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

Last updated: February 07, 2022

 

Alabama Medicaid Definition

Medicaid is a health insurance program for low-income individuals of all ages. Jointly funded by the state and federal government, it provides coverage for diverse groups of Alabama residents. This includes pregnant women, parents and caretaker relatives, adults with no dependent children, disabled individuals, and seniors. This page, however, is focused strictly on Medicaid eligibility for Alabama elders, aged 65 and over. Specifically, long term care is covered. In addition to nursing home care and assisted living services, Alabama Medicaid pays for many non-medical support services that help frail seniors remain living in their homes.

The Alabama Medicaid Agency administers the state’s Medicaid programs.

  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 Medicaid long-term care programs for which Alabama seniors may be eligible. These programs have varying financial and medical (functional) eligibility requirements, as well as 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; Anyone who meets the requirements will receive assistance. Benefits are provided in nursing home facilities.

2) Medicaid Waivers / Home and Community Based Services (HCBS) – These are not entitlement programs; There are a limited number of enrollment slots and wait lists may exist. Intended to prevent and delay the need for nursing home admissions, benefits are provided at home, adult day care, or in assisted living. More about Medicaid Waivers here.

3) Regular Medicaid / Medicaid for Elderly and Disabled (E&D) – This is an entitlement program; Anyone who is eligible will receive services. Various long-term care benefits, such as personal care assistance or adult day care, may be available.

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 does not mean one is ineligible or cannot become eligible for AL Medicaid. More.

2022 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 $2,523 / month* $2,000 Nursing Home $5,046 / month ($2,523 / month per spouse)* $4,000 ($2,000 per spouse) Nursing Home $2,523 / month for applicant* $2,000 for applicant & $137,400 for non-applicant Nursing Home
Medicaid Waivers / Home and Community Based Services $2,523 / month† $2,000 Nursing Home $5,046 / month ($2,523 / month per spouse)† $4,000 ($2,000 per spouse) Nursing Home $2,523 / month for applicant† $2,000 for applicant & $137,400 for non-applicant Nursing Home
Regular Medicaid / Medicaid for Elderly and Disabled $861 / month $2,000 Help with ADLs $1,281 / month $3,000 Help with ADLs $1,281 / month $3,000 Help with ADLs
*All of a beneficiary’s monthly income, minus a personal needs allowance of $30 / month, Medicare premiums, and potentially a monthly income allowance for a non-applicant spouse, must go towards nursing home costs.
†Based on one’s living setting, a beneficiary may not be able to keep monthly income up to this level.

 

What Defines “Income”

Any income that a Medicaid applicant receives is counted. 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 and Holocaust restitution payments are an exception and do not count as income.

When only one spouse of a married couple applies for Nursing Home Medicaid or a Medicaid Waiver, only the income of the applicant is counted. This means the income of the non-applicant spouse is disregarded and does not impact their spouse’s income eligibility. The non-applicant spouse, however, may be entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their applicant spouse. This is a spousal impoverishment rule, and in 2022, the MMMNA in AL is $2,288.75 / month (effective 7/1/22 – 6/30/23). If a non-applicant spouse has monthly income under this amount, income can be transferred from the applicant spouse to the non-applicant spouse to bring their monthly income up to this level. If the non-applicant spouse has income equivalent to $2,288.75 / month or more, the applicant spouse cannot transfer any monthly income to the non-applicant spouse.

Income is counted differently when only one spouse applies for Regular Medicaid / Medicaid for Elderly and Disabled; The income of both the applicant spouse and non-applicant spouse is calculated towards the income eligibility of the applicant. Learn more about how Medicaid counts income here.

 

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. There are also many assets that Medicaid does not count; They are exempt. Exemptions include personal belongings, such as clothing, household furnishings, an automobile, and generally one’s primary home. For home exemption, the Medicaid applicant must live in their home or have intent to return, and in 2022, their home equity interest must be no more than $636,000. Equity interest is the amount of the home’s value owned by the applicant. The home is automatically exempt if a spouse lives in it. The combined face value of life insurance policies, in 2022, are exempt up to $5,000. Prepaid burial contracts and burial funds are also exempt up to $5,000. However, the exemption amount for burial funds is decreased by the face value of one’s life insurance policies.

 While one’s home is usually exempt from Medicaid’s asset limit, it is not exempt from Medicaid’s estate recovery program. Following a long-term care Medicaid beneficiary’s death, Alabama’s Medicaid agency attempts reimbursement of care costs through whatever estate of the deceased still remains. This is often the home. Without proper planning strategies in place, the home will be used to reimburse Medicaid for providing care rather than going to family as inheritance.

All assets of a married couple are considered jointly owned regardless of the long-term care Medicaid program for which one is applying. However, a spousal impoverishment provision permits the non-applicant spouse of a Medicaid Nursing Home or Waiver applicant a Community Spouse Resource Allowance (CSRA). In 2022, the community spouse (the non-applicant spouse) can retain 50% of the couples’ assets, up to a maximum of $137,400, as the chart indicates above. If the non-applicant’s half of the assets falls under $27,480, 100% of the assets, up to $27,480 can be retained by the non-applicant.

It is vital that one does not give away assets or sell them for less than fair market value within 60 months of long-term care Medicaid application. This is because Alabama has a Medicaid look-back period that immediately precedes one’s Medicaid application date. During this 5 year period, the Medicaid agency scrutinizes all asset transfers. If it is found that assets have been transferred for under fair market value, a penalty period of Medicaid ineligibility will be calculated.

 Non-Financial Eligibility Requirements – For Alabama Medicaid long term care, an applicant’s functional need is considered. For Nursing Home Medicaid and 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, for a Waiver to pay for home modifications, an inability to safely live at home without modifications may be required. For long-term care services via the Regular Medicaid program, a functional need with the activities of daily living is required, but a NHLOC is not necessarily required.

 

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) – Also called Miller Trusts or Qualifying Income Trusts, QITs are for Nursing Home Medicaid and Medicaid Waiver applicants who are over the income limit, but still cannot afford to pay their cost of long-term care. This type of trust allows Alabama residents to become income-eligible, as money deposited into this type of irreversible trust does not count towards Medicaid’s income limit. Irreversible means once the trust has been established, it cannot be changed or canceled. Overly simplified, income over the Medicaid limit is deposited into the trust in which a trustee has legal control. Trust funds can only be used for very specific purposes, such as paying long term care services / medical expenses accrued by the Medicaid enrollee. Furthermore, the state of Alabama Medicaid authorities must be 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.

2) Asset Spend Down – Seniors who have assets over Medicaid’s limit can “spend down” assets and become asset eligible. This can be done by spending excess assets on non-countable ones. Examples include making 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. Violating this rule by gifting assets or selling them under fair market value results in a period of Medicaid ineligibility. It is recommended one keep documentation of how assets were spent as proof the look back rule was not violated.

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

 

Specific Alabama Medicaid Programs

Like all states, Alabama Medicaid pays for nursing home care for state residents who are medically and financially eligible for such care. AL Medicaid also offers Medicaid programs for seniors who require nursing home level care or have slightly lesser care requirements and do not wish to reside in a nursing home. These programs provide care at home or “in the community”.

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. Program participants have the option to self-direct their own care services via the Personal Choices Program. Participants are able to hire, train, manage, and even fire, their own caregivers, including family members. A wait list for services via the E&D Waiver may exist.

2) 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. Program participants can hire their own caregiver, including relatives, via an option called Personal Choices.

3) 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.

4) Program of All-Inclusive Care for the Elderly (PACE) – The benefits of Medicaid, including long-term care services, and Medicare are combined into one program. Additional benefits, such as dental and eye care, may be available.

 

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 Medicaid Waiver, one can call Alabama Medicaid at 1-800-362-1504. One can contact their local district Medicaid office for assistance. One’s local Area Agency on Aging office may also be helpful. Unfortunately, there is not an option for elderly and disabled AL residents to apply online. Instead, an application should be submitted to one’s district Medicaid office.

It is vital that Alabama Medicaid applicants be certain that all eligibility requirements are met prior to applying for benefits. Elderly AL residents who are over the income and / or asset limit(s), or are unsure if they are, should strongly consider Medicaid planning for the best chance of acceptance into a Medicaid program. For general information about applying for long term care Medicaid, click here.

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