Medicaid eligibility is exceedingly complex and to provide the minute details is beyond the mission of this website. There are, however, some over-arching eligibility principles. Medicaid eligibility is determined at many levels, and each state has its own requirements, which change annually. Within each state, each target constituent group has its own requirements. For example, elderly and frail individuals have different eligibility criteria than pregnant women or families with newborn children. Finally, within the aged and disabled category, Nursing Home Medicaid and Medicaid Waivers providing home and community based services (HCBS) may have different requirements than Regular Medicaid / Aged, Blind and Disabled. Furthermore, each HCBS Waiver may have its own specific eligibility criteria. This webpage focuses on long-term care Medicaid for seniors.
In the context of the elderly, Medicaid has two types of eligibility requirements: functional and financial. Functionally, individuals must have a medical need. With the exception of Regular Medicaid / Aged, Blind and Disabled Medicaid, individuals usually must require the level of care provided in a nursing home or an intermediate care facility. Financially, Medicaid eligibility looks at both the applicant’s (and sometimes their spouse’s) income and resources (assets).
The information below is generalized. While it is accurate for 2023 for most states, some states do utilize varying criteria. See state specific requirements for long-term care Medicaid.
Income Eligibility Criteria
A single individual, 65 years or older, must have income less than $2,742 / month. This applies to nursing home Medicaid, as well as assisted living services and in-home care in states that provide it through HCBS Waivers. Holocaust survivor reparations do not count as income.
Income limits for Nursing Home Medicaid and HCBS Waivers is more complicated for married applicants. When only one spouse is an applicant, only the applicant spouse’s income is counted. This means the income of the non-applicant spouse is not used in determining income eligibility of their spouse, whose income is limited to $2,742 / month. Furthermore, the non-applicant spouse can be allocated some of the applicant’s monthly income. This spousal protection, called a Minimum Monthly Maintenance Needs Allowance (MMMNA), is intended to prevent impoverishment of the non-applicant spouse. In most states, the maximum amount of income that can be allocated to a non-applicant spouse is $3,715.50 / month. Note that the income of the non-applicant spouse combined with the spousal income allowance cannot exceed $3,715.50 / month.
For married couples with both spouses as applicants, each spouse is allowed up to $2,742 / month or a combined income of $5,484 / month.
While Nursing Home Medicaid and HCBS Waivers typically have the same financial eligibility criteria, one can also receive Medicaid in-home care under “Aged, Blind and Disabled” (ABD) Medicaid. ABD Medicaid is commonly called Regular Medicaid or State Plan Medicaid. This type of Medicaid usually has a much lower, more restrictive income limit. Unlike with Nursing Home Medicaid and HCBS Medicaid Waivers, the income of a married couple, even if only one spouse is an applicant, is calculated together. This means the income of the non-applicant spouse impacts the income eligibility of their spouse.
In approximately half of the states, ABD Medicaid’s income limit is $914 / month for a single applicant and $1,371 for a couple. In the remaining states, the income limit is generally $1,215 / month for a single applicant and $1,643 / month for a couple. To be clear, there is no Minimum Monthly Maintenance Needs Allowance for non-applicant spouses of ABD Medicaid beneficiaries.
Medicaid candidates whose income exceed these limits might consider working with a Medicaid Planner or reading the section below “Options When Over the Limits”.
The Medicaid asset limit, also called the “asset test”, is complicated. There are several rules of which the reader should be aware before trying to determine if they would pass the asset test.
First, there are “countable assets” and “exempt assets”. An applicant’s home, home furnishings, personal items, and vehicle are generally exempt. However, remaining portions of COVID-19 stimulus checks are countable assets. Second, all of a married couples’ assets, regardless of whose name the asset is in, are considered jointly owned and are counted towards the asset limit. Third, asset transfers made by the applicant or their spouse up to five years (or 2.5 years in California) immediately preceding their application date for Nursing Home Medicaid or Medicaid Waiver are scrutinized. This is called the Medicaid Look-Back Period. If one has gifted countable assets or sold them under fair market value during this timeframe, a Penalty Period of Medicaid ineligibility will be calculated.
A single applicant, aged 65 or older, is permitted up to $2,000 in countable assets to be eligible for Nursing Home Medicaid or a HCBS Waiver. New York is a notable exception allowing $30,182, and is California, allowing up to $130,000. Aged, Blind and Disabled Medicaid usually has the same asset limit. See state specific Medicaid asset limits.
For home exemption, an applicant for Nursing Home Medicaid or a HCBS Waiver must have a home equity interest under a specified amount. Home equity is the fair market value of one’s home minus any debt on the home, such as a mortgage. Equity interest is the portion of the home’s equity value that is owned by the applicant. In most states, the home equity interest limit is $688,000 or $1,033,000. California is the only state that does not have a home equity interest limit. Furthermore, if the applicant does not live in the home, there must be “Intent to Return” for it to maintain its exempt status. To be clear, there is no home equity interest limit for ABD Medicaid.
Married couples with both spouses applying for Nursing Home Medicaid or a HCBS Waiver are typically allowed $4,000 in countable assets. In many states, married applicants are considered as single applicants and each spouse is permitted up to $2,000 in assets. A big change comes with married couples in which only one spouse is applying for one of these programs. While a husband and wife’s assets are considered jointly owned, the non-applicant spouse is allocated a larger portion of the couple’s assets. This is called a Community Spouse Resource Allowance (CSRA), and in most states, allows the non-applicant spouse countable assets up to $148,600. This is in addition to the $2,000 the applicant spouse is able to retain in jointly owned assets. The home is excluded from the asset limit, provided the applicant spouse or community spouse (non-applicant spouse) lives in it. If the non-applicant spouse lives in it, there is no equity value limit.
The rules are different for married couples applying for Aged, Blind and Disabled Medicaid. In this case, the couple, regardless of if one or both spouses are applicants, are permitted up to $3,000 as a couple. There is no Community Spouse Resource Allowance permitted.
The complexity of the Medicaid asset test underscores the importance of Medicaid planning, a process by which many families who are over the Medicaid asset limit still manage to become Medicaid eligible. Learn more about what Medicaid planners do. For further information on planning techniques when over the asset limit, read the section below, “Options When Over the Limits”.
Level of Care Requirements
The “level of care” (functional) requirement for long-term care Medicaid differs based on the type of Medicaid program from which a senior is seeking assistance. For nursing home care or for home and community based services via a Medicaid Waiver, the level of care that is provided in a nursing home is generally required. For Aged, Blind and Disabled (ABD) Medicaid programs that provide in-home care, often an applicant need only require limited personal care assistance. If an applicant does not require long-term care and is only seeking medical coverage via ABD Medicaid, it is only required that the applicant be aged (over 65), blind or disabled. They do not have to have a specific medical condition / functional need.
The level of care requirement for nursing home admission or for assistance via a HCBS Waiver might be referred to in a number of ways depending on one’s state of residence. One might hear it called Nursing Facility Level of Care (NFLOC), Nursing Home Level of Care (NHLOC), or simply Level of Care (LOC). The formal rules to meet the LOC need are state specific. At a minimum, program participants must require assistance with their Activities of Daily Living (ADLs). These are routine daily activities that are required to live independently and include bathing/grooming, dressing, eating, toileting, transferring (i.e., from a bed to a chair), and mobility. Sometimes a senior’s ability to perform their Instrumental Activities of Daily Living (IADLs) is also considered. IADLs include preparing meals, shopping for essentials, housecleaning, and medication management. A functional needs assessment is done, usually by a medical professional, to determine one’s level of care needs and their inability to perform ADL’s and / or IADL’s. Learn more about Nursing Facility Level of Care.
A medical diagnosis of Alzheimer’s Disease, Parkinson’s Disease Dementia, or a related dementia does not automatically mean an individual will meet Medicaid’s level of care requirements. Typically the accompanying symptoms are adequately severe that persons with these conditions meet the requirements as their conditions progress.
Eligibility by Care Type
Nursing Home Eligibility
Eligibility for Medicaid nursing home care is comprised of financial requirements and care requirements. The financial requirements are comprised of income and asset limits. These are described in detail above. The level of care requirement requires an applicant need the level of care typically provided in a nursing home. While this may sound obvious, “Nursing Home Level of Care” (NHLOC) is actually a formal designation and requires a medical doctor to make this designation. Furthermore, the rules around what defines NHLOC change in each state.
Nursing home care by Medicaid is an entitlement. This means if one meets the financial and level of care requirements, a state must pay for that individual’s nursing home care.
Assisted Living Eligibility
Prior to discussing Medicaid’s eligibility requirements for assisted living / senior living, it is helpful for the reader to understand how Medicaid pays for assisted living. Persons residing in assisted living residences receive assistance from Medicaid either through HCBS Waivers or through the state’s Aged, Blind and Disabled (ABD) Medicaid.
HCBS Waivers are designed for persons who require a Nursing Home Level of Care, but prefer to receive that care while living at home or in assisted living. This may include “memory care”, which is a type of specialized assisted living for persons with Alzheimer’s disease and related dementias. HCBS Waivers will not pay for the room and board costs of assisted living, but they will pay for care costs. Waivers are not entitlements. They are federally approved, state-specific programs that have limited participant slots. Many Waivers, especially those intended to help persons in assisted living, have waiting lists. To be clear, one can be financially and functionally eligible for an assisted living waiver, but be unable to enroll due to a waiting list.
The eligibility criteria for Medicaid assisted living services through a Medicaid HCBS Waiver are generally the same as the eligibility requirements for nursing home care. Candidates must require a “Nursing Home Level of Care” and meet the financial requirements described above.
Aged, Blind and Disabled (ABD) Medicaid provides help for persons in assisted living, but as with Waivers, it will not pay for assisted living room and board, only for care. Nor will ABD Medicaid necessarily pay for ALL the individual’s care needs. The good news about ABD Medicaid (when compared to Waivers) is that ABD Medicaid is an entitlement. If the applicant meets the eligibility criteria, the Medicaid program must provide them with the assistance they require.
ABD Medicaid typically has more restrictive income limits than Medicaid Waivers or nursing home care. However, ABD Medicaid does not typically require that beneficiaries need a “Nursing Home Level of Care”. ABD Medicaid financial eligibility criteria are state-specific. One can view their state’s rules here.
In-Home Care Eligibility
Medicaid beneficiaries can receive assistance in their home through a Home and Community Based Services (HCBS) Waiver or through Aged, Blind and Disabled (ABD) Medicaid. These are two different types of Medicaid programs with varying eligibility requirements.
Waivers, in all 50 states, offer home care as a benefit. Unfortunately, HCBS Waivers are not entitlements. Therefore, being eligible does not necessarily mean one will receive care. It is very likely one will be put on a waiting list for assistance. Waivers generally have the same level of care and financial eligibility criteria as Nursing Home Medicaid. These limits are detailed above.
ABD Medicaid also provides in-home care, and unlike HCBS Waivers, ABD Medicaid is an entitlement. Typically, ABD Medicaid has more restrictive financial eligibility criteria and less restrictive care need requirements than Waivers or Institutional Medicaid. ABD Medicaid eligibility criteria are state-specific. One can see the data for each state here.
Options When Over the Limits
Individuals and couples who are over Medicaid’s income and / or asset limit(s), but still cannot afford their long-term care costs, can still qualify for Medicaid. Medicaid offers different eligibility pathways and planning strategies to become eligible.
Options When Over the Income Limit
Medically Needy Medicaid, also called “Share of Cost” Medicaid, is currently available in 32 states and Washington D.C. The Medically Needy Pathway, in brief, considers the Medicaid candidate’s income AND their medical / care costs. If Medicaid finds one’s care costs consumes the vast majority of their income, then Medicaid will allow the individual to become income-eligible as long as their monthly income does not exceed the cost of their long-term care. States have Medically Needy Income Limits (MNILs), which is the level to which one must “spend down” their monthly income on their care costs to qualify for Medicaid via this pathway. Based on the state, the Medically Needy Income Limit may be called by a different name. For example, in Vermont it is called the Protected Income Level, and in California, it is called a Maintenance Needs Allowance.
Example – John lives in California, has a monthly income of $4,500, and the state’s Maintenance Needs Allowance is $600. He requires 40 hours of home care each week at $25 per hour. His monthly cost of care is $4,000 (4 weeks x 40 hours x $25 = $4,000). Since John’s monthly income is $500 after paying for his home care, and California’s Maintenance Needs Allowance is $600.00, John would be eligible for California Medicaid (Medi-Cal) through the Medically Needy Pathway.
2) Miller Trusts or Qualified Income Trusts (QITs)
QITs are a planning strategy for persons who have income over Medicaid’s income limit. In an oversimplified explanation, an applicant’s monthly income in excess of the limit is put into a QIT, no longer counting towards Medicaid’s income limit. The money in the trust, which is managed by someone other than the Medicaid applicant, can only be used for very specific purposes. Examples include paying Medicare premiums and medical expenses that are not covered by Medicaid.
Options When Over the Asset Limit
Neither the Medically Needy Pathway nor Qualified Income Trusts can assist Medicaid applicants who are over the asset limit in becoming asset-eligible. However, there are several planning strategies that can assist Medicaid applicants in reducing their countable assets. The simplest is to “spend down” excess assets on care costs.
Other options, which are more complicated, include purchasing an Irrevocable Funeral Trust, converting a lump sum of cash into monthly income via annuities, putting assets into Medicaid Asset Protection Trusts, and utilizing the Modern “Half a Loaf” strategy, which combines the use of annuities with gifting assets. Less utilized techniques include Medicaid Divorce and Spousal Refusal. Furthermore, there are Lady Bird Deeds, which can protect one’s home from Medicaid’s Estate Recovery Program and instead preserve it for family as inheritance. Some of these options violate Medicaid’s Look Back Rule, which inevitably, will result in a Penalty Period of Medicaid ineligibility. It is highly advised that persons over the asset limit consult with a professional Medicaid planner prior to moving forward with these strategies. Find a Medicaid expert.
Medicaid Planning is a strategy by which persons whose income and / or assets exceed Medicaid’s limit(s) can become Medicaid eligible. A Medicaid expert can assist these persons in re-structuring their finances to help them become eligible. We’ve written extensively about the Pros and Cons of Medicaid Planning and the Different Types of Medicaid Planners. One should also consider reading the New York Times piece, Is Medicaid Planning Ethical? To search for a planner, click here.