Table of Contents
1) How Does Medicaid Long Term Care Work?
Medicaid, which is a needs-based healthcare program for persons of all ages, covers the cost of long term care for seniors and disabled individuals who meet their state’s eligibility requirements. There are several Medicaid programs from which one can receive this type of care.
Nursing Home Medicaid
Traditionally, Medicaid’s coverage of long term care was restricted to institutional care, often referred to as institutional Medicaid or nursing home Medicaid. In this setting, Medicaid covers the cost of room and board, assistance with activities of daily living (i.e., bathing, mobility, and eating), skilled nursing, and medication administration. Nursing home Medicaid, which must be provided in a Medicaid certified nursing home facility (not all nursing homes accept Medicaid as a form of payment), is an entitlement for anyone who meets the eligibility criteria. This means long term care in this setting must be provided if an applicant is eligible.
HCBS Medicaid Waivers
Over the years, Medicaid’s coverage of long term care has expanded to include long term services and supports (LTSS) via Home and Community Based Services (HCBS) Medicaid Waivers, also called 1915(c) waivers. This is because it is more cost efficient for the state to pay for long term care that prevents and / or delays the need for institutionalization than it is to pay for nursing home care. Furthermore, the majority of persons prefer to receive care assistance in their own homes, or another community setting, such as assisted living, than in an institutional setting. At the time of this writing, nearly all 50 states offer long term care through HCBS Medicaid Waivers. (To see if a HCBS Medicaid Waiver is offered in the state in which one resides, click here and then click on the state in question).
Examples of LTSS’s that may be available include in-home personal care assistance, homemaker services, adult day care, respite care to relieve unpaid primary caregivers, home modifications, and home health care. To be clear, services in assisted living residences may be covered, but not the cost of room and board. Unlike nursing home Medicaid, Medicaid waiver programs are not an entitlement, as the number of potential program participants is capped. Once the allotted number of participant slots have been filled, a waitlist forms, and eligible persons wait to receive services until a participant slot becomes available.
1115 Demonstration Waivers
Nearly a quarter of states offer home and community based services via 1115 Demonstration waivers, also called Research and Demonstration waivers. (The majority of these states also offer HCBS via 1915(c) waivers, but some states only offer HCBS via 1115 Demonstration waivers). These waivers allow states greater flexibility in how they run their Medicaid program, as they allow federal Medicaid regulations to be waived and new approaches to be tested. As with 1915(c) waivers, there may be a waitlist to receive HCBS.
Regular State Medicaid
Elderly and disabled individuals may also receive long term care via their regular state Medicaid program, which is an entitlement (unlike HCBS Medicaid waivers). This means that participant enrollment cannot be capped and all eligible applicants must receive services and supports without being put on a waitlist. This state option is extremely beneficial, as it allows some Medicaid recipients to receive home and community based services who would not otherwise be able to access them immediately.
Home health care must be provided by all state Medicaid programs, and personal care assistance, also called attendant care, is available through many state’s regular Medicaid program. (For the elderly and disabled, the regular state Medicaid program is often called Aged, Blind and Disabled (ABD) Medicaid).
Some states choose to offer a larger selection of home and community based services via their state Medicaid plan, via state plan option 1915(i). Via this option, a state can target a specific population and only this group of people can receive home and community based services. For instance, the 1915(i) option could be limited to seniors or disabled individuals. Available benefits might include case management, attendant care, homemaker services, adult day care / adult day health care, and respite care.
At the time of this writing, approximately 8 states offer attendant services via another Medicaid state plan option, called Community First Choice (CFC) or the 1915(k) state plan option. Furthermore, states have the option to expand the availability of long term services and supports via CFC. Examples of long term services and supports might include transitional services (assisting one with moving from an institutional setting back to the community), emergency response systems, home delivered meals, durable medical equipment, and home / vehicle modifications.
2) Where is Long Term Care Provided?
Medicaid long term care can be provided in a number of settings. While originally only available to Medicaid recipients in an institutional setting, such as a nursing home, Medicaid has since expanded the locations in which one can live and receive long term services and supports. Based on the state, long term care Medicaid may be received in one’s home, the home of a close friend or relative, an adult foster care home, an assisted living facility, or in memory care (Alzheimer’s special care unit). Please note that while Medicaid may cover the cost of long term services and supports in an adult foster care home or an assisted living residence, Medicaid will not pay the room and board portion of living in such locations.
3) What does Medicaid Cover for Long Term Care?
A wide variety of long term care benefits may be covered based on the state and the Medicaid program for which one is applying. While nursing home care is available, there are many home and community based services (HCBS) that might also be an option. These HCBS are not only intended to help prevent / delay Medicaid beneficiaries from being institutionalized, but also to provide assistance to primary non-paid caregivers to aid them in keeping their loved ones at home.
Available long term services and supports may include case management, supervision, assistance with activities of daily living (i.e., bathing, personal hygiene, dressing, mobility, toiletry, and eating) and instrumental activities of daily living (i.e., housecleaning, meal preparation, and shopping for essentials), home health aides, meal delivery / congregate meals, in-home / out-of-home respite care (to relieve primary caregivers of caregiving duties), home modifications for safety and accessibility (i.e., wheelchair ramps, pedestal sinks, and roll in showers), vehicle modifications (i.e., to allow wheelchair access), adult day care / adult day health care, non-emergency transportation, personal emergency response systems, durable medical equipment (i.e., wheelchairs), medical supplies, and transitional services (i.e., transitioning from a nursing home back into one’s home or another community setting). Remember, while the cost of services and supports in assisted living residences and adult foster care homes may be covered by long term care Medicaid, the cost of room and board to live in these locations will not be paid by Medicaid.
Many long term care Medicaid programs allow program beneficiaries to self-direct their own care. Often called consumer directed care, one well liked feature of this option is that program participants are able to choose the personal caregiver of their liking. Based on the program, family members, sometimes even spouses, can be paid to provide care. (Learn more about getting paid as a family caregiver here).
4) How to Qualify for Medicaid Long Term Care?
In order to qualify for long term care Medicaid, an applicant must meet the following requirements.
• Be a resident of the state in which one is applying for Medicaid benefits.
• Be 65 years of age or older, permanently disabled, or blind.
• Have monthly income and countable assets under a specific level. (This will be covered in detail below).
• Have a functional need for long term care. (This will be covered in detail below).
HCBS Medicaid Waivers / Nursing Home Medicaid
Generally speaking, the income and asset limits for nursing home Medicaid and HCBS Medicaid waivers are the same. While there is some variation on the limits based on the state and the Medicaid program, as a rule of thumb (in 2021), for a single applicant, the income limit is $2,382 / month (300% of the Federal Benefit Rate for an individual) and the asset limit is $2,000. (To see state specific income and asset limits, click here).
Please note that not all assets are counted towards Medicaid’s asset limit. One’s primary home is exempt, given the Medicaid applicant lives in the home (or has “intent” to live in the home again) and has a home equity interest (the amount of the home’s value owned by the applicant) under a specific value. As of 2021, this amount is generally $603,000 or $906,000, depending on the state. (To see equity interest limits by state, click here). The home will also be exempt, regardless of other circumstances, if a non-applicant spouse is living in the home.
For married applicants, the income of a non-applicant spouse is not counted towards the applicant spouse’s eligibility. (Learn more about how Medicaid counts income here). Furthermore, under certain circumstances, monthly income can be transferred from the applicant spouse to the non-applicant spouse. This spousal income allowance, also called a monthly maintenance needs allowance, is intended to prevent non-applicant spouse’s from having insufficient monthly income from which to live. It also helps to lower an applicant spouse’s countable income.
Assets, on the other hand, are considered jointly owned by a married couple and are counted towards the applicant spouse’s eligibility even when only spouse is an applicant. That said, there is a community spouse resource allowance, which allows a greater portion of the couple’s assets to be allocated to the non-applicant spouse without impacting the applicant spouse’s long term care Medicaid eligibility. (Community spouse is another name for a non-applicant spouse of a nursing home Medicaid applicant or a HCBS Medicaid waiver applicant).
Persons who are over Medicaid’s income and / or asset limit(s) should not be discouraged. There are a variety of planning strategies that can assist applicants in meeting the financial criteria. Learn more about Medicaid planning techniques.
A common concern of persons applying for Medicaid long term care is that Medicaid can take their home. Learn more about the circumstances under which this can happen and how to protect one’s home here.
Regular State Medicaid
The income limit for regular state Medicaid (for seniors, this is often called Aged, Blind and Disabled Medicaid) is often lower than it is for HCBS Medicaid waivers and Medicaid nursing home care, though there is some state variances in limits. In most states, in 2021, the income limit is generally $794 / month (100% of the Federal Benefit Rate for an individual) or $1,073 / month (100% of the Federal Poverty Level for a household of 1) for single applicants and the asset limit is generally $2,000. See state specific income and asset limits.
Some higher valued assets, such as one’s home is not generally counted towards the limit. For the home to be exempt, the Medicaid applicant must reside in it (or express “intent” to return to live in it) and have a home equity interest (the value of the home in which the applicant has paid and owns) under a specific value. In 2021, the equity interest limit is usually $603,000 or $906,000, though this is state dependent. (For state specific equity interest limits, click here). If the applicant has a spouse who lives in the home, it will also be exempt, regardless of the applicant’s equity interest in it and the location in which he / she lives.
For applicants who are married, the income limit is generally either $1,191 / month (100% of the Federal Benefit Rate for a couple) or $1,452 / month (100% of the Federal Poverty Level for a household of 2). Unlike with nursing home Medicaid and HCBS Medicaid waivers, the income of a non-applicant spouse is counted towards the income eligibility of the applicant spouse. (More information on how Medicaid counts income can be found here). The asset limit for married couples, regardless of if one or both spouses are applicants, is generally $3,000. Also, unlike with nursing home Medicaid and HCBS Medicaid waivers, an applicant spouse cannot transfer any of his / her income to a non-applicant spouse and the non-applicant spouse is not allocated a greater portion of the couple’s assets.
HCBS Medicaid Waivers / Nursing Home Medicaid
For long term care Medicaid in a nursing home, and for most home and community based services via a Medicaid waiver, a nursing home level of care is required. However, there is no federal definition or criteria for this level of care, which means each state defines it for itself and sets the requirements necessary for this level of care. Often, a combination of factors are taken into consideration, such as the ability to complete day to day activities independently (i.e., bathing, dressing, toiletry, preparing meals, and shopping for essentials), medical needs (i.e., daily injections), cognitive issues (which are often seen with persons with Alzheimer’s disease and related dementias), and behavioral problems (i.e., wandering or impulsiveness, which is commonly exhibited in persons with dementia).
Regular State Medicaid
For long term care Medicaid via the regular state Medicaid program, a nursing home level of care is not generally required. Often, the need for assistance with activities of daily living (personal hygiene, transitioning, mobility, toiletry, etc.) is sufficient to meet functional need. The one exception is for Community First Choice, state plan option 1915(k). To be eligible for this long term care state plan option, applicants must require an institutional (nursing home) level of care.
5) How Much Does Medicaid Pay for Long Term Care?
While the question of what does Medicaid pay towards the cost of long term care is common, there isn’t a straightforward answer. For nursing home Medicaid beneficiaries, nearly all of one’s monthly income must be paid towards the cost of nursing home car. Nursing home residents are entitled to a small personal needs allowance, which varies by the state, but is approximately $30 – $200 / month (in 2021). Monthly income can also go towards paying Medicare premiums and other medical expenses not covered by Medicaid. Furthermore, there is a monthly maintenance needs allowance that may be paid to a non-applicant spouse to prevent spousal impoverishment. Therefore, the amount that Medicaid will pay towards nursing home care varies based on a number of factors: how much monthly income one receives, the amount of the personal needs allowance, the amount of any allowable medical deductions, and the amount of the spousal income allowance (if applicable).
It also can’t be said exactly how much Medicaid will pay for long term services and supports via a HCBS Medicaid waiver or the regular state Medicaid program. Many programs, but not all, cap the hours of services / number of visits a beneficiary is allowed (i.e., personal care assistance might be limited to 35 hours / week or 3 times / week) or have a spending dollar cap (i.e., $3,000 for home modifications in any given year). Furthermore, it is not uncommon for programs to allow for exceptions to their service hours / spending caps, which means under certain circumstances a Medicaid beneficiary may exceed the maximum number of service hours / visits / spending dollars allotted per participant.
6) How Much of Your Money Must be Spent Before Medicaid Takes Over?
There is no specific dollar amount that must be spent on long term care before Medicaid will take over paying. This is because how much one will spend is dependent on various factors, such as how much monthly income and countable assets he / she has and from which long term care Medicaid program he / she is enrolled.
In order to be eligible for Medicaid long term care, income and asset limits (discussed above under “How to Qualify for Medicaid Long Term Care”) must be met. Applicants who have assets over Medicaid’s limit must “spend down” their “excess” assets in order to meet the limit (and qualify for Medicaid). This can be done by paying for long term care, paying off debt, purchasing an irrevocable funeral trust, and making home modifications for safety and accessibility purposes. (Remember, assets cannot be given away or sold for under fair market value because doing so is a violation of Medicaid’s look back period and can result in Medicaid disqualification). Therefore, the amount that one might spend on long term care (or other methods of “spend down”) depend on the amount of excess assets one has. (There are also planning strategies to protect assets for family as future inheritance. Click here to learn more).
Our Medicaid Spend Down Calculator will help applicants determine how much of their assets must be spent to be eligible. The calculation is specific to the state, marital status, and financial assets of the applicant.
For those who are over Medicaid’s income limit, some states are “medically needy”, while others are “income cap”. Medically needy states are also called “spend down” states. In these states, persons can spend their “excess” income (income over Medicaid’s income limit) on long term care / medical expenses. Once one’s income has been spent down to the medically needy income limit, Medicaid will cover long term care for the remainder of the “spend down” period. The greater amount of monthly income one has, the higher the amount one has to “spend down” before Medicaid will pay for long term care. (Note that the medically needy income limit is often lower than the income limits discussed above under “How to Qualify for Medicaid Long Term Care”. )
For income cap states, Medicaid applicants are able to deposit their “excess” income into a qualified income trust, also called a Miller trust. Essentially, this is an irrevocable (cannot be changed or cancelled) trust in which a trustee is named to manage the account. The money deposited in the account no longer counts as income for Medicaid purposes and can only be used for very specific purposes, such as paying a nursing home Medicaid beneficiary’s personal needs allowance, a non-applicant’s spousal income allowance (if applicable), and contributing towards the Medicaid recipient’s cost of care. The higher the amount of one’s monthly income, the higher the amount one must deposit into the Miller trust. See if a state is a medically needy state or an income cap state.
As mentioned previously, all of a nursing home Medicaid recipient’s monthly income, with just a few exceptions, such as a personal needs allowance, must be paid towards the cost of long term care.
7) How to Apply for Long Term Care Medicaid?
The application process for Medicaid long term care varies based on the state and the Medicaid program for which one is applying. The application process can be daunting and complicated, particularly if an applicant has income and / or asset(s) over the limits or is married. Consulting a professional Medicaid planner can be extremely helpful to discuss one’s particular circumstances and potential planning strategies, as well as to assist with the application process. (Find a Medicaid expert here). Contacting one’s state Medicaid agency for additional information can also be helpful.
For general information about applying for long term care Medicaid, click here.