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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 non-medical 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 Waivers,1915 Waivers & Demonstration Waivers, these are state-specific programs that provide care and support to individuals outside of nursing homes, usually at home, in assisted living or in adult day care. 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 program available in many states. The phrase, though dated, 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. A more modern and accurate phrase is "consumer directed care". In many consumer-directed programs, family members can be "hired" as care providers, meaning they can be paid for the personal assistance they provide.
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, the Medicaid program or waiver, and one's age group. Therefore, there are hundreds of different sets of eligibility rules for Medicaid long term care services throughout the USA. Having said that, there are some general rules which apply.
The medical requirements for Medicaid long term care differ significantly by state. Generally speaking, any person that requires ongoing skilled nursing care, is mentally impaired with Alzheimer's/dementia or is unable to care for him or herself will qualify. If skilled nursing care is not required, then many Medicaid programs link eligibility to the number of ADLs (activities of daily living) with which an individual requires assistance, such as dressing, bathing, cooking etc. Most states require a "nursing home level of care", but they define that level of care differently.
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 for elderly applicants. It is important to recognize that even if one's income or assets exceeds these limits, with careful planning, many 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 also called the Federal Benefit Rate. In 2017, this limit is $2,205 a month.
Non-income cap / medically needy 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. The state ascertains if the individual can afford their cost of care by looking at the difference between their monthly income and their monthly care costs. If the candidate has less than $500 - $1,000 leftover (depending on the state) after paying their care expenses, they will likely qualify. In Medicaid-speak, this is referred to as the Medically Needy Income Limit or MNIL.
2017 Medicaid Income Qualification Type by State
Income Cap States
Medicaid Asset Limits
Medicaid applicants' financial resources are also a major factor in eligibility. Resources are also referred to as "assets" and "countable assets." Most states' asset limit is $2,000 though the range for 2017 is between $1,000 to $15,000. Furthermore, past asset transfers for up to 5 years preceding the application date are considered, this is called the Look-Back Period. 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 their 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". In 2017, in most states, the community spouse is permitted up to $120,900 in countable assets. More on joint assets.
Persons whose assets exceed Medicaid countable limits should not automatically consider themselves ineligible. Read the Qualifying section below for more information.
There are several other eligibility considerations and factors often thought to impact eligibility when, in fact, they 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.
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 their financial eligibility requirements. Second, while there are hard definitions for income and assets, there is also considerable 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 Income Exceeds the Limit
When one's income exceeds Medicaid eligibility threshold; the excessive income can be allocated to a trust thereby legally lowering 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 recommended one consult with a Medicaid Planning professional or an attorney if they are considering this approach.
Qualifying When Assets Exceed the Limit
It is rare for the total value of a Medicaid applicant's assets to be less than $2,000 (most states' limit in 2017). 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 $100,000 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 requires care in a residential facility and the other remains healthy and lives 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.
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. Re-applying for Medicaid in a different state, either for oneself or for a family member is complicated. Medicaid does not transfer from state to state, read more here.
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.
In all states, Medicaid pays for long term nursing home care, provided the facility is Medicaid certified.
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 early 2017, in 45 states, Medicaid pays for some assisted living fees mostly by way of Medicaid Home and Community-Based Services Waivers. To be clear, Medicaid will not pay for room and board or rent in assisted living communities. However, there are other programs open to Medicaid beneficiaries which can help. In addition, there are assisted living-like programs that may not be called assisted living but provide a very similar experience. Read each state's assisted living policy and specific Medicaid waivers here. Often positioned as an alternative to assisted living or nursing home care, adult foster care is covered by Medicaid in many states. Read states’ adult foster care policies here.
Medicaid in all 50 states through Medicaid HCBS Waivers and some regular Medicaid programs 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 reverse. Still other states elect to cover both options. Specific state policies and waivers are available here.
Medicaid, through HCBS Waivers and some regular Medicaid "personal care assistance" programs 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.
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. In most cases, the asset which is claimed, is the home in which the Medicaid enrollee was residing. In some cases, by working with a planning professional, this action can be avoided. Learn more about Medicaid planning.