Alabama Medicaid Eligibility for Long Term Care: Income & Asset Limits

Last updated: June 23, 2021


Alabama Medicaid Definition

Medicaid is a wide-ranging health insurance program for low-income individuals of all ages. Jointly funded by the state and federal government, it provides health coverage for diverse groups of Alabama residents, including pregnant women, parents and caretaker relatives, adults with no dependent children, disabled individuals, and seniors. However, this page is focused strictly on Medicaid eligibility for Alabama elders, aged 65 and over, and specifically for long term care, whether that be at home, in a nursing home, or in an assisted living facility.

  The American Council on Aging now offers a free, quick and easy Medicaid eligibility test for seniors.


Income & Asset Limits for Eligibility

There are several different Medicaid long-term care programs for which Alabama seniors may be eligible. These programs have slightly different financial and medical (functional) eligibility requirements, as well as varying benefits. Further complicating eligibility are the facts that the requirements vary with marital status and that Alabama offers multiple pathways towards Medicaid eligibility.
1) Institutional / Nursing Home Medicaid – this is an entitlement program, which means anyone who meets the requirements will receive aid. Assistance is only provided in nursing home facilities.
2) Medicaid Waivers / Home and Community Based Services (HCBS) – with these programs, there are a limited number of enrollment slots. Therefore, wait lists may exist. Benefits are provided at home, adult day care, or in assisted living. (More about Medicaid Waivers here).
3) Regular Medicaid / Aged, Blind or Disabled – this is an entitlement program, meaning anyone who is eligible will receive services. Assistance is provided at home or adult day care.

The table below provides a quick reference to allow Alabama seniors to determine if they might be immediately eligible for long term care from a Medicaid program. Alternatively, one can take the Medicaid Eligibility Test. IMPORTANT, not meeting all the criteria below does not mean one is not eligible or cannot become eligible for Alabama Medicaid. More.

2021 Alabama Medicaid Long Term Care Eligibility for Seniors
Type of Medicaid Single Married (both spouses applying) Married (one spouse applying)
Income Limit Asset Limit Level of Care Required Income Limit Asset Limit Level of Care Required Income Limit Asset Limit Level of Care Required
Institutional / Nursing Home Medicaid $2,382 / month** $2,000 Nursing Home $4,764 / month (Each spouse is allowed up to $2,382 / month)** $4,000 (Each spouse is allowed up to $2,000) Nursing Home $2,382 / month for applicant** $2,000 for applicant & $130,380 for non-applicant Nursing Home
Medicaid Waivers / Home and Community Based Services $2,382 / month $2,000 Nursing Home $4,764 / month (Each spouse is allowed up to $2,382 / month) $4,000 (Each spouse is allowed up to $2,000) Nursing Home $2,382 / month for applicant $2,000 for applicant & $130,380 for non-applicant Nursing Home
Regular Medicaid / Aged Blind and Disabled $814 / month $2,000 None $1,211 / month $3,000 None $1,211 / month $3,000 None
What Defines “Income”

For Medicaid eligibility purposes, any income that a Medicaid applicant receives is counted. To clarify, this income can come from any source. Examples include employment wages, alimony payments, railroad retirement, black lung, pension payments, Social Security Disability Income, Social Security Income, IRA withdrawals, and stock dividends. Covid-19 stimulus checks (both previous and potential future payments) do not count as income and have no impact on eligibility for Medicaid.

When only one spouse of a married couple is applying for nursing home Medicaid or a HCBS Medicaid waiver, only the income of the applicant is counted. Said another way, the income of the non-applicant spouse is disregarded. For clarification purposes, it is important to mention that income is counted differently when one spouse of a married couple is applying for Aged, Blind and Disabled Medicaid. In this case, the income of both the applicant spouse and the non-applicant spouse is calculated towards the income eligibility of the applicant. (Learn more about how Medicaid counts income here.)

For married couples, with non-applicant spouses’ with insufficient income in which to live, there is a Minimum Monthly Maintenance Needs Allowance (MMMNA). This income allowance, a spousal impoverishment rule, applies in the case where one spouse is applying for nursing home Medicaid or a HCBS Medicaid Waiver. Basically, if the non-applicant spouse, also called a community spouse or well spouse, has income under $2,177.50 / month (this figure is effective 7/1/21 through 6/30/22), he or she is entitled to a portion of the applicant spouse’s income. If the well spouse has income equivalent to $2,177.50 / month or income in excess of this amount, the applicant spouse cannot allocate any money to the non-applicant spouse. To be clear, this rule does not apply when only one spouse of a married couple applies for regular state Medicaid.

**Note that regardless of the income limit for nursing home Medicaid, all of a beneficiary’s monthly income, minus a monthly personal needs allowance of approximately $30, and potentially a monthly maintenance needs allowance for a non-applicant spouse, must go towards the cost of nursing home care.


What Defines “Assets”

Countable assets include cash, stocks, bonds, investments, promissory notes, credit union, savings, and checking accounts, and real estate in which one does not reside. However, for Medicaid eligibility, there are many assets that are not counted. In other words, they are exempt. Exemptions include personal belongings, such as clothing, household furnishings, an automobile, burial funds (limited to $5,000 in 2021), the combined face value of life insurance policies (limited to $5,000 in 2021), and one’s primary home, given the Medicaid applicant lives in it, or expresses an “intent” to return to it, and his / her home equity interest is under $603,000 (in 2021). (Equity interest refers to the amount of the home’s value owned by the applicant). If the applicant has a spouse who lives in the home, it is exempt regardless of where the applicant lives or the home’s value.

For married couples, as of 2021, the community spouse (the spouse of a Medicaid nursing home or HCBS waiver applicant) can retain 50% of the couple’s joint assets, up to a maximum of $130,380, as the chart indicates above. That said, if the couple has assets valued at $28,076 or less, the non-applicant is entitled to $26,076 as a Community Spouse Resource Allowance (CSRA). (The remaining $2,000 is the amount the applicant spouse is able to retain). As with the income allowance rule, this asset allowance does not apply to married couples with one spouse applying for regular Medicaid.

It is vital that one does not give away assets or sell them for less than fair market value in an attempt to meet Medicaid’s asset limit. This is because Alabama has a Medicaid look-back period, which is a period of 60 months (5 years) that dates back from one’s Medicaid application date. During this time frame, Medicaid checks all past transfers to ensure no assets were sold or given away for less than they are worth. If one is found to be in violation of the look-back period, a penalty period of Medicaid ineligibility will ensue.

 For long-term care Medicaid eligibility, an applicant’s level of care need is also considered. For nursing home Medicaid and many HCBS Medicaid Waivers, a nursing facility level of care (NFLOC) is required. Furthermore, certain benefits may have additional eligibility requirements specific to the particular benefit. For example, in order for a Medicaid Waiver to cover the cost of home modifications, a needs assessment must demonstrate an applicant could benefit from this service.


Qualifying When Over the Limits

For Alabama elderly residents (65 and over), who do not meet the eligibility requirements in the table above, there are other ways to qualify for Medicaid.

1) Qualified Income Trusts (QIT’s) – QIT’s, also referred to as Miller Trusts or Qualifying Income Trusts, are for Medicaid applicants who are over the income limit, but still cannot afford to pay their cost of long-term care. This type of trust offers a way for Alabama residents over the Medicaid income limit to still qualify for long-term care Medicaid, as money deposited into a QIT does not count towards Medicaid’s income limit. In simple terms, one’s excess income (over the Medicaid limit) is directly deposited into a trust, in which a trustee is named, giving that individual legal control of the money. The account must be irreversible, meaning once it has been established, it cannot be changed or canceled, and must have the state of Alabama Medicaid authorities listed as the remainder beneficiary. (This means the state will receive the remaining funds in the account, up to the amount the state paid for care, after the death of the Medicaid recipient). In addition, the money in the account can only be used for very specific purposes, such as paying long term care services / medical expenses accrued by the Medicaid enrollee.

Unfortunately, Income Only Trusts do not assist one with extra assets in qualifying for Medicaid. Said another way, if one meets the income requirements for Medicaid eligibility, but not the asset requirement, the above option does not help one reduce their extra assets. However However, one can “spend down” assets by spending excess assets on non-countable ones, such as home modifications (addition of a first floor bedroom, wheelchair ramps, roll-in showers, pedestal sinks, and stair lifts), vehicle modifications (wheelchair lifts, adaptive control devices, and floor modifications to allow one to drive from a wheelchair), prepaying funeral and burial expenses, and paying off debt. Remember, Medicaid has a look-back period in which past assets are reviewed for a period of 60-months preceding one’s Medicaid application date. If one violates this rule by gifting assets or selling them under fair market value, there is a penalty in the form of Medicaid ineligibility.

2) Medicaid Planning – the majority of persons considering Medicaid are “over-income” or “over-asset” or both, but still cannot afford their cost of care.  For persons in this situation, Medicaid planning exists. By working with a Medicaid planning professional, families can employ a variety of strategies to help them become Medicaid eligible and protect their home from Medicaid’s estate recovery program. Read more or connect with a Medicaid planner.


Specific Alabama Medicaid Programs

1. Alabama Elderly and Disabled Waiver (E & D) – Assists seniors in living in the community by providing benefits that promote independent living, such as meal delivery, homemaker services, personal care assistance, and adult day health.  A wait list may exist.

2. Alabama Personal Choices (PC) – Allows elderly individuals receiving services via a HCBS Medicaid Waiver to self-direct their own care services. Participants are able to hire, train, manage, and even fire, their own caregivers, including family members.

3. Alabama SAIL Waiver – The State of Alabama Independent Living waiver is intended to delay or prevent nursing home placement, or assist with the transition of institutionalization back into the community, of disabled individuals and seniors who meet the medical qualification. Home modifications, assistive technology, personal assistance, and other benefits are available.

4. Alabama Community Transition Waiver (ACT) – Assists nursing home residents with transitioning back to living in their home or the home of a family member. Program participants must require a level of care consistent to that which is provided in a nursing home residence. Benefits include home modifications, respite care, personal emergency response systems, companionship services, and adult day care.


How to Apply for Alabama Medicaid

For more information about Medicaid or to apply for benefits, be that regular Medicaid, nursing home Medicaid, or a home and community based services Medicaid wavier, one can call Alabama Medicaid at 1-800-362-1504. One can also contact their local district Medicaid office for assistance. In addition, one’s local Area Agency on Aging office may be helpful. Unfortunately, there is not an online application for nursing home Medicaid and Medicaid programs for the elderly and disabled. Instead, an application should be submitted to one’s district Medicaid office.

For general information about applying for long term care Medicaid, click here.

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