining eligibility for Medicaid long term care each state considers an individual's finances differently. However, in all states both one's income and their assets are consideration factors. It is important to recognize that even if one's income or assets exceed the following limits, with careful planning, individuals can still qualify for Medicaid.

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" or "spend-down" Medicaid. Income cap states set a hard income limit at 3 times the SSI payment amount.  For 2014, this limit is $2,163 a month.

Non-income cap states consider an applicant’s income relative to their cost of care. If it is determined that the applicant cannot afford their cost of care, then he or she will likely qualify or it will be required that they "spend-down" their income on their care costs to a certain level at which point the state's Medicaid program will cover the remaining cost of care.   It should be noted that often the family and the state disagree over whether the family can afford the cost of care.   

 In both Income Cap and Spend Down states, it is still possible to qualify if the applicant is "over-income" by working with Medicaid planning professional.

2014 Medicaid Income Qualification Type by State

Income Cap States

Spend-Down States

Alabama

Alaska

Arizona

Arkansas

Colorado

Delaware

Florida

Georgia

Idaho

Iowa

Kentucky

Louisiana

Mississippi

Nevada

New Jersey

New Mexico

Oklahoma

Oregon

South Carolina

South Dakota

Tennessee

Texas

Wyoming

California

Connecticut

Hawaii

Illinois

Indiana

Kansas

Maine

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Montana

Nebraska

New Hampshire

New York

North Carolina

North Dakota

Ohio

Pennsylvania

Rhode Island

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

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 for 2014 is from $1,000 to $15,000. Furthermore, past asset transfers for up to 5 years preceding the application date are considered.  Having said that there are a considerable number of exceptions made when determining what qualifies as "countable".  For example, the Medicaid applicant's home, vehicle, jewelry, clothing and furniture can all be considered "non-countable" or exempt assets.  

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.

Married couples can have considerably higher asset limits, but only if one spouse is not applying for Medicaid.  The non-applicant is referred to as the "community spouse" and in 2014, they are entitled to up to $117,240 in countable assets.

Persons whose assets exceed Medicaid countable limits should not automatically consider themselves ineligible. Continue reading for more information.

Other Qualifications

There are several other eligibility considerations and factors thought to impact eligibility which, in fact, do not.  Medicaid long term care services are available to individuals 65 and over, or younger if they are officially considered disabled.  Marital status does not directly impact eligibility but does so indirectly by  changing the income and asset limits.  One's veteran status has no impact on eligibility although there may be other assistance options available to veterans.

Qualifying and Applying for Medicaid

 Having monthly income or financial assets in excess of Medicaid's limits should not prevent families from considering Medicaid as a possible financial option.

Medicaid Planning Techniques

Applying for Medicaid or choosing when and how to apply is not as straight-forward as one would think and there are several reasons for this complexity. First, married couples can apply jointly or separately and how they choose to apply dramatically changes the financial eligibility requirements. Second, while there are hard definitions for income and assets, there is also consider wiggle room within those definitions and there are many Medicaid planning techniques which can be applied to improve the chances of being accepted.  

Qualifying 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 and 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 it is recommend one consult with a Medicaid Planning professional or an attorney if they are considering this option.

Qualifying 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 this limit is often 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 60 months 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 funeral trusts.

There are also other, more complicated techniques that help families qualify for Medicaid even if their assets are $50,000 or more beyond the limit.  For families in this situation, we strongly encourage them to consult with a Medicaid planner.  There is also a veterans' pension alternative to Medicaid available to US veterans with higher assets.  Compare Medicaid and veterans pensions here.

Qualifying One Spouse for Medicaid
Often times, one spouse will require care in a residential facility and the other remains healthy and living at home; the spouse living at home is known as the “community spouse”. Their income, if considered jointly, 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 contact a Medicaid planning professional.   

Working with a Medicaid Planner
As mentioned previously, the financial eligibility rules for Medicaid are very complex. There are approaches and strategies that help seniors gain eligibility.  There are also a variety of different professionals who can provide assistance, in addition to Medicaid planners, there are Area Agencies on Aging case managers and geriatric care managers who can provide assistance.

How To Apply

Seniors can apply for Medicaid in their states of residence by obtaining an application from their local Medicaid office.  Alternatively many states now allow candidates to apply online. 

Medicaid applications are processed within 45 days after receipt or in 90 days if a disability determination is necessary. However, a family should add several weeks to that figure in order to collect the necessary paperwork for the application process.

Medicaid Benefits and Services

The services covered by Medicaid vary from program to program and from state to state.  What follows are general Medicaid benefits which are typically available in most states.

 The Affordable Care Act / ObamaCare does not significantly impact Medicaid long term care benefits for the elderly.

Nursing Homes / Skilled Nursing

In all states, Medicaid pays for long term nursing home care, provided the facility is Medicaid certified.

 

Assisted Living / Senior Living Communities

The number of state Medicaid programs helping with assisted living is increasing and this trend looks to continue until it is available nationwide. As of 2013, in 41 states, Medicaid pays for some assisted living fees mostly by way of Medicaid Home and Community-Based Services Waivers.  Some waivers will pay only for care services in assisted living and other for care services and room and board.  Each state's policy and the specific Medicaid waivers which cover assisted living is available here.

Adult Day Care / Adult Day Health Care

Medicaid in all 50 states through Medicaid HCBS Waivers will cover adult day care and / or adult day health care for some beneficiaries.  Interestingly some states choose to only cover adult day care and not adult day health (medical) care and other states choose to do the opposite.  Still other states elect to cover either option.  Specific state policies and waivers are available here.

Home Health Care / Non-Medical Home Care

Medicaid, through HCBS Waivers will pay for home health care.  Many waivers also offer support for personal care (non-medical home care) as well as a variety of other chore services for in and around the home.  State by state information and waivers is available here.

 

Costs Associated with Medicaid and Applying for Medicaid

Once an individual has been accepted into the Medicaid program, generally speaking, there are no monthly payments; and co-pay amounts are non-existent or very minor.  However, applicants may incur some costs during the Medicaid application process if they elect to use certain types of assistance.  

There are Area Agencies on Aging that have case managers and benefits counselors who can help with the application process for no charge. There are also private Medicaid Planners who have a much stronger incentive to ensure a senior’s acceptance into the program. Private Medicaid planning fees are typically several thousand dollars.  It is worth noting that private Medicaid planners can very quickly pay for themselves if they are able to help a family retain some of their assets or get the candidate into the Medicaid program sooner as even one month of out-of-pocket long term care costs can greatly exceed any Medicaid planning fees.

Medicaid applicants should be aware of Medicaid Assistance Estate Recovery (MAER), more commonly referred to 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.