Qualifications for Medicaid Long Term Care Benefits

How to Qualify for Medicaid Long-Term Care?

For people who need to receive care in nursing homes, Medicaid long-term care benefits can provide financial assistance. These benefits can help a person avoid the loss of their financial assets to pay for nursing home care. However, in order to qualify for Medicaid long-term care benefits, a person must meet both income and asset criteria. If a person's income and assets are below a certain threshold, they may qualify for Medicaid long-term care benefits.

Income Eligibility and Share of Costs

As a general rule, so long as a nursing home patient's income does not exceed the costs of nursing home care each month, the patient will be income-eligible (or they can become income-eligible in an income-cap state). In income cap states, a single patient is limited from being income-eligible for Medicaid if their available income is more than triple the SSI limit, which is adjusted annually. For example, the income limit for 2020 was $2349 per month. However, in non-income cap states (like Louisiana), a person will be ineligible if they earn more income than the cost of care.

Situations where a person has more income than the allowable limit may be dealt with in one of two ways. The majority of states (like Louisiana) allow for spenddown, which translates into only being income-eligible if there is more income than the cost of care. A minority of states—referred to as "income cap states"—allow for the shifting of excess income into a special trust to allow for eligibility, called a Miller Trust or Qualified Income Trust.

Co-Pays

The amount a patient must pay towards the costs of care is known as the "co-pay." Once eligibility for Medicaid is established, the patient will be required to pay a monthly co-pay based on their income. Each state uses a co-pay determination formula, and this formula will be different if the patient has a spouse.

Determining a co-pay for a single patient is considerably simpler than for a patient with a spouse. At its most elemental level, the co-pay for a single person can be calculated using the following equation:

Gross Monthly Income - Allowable Deductions = Monthly Co-Pay

To determine gross income, a patient's individual income sources will be added together. The allowable deductions may include a Personal Needs Allowance, health insurance and Medicare premiums, and other limited categories of expenses.

Addressing the Needs of Spouses

For a married person with a Community Spouse (a spouse who is not in a nursing home), the calculations will take into account the financial needs of the stay-at-home spouse. The Community Spouse is entitled to a Spousal Allowance.

Medicaid operates under the "name-on-the-check" rule. This rule establishes that the Community Spouse's income is never subject to contribution towards the costs of the patient spouse's long-term care expenses. In fact, the Community Spouse can receive unlimited income, and they will never be forced to contribute one penny of it to the costs of the other spouse's care.

Even though a Community Spouse is never forced to contribute to the cost of their spouse's care, the law allows for the payment of a spousal allowance to the Community Spouse from the patient's income before a co-pay is required to be paid to the nursing home. This spousal allowance recognizes that a spouse in a nursing home will still owe the at-home spouse an ongoing duty of support. Many Community Spouses rely on their spouses' incomes for their day-to-day needs, and if they lost that income to a nursing home co-pay, it would put them in a financially vulnerable and needy condition that the government hopes to avoid.

Calculating Support for a Community Spouse

The amount of spousal support that a Community Spouse requires is known as the Minimum Monthly Maintenance Needs Allowance (MMMNA). The Community Spouse is allowed to receive an income up to the MMMNA. This represents the total income allowed to the Community Spouse, including the Community Spouse's own income. The MMMNA can be determined by adding a spousal support allowance (called the Monthly Income Allowance or MIA) to the Community Spouse's income.

This complicated concept is best illustrated by an example. Assume that a nursing home patient has an income of $3,000. The Community Spouse has an income of $1,000. The MMMNA is determined to be $2,400. Medicaid allows a portion of the nursing home patient's income to be paid to the Community Spouse. In this case, that payment would be $1,400, so that the Community Spouse may receive the full amount of the MMMNA. After the payment of the $1,400 of the nursing home patient's income, called the Monthly Income Allowance, the remainder of the nursing home resident's income will be paid to the nursing home as their co-pay.

Determining appropriate spousal support and co-pays can be a complicated calculation depending on whether there is no MIA, a partial MIA, or a full MIA. By consulting with a Certified Medicaid Planner like Gary Brown who can explain this concept further, you can receive assistance and ensure that a Community Spouse will receive the full income he or she is entitled to under the law.

Eligibility for Medicaid Based on a Person's Assets

To qualify for Medicaid long-term care benefits, an person must meet an asset test to ensure that his or her assets do not exceed a certain threshold. Each asset is classified by Medicaid rules as either a protected asset (also called a non-countable asset) or an available asset (also called a countable asset). Non-countable assets are often referred to as exempt assets because they are exempt from counting towards Medicaid eligibility or being subject to spenddown.

The most common non-countable assets are the following:

1. Homestead (up to a value of $688,000 in Louisiana)
2. Primary Vehicle
3. Personal Items (but not investment grade items like precious metals, jewelry, or art)
4. Cash Value Life Insurance (up to a value of $10,000 in Louisiana)
5. Single Premium Immediate Annuities (must be Medicaid compliant)
6. Funeral/Burial Plans
7. Individual Countable Resource Allowance (up to $2,000)

Almost all assets that do not qualify as non-countable assets are considered countable. They will be included when determining a person's eligibility for Medicaid long-term care benefits. The resource limits for Medicaid eligibility will depend on whether an applicant is single or married. A single applicant's resources cannot exceed $2,000 in countable asets. There are different rules for an applicant with a spouse. These rules are called spousal impoverishment rules. Our Certified Medicaid Planner can provide guidance on how these rules may affect Medicaid applications and how an applicant can avoid financial losses.

An important distinction between income and assets when calculating Medicaid eligibility is that if a Medicaid applicant is married, all of the assets of both the husband and wife will be considered to determine Medicaid eligibility. This calculation is separate from the income eligibility determination, which only considers the income of the applicant spouse (Remember: the "name on the check" rule).

Contact Our New Orleans Certified Medicaid Planning Attorney

If you or a family member is faced with the possibility of long-term care, contact our Certified Medicaid Planner to assist in determining Medicaid eligibility and qualifying for Medicaid long-term care benefits. This can save you tens, if not hundreds, of thousands of dollars. Call 504-447-6000 to schedule an initial consultation.