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

Last updated: February 15, 2024



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 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 in which the application was filed.

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 for 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 Regular State Plan Medicaid / Categorically Aged, Blind, and Disabled, 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.


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 lengthy, and 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. 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 2024, the average cost of residing in a nursing home facility is approximately $7,908 / month. Take an elderly individual who unexpectedly requires skilled nursing care and has to move into a nursing home. It may take them several weeks or even a few months to complete the Medicaid application process. It can provide peace of mind knowing that this costly expense can be retroactively covered for up to 3-months prior to Medicaid application if the applicant is found Medicaid-eligible during this period.


Qualifying for Retroactive Medicaid / Eligibility Criteria

To be eligible for Retroactive Medicaid, one must meet the eligibility requirements prior (up to 3 months) to their application date. Generally speaking, to be eligible for Nursing Home Medicaid in 2024, one must have a monthly income no greater than $2,829, and must not have assets in excess of $2,000. See state-by-state eligibility criteria for long-term care Medicaid. Applicants must also have a functional need for Nursing Home Level of Care. This need is often demonstrated by the necessity for assistance with Activities of Daily Living, such as bathing, grooming, dressing, mobility, and eating.

 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, Medicaid-Complaint-Annuities ccan be used to transform excess assets into a stream of income. Countable assets can also be lowered by purchasing an Irrevocable Funeral Trust. 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.

In 1997, Massachusetts (MassHealth) eliminated 3-month retroactive eligibility for persons under 65 years old who did not require nursing home care, and instead, permitted a 10-day retroactive period. During the Covid-19 pandemic, 3-month retroactive coverage was reinstated for all Medicaid groups. Georgia also eliminated Retroactive Medicaid coverage for some groups, but not for those who are Aged, Blind and Disabled (ABD), which in this state, means Nursing Home Medicaid beneficiaries can be covered retroactively up to 3 months prior to application.

Some states have eliminated or reduced retroactive eligibility even for Nursing Home Medicaid beneficiaries. In February 2019, Florida limited retroactive eligibility to pregnant women and children under the age of 21. 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. In July of 2019, Arizona also limited retroactive eligibility for all groups except pregnant women and children under the age of 19. Retroactive coverage for all other groups, including Nursing Home Medicaid, begins the first day of the month in which the application was received.

Other states, like New York, Illinois, and California (Medi-Cal), have not eliminated or reduced Retroactive Medicaid for any eligibility group.

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. There may be additional services / supports that may be paid retroactively, but even so, 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 it 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. They will know if a state allows retroactive coverage, and if so, the rules specific to that state. Find a professional Medicaid Planner.

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