Long-term care, whether provided in a private home, a nursing home, an assisted living facility or a continuing care retirement community, is expensive. The average national rate for a private room in a nursing home in the U.S. is $100,375 each year according to the 2018 Genworth Cost of Care Survey.
Many family caregivers and seniors think these costs will be taken care of by Medicaid, the joint federal and state program that provides medical assistance to impoverished people. When it comes to long-term care, this public assistance program does pay for the largest share of these services, but only if a senior meets strict financial and functional requirements. Because Medicaid is administered by each state, keep in mind that these criteria can vary considerably from one state to another.
Eligibility Requirements for Medicaid Long-Term Care
Medicaid will cover the costs of nursing home care, but there are different types of criteria that applicants must meet in order to receive assistance. The most basic and universal requirements include being a U.S. citizen (or a qualified non-citizen) and meeting residency rules in the state where the applicant intends to apply for Medicaid.
Additionally, an applicant must:
- Be age 65 or older; OR
- Have a permanent disability as defined by the Social Security Administration; OR
- Be blind.
Medical Criteria for Medicaid-Covered Long-Term Care
To receive long-term care services paid for by Medicaid, an applicant must be assessed and determined to need a nursing facility (NF) level of care. A medical specialist in the state conducts a needs assessment of the applicant and determines if they require care in a nursing home, care in an assisted living or if they are a candidate for home and community-based services (HCBS) like in-home care. (HCBS are a slightly different type of Medicaid aimed at delaying or preventing applicants’ entry into institutional facilities like nursing homes).
Each state defines its own NF care level criteria, and the explanations are often very complex or vague. However, the requirements for meeting a nursing home level of care typically include a combination of medical, functional and cognitive components.
Medically, an applicant may need to be certified as requiring frequent skilled nursing care (e.g. assistance with injections, IVs, catheter care or other medical devices and treatments). An applicant’s functional level is commonly determined by assessing their ability to manage activities of daily living (ADLs). The six ADLs are eating, bathing, dressing, continence, toileting and transferring/mobility.
Criteria relating to cognitive abilities are often more difficult to define and quantify. Many states account for the special long-term care needs of seniors with neurodegenerative diseases like Parkinson’s, Alzheimer’s and other forms of dementia in their nursing home level of care requirements. However, even if dementia-related symptoms like memory loss and sundowning are not specifically mentioned in a state’s Medicaid guidelines, progressive neurological conditions do take a toll on a senior’s health and ability to function independently.
Financial Eligibility Requirements for Medicaid Long-Term Care
Medicaid is a program designed to help medically needy individuals with low incomes and limited assets. State Medicaid programs set strict income and asset limits when determining whether applicants qualify financially.
- Medicaid Income Limits
Some sources of income are counted by Medicaid, while others are not. Income limits vary by state and are typically based on the Social Security Administration’s set federal benefit rate. The hard income limit for Medicaid in 2019 is $2,313. Some states allow medically needy seniors who are over this limit and have high medical bills to still qualify.
- Medicaid Asset Limits
Some assets are included in Medicaid’s requirements, while others are considered non-countable assets. Exempt assets include the applicant’s primary residence, their personal belongings, one motor vehicle, property essential to self-support, whole life insurance with a face value under $1,500, certain prepaid burial arrangements and assets held in specific kinds of trusts.
Unless specifically excluded, any other real or personal property is counted in the Medicaid eligibility determination. The general asset limit for Medicaid in most states is $2,000 but may be higher in some states. Different rules and limits apply for married couples where only one spouse is applying for long-term care covered by Medicaid.
Part of determining a senior’s eligibility is a five-year look-back at their financials. Any indication that an applicant has transferred assets for less than fair market value (FMV) in the five-year window prior to their application will disqualify them and trigger a penalty period. (In some states, the look-back period may be shorter.)
If a person has reasonable income and assets but meets Medicaid’s medical criteria, they must typically pay for care out of pocket until their assets have been significantly diminished to Medicaid limits. It is important to seek more detailed information and guidance from an attorney before initiating any kind of spend down strategy for income or for assets. Medicaid planning is not a do-it-yourself project.
If you or an aging loved one need assistance with applying for Medicaid to pay for long-term care, contact your state’s Area Agency on Aging and consider working with a reputable elder law attorney who is knowledgeable about Medicaid planning in your state.
To see each state’s Medicaid profile, visit Medicaid State Overviews.