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Medicaid eligibility is exceedingly complex and to provide the minute details is beyond the mission of this website. That said, there are some over-arching eligibility principles that should be mentioned. Medicaid eligibility is determined at many levels, and each state has its own requirements, which change every year. Within each state, each target constituent group has its own requirements. For example, elderly and frail individuals have different requirements for eligibility than pregnant women or families with newborn children. Finally, nursing home or long term care Medicaid may have different requirements than Medicaid Waivers or Aged, Blind or Disabled Medicaid. In addition, each waiver may have its own requirements for eligibility purposes. This webpage focuses on Medicaid for seniors.
In the context of the elderly, Medicaid has two types of eligibility requirements: functional and financial. Functionally, (depending on the type of Medicaid program), 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 one’s spouse’s) income and their total resources, or said another way, their countable assets.
Income Eligibility Criteria
A rule of thumb for the year 2020 is a single individual, 65 years or older, must have income less than $2,349 / month. This applies to nursing home Medicaid, as well as assisted living (in the states which cover it) and in-home care when this is provided through a state’s HCBS Waivers. (HCBS stands for Home and Community Based Services).
Income limits (for nursing home Medicaid and HCBS Waivers) are not as straightforward for married applicants. Generally, married couples’ incomes are counted separately. Therefore, the income of a non-applicant spouse is not used in determining income eligibility of his / her applicant spouse, who is able to have up to $2,349 in monthly income. Furthermore, the non-applicant can be allocated some of the applicant’s income to enable him / her to continue living at home when his / her spouse goes into a nursing home or receives HCBS through a Medicaid waiver. This is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). In 2020, in most states, the maximum amount of income that can be allocated to a non-applicant spouse is $3,216.00 per month. For married couples in which both spouses are applicants, in most states, in 2020, each spouse is allowed $2,349 / month or a combined income of $4,698 / month.
As demonstrated above, nursing home Medicaid and HCBS Waivers typically have the same financial eligibility criteria. However, one can also receive home care from Medicaid under “Aged, Blind or Disabled” (ABD) Medicaid. This type of Medicaid usually has a much lower, more restrictive income limit. ABD Medicaid is commonly called Regular Medicaid or State Plan Medicaid. In approximately half of the states, in 2020, ABD Medicaid’s income limit is $783 / month for a single applicant or $1,175 for a married couple. In the remaining states, as of 2020, the income limit for ABD Medicaid is generally $1,063 / month for a single applicant and $1,437 / month for a married couple. Unlike with nursing home Medicaid and HCBS Medicaid waivers, the income of the spouses, even if only one spouse is an applicant, is calculated together. Another difference is that there is no Minimum Monthly Maintenance Needs Allowance for ABD Medicaid for non-applicant spouses.
Medicaid candidates whose incomes 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 he / she would pass the asset test. First, there are “countable assets” and “exempt assets”. In most cases, one’s home and furnishings are exempt. Second, unlike income, which is sometimes counted separately, all of a married couples’ assets are considered to be jointly owned and are counted towards the asset limit. Third, asset transfers made by the applicant up to five years preceding their application date (or 2.5 years in California) are counted. This is referred to as the Medicaid Look-Back Period, and if one is in violation of this period, they may be ineligible for Medicaid for a period of time.
In 2020, in most states, a single applicant, aged 65 or older is permitted up to $2,000 in countable assets to be eligible for nursing home Medicaid or HCBS Waivers (New York is a notable exception allowing $15,750). Aged, Blind or Disabled Medicaid usually has the same asset limit. State specific Medicaid asset limits are available here. An applicant’s home is considered exempt, given the value of his / her home equity (the fair market value of one’s home minus any debt on the home, such as a mortgage) does not exceed $595,000 (or $893,000 in some states, or California which has no upper limit on home value). Furthermore, if a single applicant does not live in the home, he / she must have “intent” to move back into the home.
Married couples with both spouses applying for nursing home Medicaid or a HCBS Waiver are typically allowed to have $4,000 in countable assets to qualify for Medicaid. (In many states, married applicants are considered as single applicants and each spouse is permitted up to $2,000 in assets). However, a big change comes with married couples in which only one spouse is applying for one of these programs. The applicant is permitted to transfer assets to the non-applicant spouse. This is referred to as a Community Spouse Resource Allowance. In 2020, community spouses (non-applicant spouses) can have countable assets valued at as much as $128,640. 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 community spouse lives in it. In this case, 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 able to retain 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” requirement for Medicaid for seniors changes based on the type of Medicaid program from which one is seeking assistance. Long term care in a nursing home or for home and community based services via a Medicaid waiver requires a high level of care need. “Aged, Blind or Disabled” (ABD) Medicaid only requires that the applicant be aged (over 65), blind or disabled. They do not have to have a specific medical condition.
The level of care requirement for a 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. For instance, one might hear it called Nursing Facility Level of Care (NFLOC) or simply Level of Care (LOC). The formal rules change by state as well. At a minimum, program participants must require assistance with their Activities of Daily Living (ADLs). ADLs are activities that are routinely done daily, such as bathing/grooming, dressing, eating, toileting, eating, and mobility. Sometimes it is also considered if seniors are able to perform their Instrumental Activities of Daily Living (IADL). These activities include preparing meals, shopping for essentials, housecleaning, and medication management. In most cases, a medical professional must do an assessment to determine one’s level of care needs or their inability to perform ADL’s and / or IADL’s. Learn more about Nursing Facility Level of Care here.
A medical diagnosis of Alzheimer’s Disease, Parkinson’s or other dementia does not automatically mean an individual will meet Medicaid’s level of care requirements. However, typically the accompanying symptoms are adequately severe that persons with these conditions meet the requirements (or will soon 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 limits and asset limits. These are described in detail above. The level of care requirement simply means that the applicant must require 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. This is mentioned because nursing home / institutional Medicaid is different from home care and assisted living which are not entitlements. One can meet all the eligibility criteria for home care or assisted living and still be wait-listed to receive assistance.
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 (“memory care” for persons with Alzheimer’s is a type of specialized assisted living). 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 enrollments. 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 and still not be able to enroll due to the wait-list.
The eligibility criteria for Medicaid assisted living through a Medicaid HCBS Waiver are the same as the eligibility requirements for nursing home care. Candidates must require “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 differently than Waivers. ABD Medicaid will provide beneficiaries with a caregiver and the beneficiary can use that caregiver at their place of residence. So, the individual could live at home or in an assisted living community. From Medicaid’s perspective, it is not important where they live so long as they do not live in a nursing home. ABD Medicaid 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 insist 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 different eligibility requirements.
HCBS 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 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 (when compared to Waivers or Institutional Medicaid). ABD Medicaid eligibility criteria are state-specific. One can see that data for each state here.
Options When Over the Limits
When individuals or couples are over Medicaid’s income or asset limits, yet they still cannot afford to pay for the care they require, hope should not be lost. Medicaid offers different pathways and planning strategies to become eligible.
Medically Needy Pathway
Medically Needy Medicaid, currently available in 32 states and D.C., is a great option. The Medically Needy Pathway, in brief, considers the Medicaid candidate’s income AND their care costs. If Medicaid finds one’s care costs consumes the vast majority of one’s income, then Medicaid will allow the individual to become eligible regardless of how high his / her income is. The table below shows the 2019 Medically Needy Income Limits (MNILs) by state, which is the level to which one must “spend down” his / her monthly income on his / her care costs to qualify for Medicaid via this pathway.
Example – John lives in California and has $4,500 in monthly income. He requires 40 hours of home care each week at $25 per hour. Therefore, 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 Medically Needy Income Limit is $600.00, John would be eligible for California Medicaid (Medi-Cal) through the Medically Needy Pathway.
|2019 Medically Needy Income Limits for Medicaid Eligibility|
|State||Medically Needy Income Limit|
|District of Columbia||$666.13|
Options When Over the Income Limit
Miller Trusts or Qualified Income Trusts (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, such as paying for Medicare premiums and medical expenses that are not covered by Medicaid.
Options When Over the Asset Limit
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 be implemented to assist Medicaid applicants who over the asset limit. The simplest is to “spend down” excess assets on care costs and debt or to purchase an irrevocable funeral trust. Other options, which are more complicated, include annuities, lady bird deeds, Medicaid asset protection trusts, and “Half a Loaf” strategies. Some of these options violate Medicaid’s look back rule, which inevitably, will result in a period of Medicaid ineligibility. Therefore, it is highly advisable that persons over the asset limit consult with a professional Medicaid planner prior to moving forward with these strategies. Find a Medicaid expert here.
Medicaid Planning is a strategy by which persons whose income or assets exceed Medicaid’s limits can become Medicaid eligible. They do so by working with a Medicaid expert who can re-structure 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 of Is Medicaid Planning Ethical?