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

Last updated: December 15, 2020


Iowa Medicaid Definition

In Iowa, Medicaid is also called IA Health Link and is a managed care program. The Iowa Department of Human Services’ division of Iowa Medicaid Enterprise administers the Medicaid program.

Medicaid (Title 19) is a wide-ranging, jointly funded state and federal health care program for low-income individuals of all ages. While there are many different eligibility groups, this page is focused strictly on Medicaid eligibility for elderly Iowa residents who are 65 years of age and older. This page will specifically cover long term care Medicaid, whether that is in one’s home, a nursing home, or 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 Iowa 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 criteria vary with marital status and that Iowa offers multiple pathways towards eligibility.

1) Institutional / Nursing Home Medicaid – This is an entitlement program, which means anyone who meets the eligibility requirements is offered assistance. It is provided only in nursing homes.
2) Medicaid Waivers / Home and Community Based Services (HCBS) – Waivers limit the number of program participants. Once the enrollment cap has been reached, there are wait lists. Services are provided at home, adult day care, or in assisted living.
3) Regular Medicaid / Aged Blind and Disabled – This is an entitlement program, so as long as one meets the eligibility requirements, services can be received. Assistance is provided at home or adult day care.

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

2021 Iowa 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)** $3,000 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) $3,000 Nursing Home $2,382 / month for applicant $2,000 for applicant & $130,380 for non-applicant Nursing Home
Regular Medicaid / Aged Blind and Disabled $794 / month $2,000 None $1,191 / month $3,000 None $1,191 / 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, Veteran’s benefits, alimony payments, pension payments, Social Security Disability Income, Social Security Income, annuities, IRA withdrawals, and stock dividends. Covid-19 stimulus checks (previous and subsequent) are not considered income and do not impact Medicaid eligibility.

When just one spouse of a married couple is applying for institutional Medicaid or home and community based services via a Medicaid waiver, only the income of the applicant is counted. This is often referred to as “the name on the check rule”. Put another way, the income of the non-applicant spouse is disregarded. (Learn more about how Medicaid counts income here). For regular Medicaid, this rule does not apply. Instead, the income of both spouses is calculated together for the purpose of eligibility of the applicant spouse.

To prevent spousal impoverishment, there is a Minimum Monthly Maintenance Needs Allowance (MMMNA), which is the minimum amount of monthly income to which the non-applicant spouse (of a nursing home Medicaid or a HCBS Medicaid waiver applicant) is entitled. In Iowa, as of 2021, this rule allows the Medicaid applicant to transfer income to the non-applicant spouse, up to $3,259.50 / month, to ensure he or she has sufficient funds from which to live. (The MMMNA is also referred to as a spousal allowance or an income allowance). Please note that there is no spousal income allowance for married couples with one spouse applying for regular Medicaid.

*The rules governing eligibility for married couples that are both seeking nursing home Medicaid or a Medicaid Home and Community Based Services Waiver is complicated. Assuming both spouses are approved for nursing home Medicaid or a HCBS Medicaid Waiver at the same time and are living together, the income and asset limits in the chart above are correct. However, the rules change after six months of Medicaid eligibility. At this time, married couples can choose to be considered as single applicants. If they choose this option, each spouse is able to have up to $2,382 / month in income and $2,000 in assets. If a married couple does not want to be considered individually, they can continue to be treated as a couple.

**While there are income limits in order to be eligible for nursing home Medicaid, this does not mean a nursing home resident can retain monthly income up to this level. Instead, all of a resident’s income, with the exception of a monthly personal needs allowance of $50 and a spousal income allowance (if applicable), must go towards the cost of nursing home care.


What Defines “Assets”

Countable (non-exempt) assets include cash and most anything that can easily be converted to cash to be used to pay for long-term care. Other non-exempt assets include stocks, bonds, investments, credit union, savings, and checking accounts, and real estate in which one does not reside. However, for Medicaid eligibility, there are also many assets (resources) that are considered exempt (non-countable). Exemptions include personal belongings, such as clothing, household furnishings, an automobile, an irrevocable funeral contract, burial spaces, and one’s primary home, given the Medicaid applicant lives in the home, or expresses “intent” to return to it, and his / her home equity interest is valued under $603,000 (in 2021). (Equity interest is the value of the home in which the applicant outright owns). If the applicant has a spouse living in the home, it is exempt regardless of the above circumstances.

For married couples with a nursing home Medicaid applicant or a HCBS Medicaid waiver applicant, as of 2021, the community spouse (the non-applicant spouse) can retain up to half of the couples’ joint assets, up to a maximum of $130,380, as shown on the chart above. In Medicaid terminology, this is called the Community Spouse Resource Allowance (CSRA). There is also a minimum CSRA, which is $26,076, and allows the non-applicant spouse to retain 100% of the couple’s assets, up to this figure. This spousal allowance does not extend to couples with one spouse applying for regular Medicaid.

When considering assets, one should be aware that Iowa has a Medicaid Look-Back Period of 60 months that dates back from one’s Medicaid application date. During this time frame, Medicaid checks to ensure no assets were sold or given away under fair market value. Please note, this also includes gifts, as well as asset transfers one’s spouse may have made. If one is found to be in violation of the look-back period, a penalty period will be established and one will be ineligible for Medicaid for the duration of the penalty period.

 In order to be eligible for long-term care Medicaid, an applicant must have a functional need. For nursing home Medicaid and many HCBS Medicaid Waivers, a nursing facility level of care (NFLOC) is a requirement. Furthermore, some program benefits, such as home modifications, may have additional eligibility requirements that must be met. For instance, a needs assessment indicating that the individual cannot safely live at home without modification of the home may be necessary.


Qualifying When Over the Limits

For Iowa 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) Medically Needy Pathway – In Iowa, there is a medically needy pathway, also called a “Spenddown” program, and is specifically intended for those that are categorically aged, blind or disabled that have income over the Medicaid limit. In a nutshell, one may still be eligible for Medicaid services even if they are over the income limit by “spending down” their income over the Medically Needy Income Limit (MNIL) on medical expenses. (Medical expenses may include past due medical bills, Medicare premiums, private health insurance premiums, and medical expenses that Medicaid won’t cover.) The amount of income one must spend down to reach the MNIL can be thought of as a deductible. As of 2021, the MNIL is the same for a single individual, as well as a married couple, and is set at $483 / month. Once an individual or married couple has “spent down” their income to the MNIL, they are eligible for Medicaid for the remainder of the spenddown period. Please note, both the income and asset limit for the medically needy program are different from the program limits in the chart above. As of 2021, the medically needy asset limit is $10,000 per household.

2) Miller Trust – this type of trust, also called a Qualified Income Trust (QIT), is referred to a Medical Assistance Income Trust (MAIT) in Medicaid-speak in Iowa. For persons who are applying for nursing home Medicaid or a HCBS Medicaid waiver and are over the income limit, MAIT’s allow a way for one to still meet Medicaid’s income limit. In simple terms, income that is over the limit is deposited into the trust and is not counted towards Medicaid’s income limit. A trustee is named who has legal control of the money in the account. The account must be irreversible, meaning once it has been established, it cannot be changed or canceled. In addition, the money in the account can only be used for very specific purposes, such as paying medical expenses and long-term care costs accrued by the Medicaid enrollee.

3) Asset Spend Down – Unfortunately, neither the Medically Needy Pathway nor a Medical Assistance Income Trust can assist one in spending down extra assets for Medicaid qualification. Said another way, if one meets the income requirements for Medicaid eligibility, but not the asset requirement, the above programs cannot assist one in meeting Medicaid’s asset limit. However, one can “spend down” assets by spending excess assets on non-countable ones, such as home modifications, like the addition of wheelchair ramps or stair lifts, prepaying funeral and burial expenses, and paying off debt. Remember, when spending down assets, it’s important that one does not give away assets or sell them under market value. This is because in Iowa, Medicaid has a “Look-Back” period of 60 months, and if one is in violation, a period of Medicaid ineligibility may result.

4) Medicaid Planning – the majority of persons considering Medicaid are “over-income” or “over-asset” or both, yet still cannot afford their cost of long-term 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 to protect their home from Medicaid’s estate recovery program.
Read more or connect with a Medicaid planner.


Specific Iowa Medicaid Programs

1) HCBS Elderly Waiver – This Home and Community Based Services Medicaid waiver is intended to provide services to prevent and / or delay nursing home placement of seniors. Program participants have the option of directing their own care and hiring the care attendant of their choosing, including their own adult children. Other benefits include adult day care, home modifications, and personal emergency response systems.

2) Health and Disability Waiver – Abbreviated as HD, this waiver is for physically disabled adults under 65 years of age. Also a nursing home diversion program that allows for self-direction, supportive benefits include homemaker services, meal delivery, respite care, and more.


How to Apply for Iowa Medicaid

Elderly Iowa residents can apply for Medicaid online at the Iowa Department of Human Services (DHS) Services Portal or in person at one’s local DHS office. Additional information about applying for long-term care in Iowa is available on the state’s DHS website. Persons may also contact their local Area Agency on Aging office for additional program information or for assistance with the application process.

Prior to applying for Medicaid, it is imperative that seniors are confident that they meet all of the eligibility requirements discussed above. For those who do not meet the criteria, or are unsure if they do, Medicaid planning can play an instrumental role. Applying for long-term care Medicaid is frequently a complicated and lengthy process. To learn more about the application process, click here.

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