How Retroactive Medicaid Coverage Works and Can Help Pay Existing Nursing Home Bills

Last updated: May 14, 2019

 

Definition

Retroactive Medicaid allows Medicaid applicants to receive nursing home coverage for up to 3 months prior to the date of one’s application. Stated differently, as long as one meets Medicaid’s eligibility requirements in the 3 months preceding application, Medicaid will still pay Medicaid covered expenses during that timeframe. Without retroactive eligibility, benefits for Medicaid eligible persons begin on the date the Medicaid application was filed or the beginning of the month the application was filed. Or phrased another way, Medicaid applications can be backdated.

As an example of retroactive Medicaid, Bill moves to a nursing home in March, but doesn’t apply for Medicaid until June. He is approved for benefits. He also met the eligibility requirements the three months preceding his application. Therefore, unpaid nursing home expenses for March, April, and May are paid by Medicaid.

Retroactive eligibility also applies to the categorically aged, blind, and disabled program, and in some states, Home and Community Based Services (HCBS) Medicaid waiver programs. However, for purposes of this article, we will focus on retroactive eligibility for institutional (nursing home) Medicaid. Learn more about nursing home Medicaid.

 

Benefits of Retroactive Medicaid

Retroactive Medicaid is meant to provide a safety net for financially needy persons who have an unexpected illness or injury. It provides a way for medical bills to get paid when the care recipient does not have the means to cover the cost. The Medicaid application process can be complicated and can take time. Therefore, it isn’t feasible for persons to become eligible for Medicaid immediately. In addition, when dealing with a serious sickness or injury, starting the application process is not generally at the forefront of one’s mind. Retroactive eligibility allows persons time to apply for Medicaid without stressing over how the bills are going to be paid. As mentioned previously, as long as the applicant is eligible for Medicaid the three months prior to application, Medicaid will pay for covered expenses accrued during these months. Even after death, an application for retroactive eligibility can be filed on behalf of that person. Please note that some states will only cover unpaid medical expenses, while other states will reimburse Medicaid recipients for paid bills.

Retroactive eligibility is particularly beneficial in the context of nursing home care. In 2019, the average cost of residing in a nursing home facility is approximately $7,500 / month. Take an elderly individual who unexpectedly requires skilled nursing care and has to move into a nursing home. With a monthly income of just $1,200, and a small nest egg of $10,000, he/she is ineligible (due to excess assets) for Medicaid at the time of admission. However, the resources will quickly be spent on care, the care recipient will no longer have assets over Medicaid’s asset limit, and he/she will be unable to pay the monthly nursing home fees. The senior will then apply for Medicaid and while the application is pending, have peace of mind knowing that any unpaid bills will be retroactively covered.

 

Qualifying for Retroactive Medicaid / Eligibility Criteria

In order to be eligible for retroactive Medicaid, one must meet the eligibility requirements prior (up to 3 months) to his/her application date. As of 2019, in order to be eligible for nursing home Medicaid, one must have a monthly income no greater than $2,313, and must not have assets in excess of $2,000. While these figures are generally true for many of the states, limits are not consistent across all of the states. (See eligibility criteria for long-term care Medicaid by state.) In addition to the financial criteria, applicants must also have a functional need. This need is often demonstrated by the necessity for assistance with activities of daily living, such as bathing, grooming, dressing, mobility, eating, etc.

 

 Advance Planning for Medicaid is Preferred, Not Required!
The best course of action is planning well in advance of the need for long-term care Medicaid. This allows persons over the income and/or resource restriction(s) to use planning strategies to meet the limits. For example, annuities can be used to transform excess assets into a stream of income, purchasing an irrevocable funeral trust can lower countable assets, Medicaid asset protection trusts can also lower countable assets, and qualified income trusts help persons with excess income to meet the income limit. It is highly recommended that one seeks the counsel of a professional Medicaid planner when considering strategies to meet Medicaid’s financial guidelines. To find an experienced planner in your area, click here.

 

State-by-State Restrictions on Retroactive Eligibility

While retroactive eligibility is federally mandated (required by federal law), some states are finding a loophole and restricting or limiting retroactive eligibility. They are doing this through Section 1115 Demonstration Waivers, which allow states flexibility in their Medicaid programs, including disregarding certain federal rules.

Effective February 2019, Florida limited retroactive eligibility to pregnant women and children under the age of 21. This means persons who require nursing home care can no longer receive retroactive benefits. However, Florida does allow a Medicaid-eligible applicant’s coverage to start the first day of the month of application. For instance, an applicant who applies for Medicaid on January 27th and is approved, will receive coverage starting January 1st.

As of May, 2019, other states that have also eliminated or restricted retroactive coverage, or have a pending waiver to limit or get rid of it include Arizona, Arkansas, Indiana, New Hampshire, Massachusetts, New Mexico, Oklahoma, Utah, Maine, Kentucky, and Delaware.

The rules governing a state’s Medicaid program frequently change, and states that currently allow retroactive coverage may eliminate, or limit, it to certain eligibility groups. Also, states that have eliminated retroactive coverage may reconsider and reinstate it. For instance, Iowa eliminated retroactive coverage for nursing home recipients in 2017, but reinstated it in 2018.

 

Expenses that can be Paid via Retroactive Medicaid

In addition to skilled nursing home care, retroactive Medicaid may also pay for a number of other expenses. Examples include hospice, hospitalization, out-patient hospital services, laboratory tests, x-rays, physician visits, home health care, prescription medications, non-medical transportation for doctor’s appointments, and durable medical equipment. Please note that there be additional services / supports that may also be paid retroactively, and that all states may not retroactively cover all of the benefits mentioned above. As mentioned previously, some states may also cover home and community based services via HCBS Medicaid waivers retroactively.

 

How to Apply for Retroactive Medicaid

Professional assistance is not required to apply for retroactive Medicaid, but can be very helpful in the application process. This is especially true because a planner can analyze the Medicaid candidate’s financial situation for the 90 days preceding application and make certain the applicant has not inadvertently disqualified themselves for Medicaid or for retroactive coverage.

Medicaid planners are knowledgeable in the process (including providing supporting documentation), as well as know the rules surrounding a state’s Medicaid program. For instance, they will know if a state allows retroactive coverage, and if so, the rules specific to that state. Find a professional Medicaid planner here.

To find contact information for the agency that manages your state’s Medicaid program, click here.

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