Medicaid 101 - An Easy Guide to Benefits for Aging & Long Term Care

Page Reviewed / Updated - September 06, 2020

Introduction

Medicaid is an incredibly confusing subject. Yet it is subject that must be understand by anyone with a loved one who requires long term care. Fortunately, this article will simplify the subject so the reader will understand who the program helps, how it works and the locations in which care can be provided. One important note, this article will explain Medicaid as it relates to caring for the elderly on a long term basis. The Medicaid program also helps low income families, children, the disabled and expectant mothers. But these groups are not addressed in this article. To open, four important points that can eliminate a lot of the confusion associated with the program. 1) Medicaid should not be confused with Medicare. Medicare is health insurance for all Americans over 65. 2) Medicaid has different names in different states. It can be called MassHealth, Medi-Cal, Apple Health, TennCare and many other names. 3) Medicaid is a program for persons with limited financial resources. Not everyone is eligible. 4) Every state offers multiple Medicaid programs for the elderly and each program has its own eligibility requirements.

Understanding What Medicaid Programs Cover

Medicaid offers multiple programs in each state that provide assistance to the elderly. What makes them challenging to understand is the fact that some programs are specifically for one type of care and other programs offer multiple types of care in different locations. Since most families think of care by the location in which it is received, we address Medicaid benefits in this same format.

Nursing Home Care

In all states, Medicaid will pay for the complete cost of nursing home care through the state’s Regular Medicaid program. This includes all the care persons receive as well as their room costs and meals. However, to be eligible persons must 1) require nursing home level care and 2) have extremely limited income and very little financial assets. More information on eligibility follows. Medicaid nursing home care in an entitlement. This means if the person is eligible, the state must pay.

Assisted Living Care

In nearly all states (between 95% - 98%), Medicaid pays for care for persons in assisted living communities. However, Medicaid does not pay for room and board in assisted living. Typically, room and board charges make up between one-third and two-thirds of assisted living monthly fees. Furthermore, assisted living care is not an entitlement. It is paid for through Medicaid programs called Waivers. Each state has different Waivers and all of them have limited enrollments. Being eligible financially and medically does not guarantee one can participate. Many Waivers have long waiting lists (though some do not). See state-specific assisted living waivers and eligibility.

In-Home Care

In all states, Medicaid pays for in-home care for elderly persons who are medically and financially qualified. Furthermore, there are many Medicaid programs that cover in-home care. Medicaid State Plans and Waivers both offer home care as a benefit, but there are major differences between these two. Waivers, as mentioned before, are different in every state and limit enrollment. A person can be medically and financially qualified for a state’s waiver and still not receive assistance. However, State Plan Medicaid programs are entitlements. If one’s state offers personal care or home care under their state plan, and they are eligible, Medicaid must provide assistance. Unfortunately, not all states offer personal care under their State Plans. See state-specific Medicaid programs for home care.

Adult Day Care

In all states, Medicaid pays for adult day care, but not necessarily for everyone. Very similar to in-home care, adult day care is covered under limited enrollment Waivers and often covered under the State Plan. Waivers are not entitlement, so persons may be wait-listed and State Plans do not uniformly cover adult day care. Whether adult day care is available, and if your loved one is eligible, is a state-specific question. See state programs & rules.

Adult Foster Care

Medicaid coverage of adult foster care is not uniform across the 50 states. There is no consistent definition of what defines adult foster care. Some states do not differentiate assisted living from adult foster care, and other states do. However, one thing is consistent which is room and board in adult foster care is not an eligible expense. If a state Medicaid program will cover adult foster care, they will only pay for care expenses in that environment. (However, a state may offer other non-Medicaid assistance for room & board). Very similar to assisted living, when a state covers adult foster care, they do so through Medicaid Waivers. Waivers have limited number of slots available so wait lists are common. State Medicaid adult foster care policies.

Medicaid Benefits Quick Comparison Table

Medicaid Programs for the Elderly and Locations Where Care is Provided
	Nursing Home Care	Assisted Living	Home Care	Adult Foster Care	Adult Day Care
Nursing Home Medicaid	Yes	No	No	No	No
Medicaid Waivers (HCBS, 1915, etc.)	No	Most States	Yes	Some States	Yes
State Plan / Regular Medicaid	N/A	Some States	Yes	Some States	Most States

Understanding Medicaid Eligibility

There are several factors that make understanding Medicaid eligibility difficult. Eligibility rules, especially with regards to income and assets, are not the same for everyone. For example, rules differ for married or widowed applicants and they differ if only one spouse of a married couple is applying. Eligibility is also different for different Medicaid programs, even in the same state. Finally, most states offer multiple “pathways to eligibility” meaning there is more than one set of rules. If an applicant does not qualify by one set, they may still be able to qualify under a different set of rules.

 Most people who receive Medicaid assistance were not eligible when they began the application process. 

Readers should take comfort in knowing that most persons who eventually receive Medicaid assistance were not automatically eligible when they began considering the program. Readers should not assume if they don’t meet the black & white, financial eligibility criteria that follow, that they cannot become eligible for Medicaid. Think of Medicaid eligibility as a process in which multiple steps are taken in order to become eligible. Very often, 3rd party, professional assistance is retained to help with the approval process.

 Financially eligible rules differ slightly in every state. What follows are “rules of thumb” that should be sufficient to determine if one is automatically eligible or whether they will need assistance in becoming eligible.

A rule of thumb for most Medicaid programs is a single applicant is limited to monthly income of approximately $2,200. Additionally, they must have less than $2,000 in countable assets. Married couples are permitted considerably higher incomes levels and countable assets. This is especially true if one spouse will continue to live if their home while the other spouse enters residential care. Readers should be aware that Medicaid rules prevent applicants from simply giving away their excess income or assets to become eligible. However, there are many approaches and techniques that help persons who need care to become eligible. Follows are links to detailed explanations of several techniques. However, this list is, by no means, comprehensive. It is strongly recommended that families consult with a Medicaid planning professional to get a more definitive answer if their loved one is eligible and what can be done to help them become eligible. Check eligibility and learn more here.

• Use Funeral Trusts to Lower Assets
• Use Income Trusts to Reduce Income
• Transferring Assets or Income to Spouses
• Transferring a Home to an Adult Child Caregiver
• Using Life Care Agreement to Reduce Income or Assets