Will Medicaid Benefits Help Pay LTC Costs?

A joint federal and state program, Medicaid pays medical care expenses for individuals who cannot pay their own medical bills. To qualify, an individual must have limited income and few assets. Medicaid eligibility rules are complicated and vary by state.

Medicaid currently pays most of our nation's nursing home care costs. Different from Medicare, Medicaid will pay for both skilled and custodial care. Qualifying expenses can include physician-approved hospital stays, medical care, prescription drugs, and skilled nursing home care. (See your state regulations for specific coverage.)

However, Medicaid limits a person's choices of nursing homes and may force a person into a nursing home, since Medicaid usually will NOT pay for home care.

Here is an overview of Medicaid eligibility income and assets criteria, whether married or single.

Income Limits
Social Security and pension income of the patient must generally be used for paying the long-term care costs. Patients are allowed a "personal-needs allowance" averaging $30 per month.* (Varies by state)

If the patient is married, the at-home spouse is allowed to keep some of the income (between $1,452 and $2,232*). If income is coming in the at-home spouse's name alone, they can keep it.

Normally, if a person can pay for their own care they will not qualify for Medicaid. Nor will a couple qualify if they can provide the at-home spouse with the minimum income requirements and pay for the nursing home spouse's long-term care.

Asset Limits
To qualify for Medicaid, an applicant must have limited assets or "spend down" their assets, such as cash, stocks, other cash value assets, until only $2,000 remains, (varies by state).

An at-home spouse may keep between $17,856 and $89,280 in assets, (varies by state). The house and car and a few other assets are not included. For Medicaid eligibility purposes, a couple's assets are evenly split and the patient spends their half down to the state's criteria. The at-home spouse will get to keep 50% of their assets up to $89,280. They may keep a minimum asset allowance (varies by state). A few states allow the at-home spouse to keep the maximum ($89,280) if there is that much in assets.

Transferring Your Assets to Qualify for Medicaid
Some people try to qualify for Medicaid by giving their assets away. The 1993 budget bill (OBRA '93) changed the transfer of asset guidelines dramatically. The Medicaid program must now "look back" 36 months from the application date for Medicaid's nursing home benefit to see if assets have been transferred (i.e. to children or others) They must look-back 60 months for assets transferred to an irrevocable trust. Applicants are ineligible for benefits for a period equal to the number of months arrived at by dividing the transfer amount by the state's average cost of nursing home care.

Estate Recovery for Medicaid Benefits
Federal Law requires states to recover what is spent for nursing home care when the second spouse dies. Rules and practices for estate recovery vary significantly by state. Some are more strict than others. Some states require placing a lien on your home as part of the estate recovery act.

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