How Much Does Medicaid Cost?

Last updated: August 20, 2020
medicaidplanner Staff asked 4 years ago

How Much Does Medicaid Cost? Are there monthly premiums or is the program free?

1 Answers
medicaidplanner Staff answered 4 years ago

Medicaid is unlike Medicare and other health insurances in that there is no monthly premium cost. Long term care Medicaid, however, is intended for persons who have limited financial means (low income and assets). That said, beneficiaries may have to contribute the majority of their income towards the cost of their care. (State-by-state financial eligibility criteria can be found here). Phrased differently, what Medicaid actually costs an individual to enroll depends on that individual’s income. Persons with very low income, may receive Medicaid for free while middle-income persons may have to contribute a significant portion of the monthly income to enroll.
Being over Medicaid’s income limit (approximately $2,349 / month in 2020 for nursing home Medicaid and home and community based services via a Medicaid waiver) is not automatic cause for Medicaid denial. Approximately half of the states allow Medicaid applicants to create irrevocable (cannot be cancelled or changed) qualified income trusts (QITs) in which “excess” income is deposited and no longer counts as income for Medicaid eligibility purposes. Stated differently, QITs allow Medicaid applicants to meet Medicaid’s income limit. A trustee (someone other than the Medicaid applicant) is named to manage the trust and the income deposited into the trust can only be used for very limited reasons. For example, it may go towards the cost of the Medicaid beneficiary’s long term care.
States that do not allow qualified income trusts offer a medically needy pathway to income eligibility. These states are sometimes referred to as “spend down” states and allow Medicaid applicants to spend their “excess” income on medical expenses until they reach the medically needy income limit. Once they have done so, they are income eligible for the remainder of the spend down period.
It’s important to mention that Medicaid nursing home recipients must contribute the majority of their income towards the cost of their nursing home care. Stated differently, even when the income limit is met, they are not able to retain monthly income up to this level. Instead, they are only able to keep a monthly personal needs allowance, which varies based on one’s state, but is approximately $30 – $200 / month. Furthermore, married applicants with non-applicant spouses may be able to transfer a portion of their income to their non-applicant spouses as a spousal income allowance, also called a monthly maintenance needs allowance

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