Long-term care is a crucial service for many seniors and individuals with disabilities. It helps to meet their practical needs while offering improved quality of life, health, and independence. Such services are often essential for health and safety, especially when individuals are no longer fully independent. Medicaid is the primary source of funding for such care, but it’s only relevant when individuals meet all the criteria to be financially and clinically eligible for Medicaid. Here, we go over what you need to know when applying for Medicaid for your long-term care needs. Knowing what to expect can help you plan well, reducing the risk of delays and complications.
There are strict eligibility requirements when applying for Medicaid
To receive Medicaid funding for long-term care, individuals must meet strict eligibility requirements based on their income, assets, and health needs. The exact criteria vary between states and over time, so it’s important to research the unique program requirements in your state. Let’s take a closer look at these eligibility requirements now.
Income limits
Medicaid funds long-term care only when individuals can’t pay for it themselves. When you’re applying for Medicaid, assessors will examine your income to ensure it doesn’t exceed a certain threshold, which varies by state. Most states will assess wages, Social Security income, IRAs, and property payments, among other sources of income.
The income limits for Medicaid are much lower than many people expect. These low thresholds can make some people ineligible for this support, even if they lack the resources to pay for long-term care. States can change the limits, so you should consult with your local Medicaid office to find out the current amounts. For a frame of reference, the income limit for a Minnesota resident in 2024 is $1,255 per month. In Texas and Florida, individuals can earn no more than $2,829 per month in 2024.
Asset limits
Medicaid also assesses your countable assets, the limits of which vary by state. For instance, in 2024, an individual living in Minnesota cannot exceed $3,000 in assets for nursing home eligibility. Single Florida residents cannot exceed $2,000 in assets.
Various items and accounts are considered assets, such as checking account balances, savings accounts balances, expensive cars, investment accounts, multiple properties, insurance policies with a cash value, retirement accounts, stocks, and anything that can be turned into cash.
Owning assets that exceed Medicaid’s threshold doesn’t necessarily disqualify you, but Medicaid will use the amount that exceeds the state’s asset limit to calculate the length of time that Medicaid will delay before it starts to cover your expenses (called the Medicaid penalty period).
Health needs
There’s also a functional aspect to meeting Medicaid eligibility for long-term care coverage. Individuals are evaluated and must be determined to require a nursing home level of care (NHLOC). The assessment typically covers four main areas: physical function, medical needs, cognitive impairment, and behavioral issues.
There is no federal definition of NHLOC, so each state sets its own criteria, tools, and methods for determining it. Because of this, a person could be eligible for long-term care payments in some states but not in others.
For example, New York relies on its Uniform Assessment System, which scores an individual’s mental health, physical health, physical functioning, and social support needs. Washington state uses its Comprehensive Assessment Reporting Evaluation (CARE) tool, which assesses key elements such as cognition, ability to perform activities of daily living, and clinical complexity.
Methods of assessing care needs are not foolproof. There are often subjective elements, and the assessment may fail to capture the senior’s needs. In some cases, an inaccurate assessment could lead to a denial you would then need to appeal.
Some people also fall into an intermediate situation, where they need more care than can be provided at home but do not meet the NHLOC criteria. Such a situation can complicate access to financial support, especially since NHLOC criteria may be used to determine funding for other types of care settings (the NHLOC requirement implies that Medicaid for long-term care covers only nursing homes and similar facilities, but through home- and community-based services waivers, Medicaid can finance other care settings, such as home health, hospice, or adult day care).
You may need to spend down
Because of the financial requirements, some people may need to use their savings and sell assets before they are eligible for Medicaid. This process is known as “spending down” and may involve using the senior’s assets to pay for their long-term care needs until they meet Medicaid’s asset limits. The individual will only be eligible for Medicaid support once they have spent down enough of their assets.
Many people feel a sense of security when they have assets and money in the bank. As a result, the spending-down process can feel distressing. In addition, you still need to trust that Medicaid will actually pay for care when it comes to it.
Applying for Medicaid is time-consuming and complex
Medicaid reviews the applicant’s finances for five years before the application, which is known as the look-back period. Assessors examine all the applicant’s financial records, which means that the applicant and any family member helping with the application will need to compile a considerable amount of documentation, like proof of assets, income, medical needs, and more. Having a system to organize paperwork can make this part of the process easier, but even then, it takes time.
The purpose of the look-back period is for Medicaid to ensure that the applicant hasn’t given away their assets simply to have Medicaid pay for their long-term care. As your Medicaid caseworker reviews your bank account information, you may be asked to show proof that an item was not gifted. Selling assets well below their market value is also a red flag. Assets transferred within this period can lead to a Medicaid penalty and a period of denied coverage, during which you’ll have to pay for care out of pocket to make up the financial difference.
Beyond this, there can be delays in the application process and the detailed Medicaid look-back. The application could also ultimately be denied, resulting in extra time and documentation for appeals. These factors all add to the time required for the application, which can be stressful if long-term care is needed urgently.
As a result, it’s important to start the application as early as possible. If you or a loved one might need long-term care in the future, it’s worth starting to organize and plan now. Doing so may also make the five-year look-back easier.
Caregivers face additional complexities
Things can be trickier if you’re a caregiver helping another person apply for Medicaid. In a few situations, having your loved one grant verbal consent over the phone for documentation from banks and other accounts may suffice. In most cases, though, power of attorney paperwork will be essential for getting most companies to release necessary information to you. Even then, there may be some hoops to jump through.
There may be extra costs, even with Medicaid coverage
While Medicaid generally pays for the entirety of long-term care expenses, families may still have to pay other fees. For example, in some states, there may be deductibles for specific medical services.
Beyond this, some services and expenses are considered extras and aren’t covered by Medicaid. These expenses can include the cost of private rooms, cosmetic items, personal dietary requests (that aren’t medically necessary), and cosmetology services. It’s important to ask questions and read the paperwork carefully to avoid unexpected costs.
Additionally, there can be a penalty period after being approved for Medicaid for long-term care, during which you’ll need to pay for long-term care costs out of pocket.
Some long-term care facilities don’t accept Medicaid
It can be difficult to find an appropriate facility, as some long-term facilities don’t accept Medicaid at all. Additionally, there is a high demand for facilities that do, which can mean few available spaces or waiting lists.
As a result, you should search for facilities in your area that accept Medicaid and have enough space. You may need to choose a different facility or one with lower quality care ratings than you had hoped.
The state may recoup costs
After the individual passes away, Medicaid may have the power to recover some of the money it spent on their care from the beneficiary’s estate and may take their house. This process, known as Medicaid estate recovery, can be unexpected and highly distressing for family members who anticipated taking ownership of their loved one’s home.
Take the time to research whether such estate recovery is possible in your situation. Doing so can help you weigh everything and make the best decision.
It’s often worth hiring an elder law attorney
The areas we’ve discussed all complicate the process of applying for Medicaid for long-term care. Even if you can navigate all the paperwork yourself, it’s often worth hiring an elder law attorney who specializes in long-term care Medicaid applications. They can help streamline the process and prevent any unexpected issues. An attorney can also assist before you need care by helping you set up assets in a way that works best for Medicaid approval in the future.
Plan ahead when applying for Medicaid for long-term care
Applying for Medicaid to cover long-term care can be complicated and time-consuming, with strict eligibility requirements on income, assets, and health status. Delays and denials are not uncommon. It’s important to plan ahead, understand your state’s specific requirements, and seek guidance to navigate the process. By being proactive and well-informed, you can reduce the risk of complications and ensure that you or your loved one receives coverage for the care they need.
