How Medicaid Works?

How Medicaid Works

Medicaid is a joint federal and state program that pays for medical care for individuals who cannot pay their own medical bills. (In California this program is known as Medi-Cal). To qualify for Medicaid, an individual must have limited income and few assets. Medicaid eligibility rules are complicated, and different states apply different rules. Each state operates its own Medicaid program, consistent with federal law.

Medicaid pays for a majority of our nation's nursing home care costs. Unlike Medicare, Medicaid will pay for both skilled and custodial care. Medicaid pays for physician-approved hospital stays, medical care, prescription drugs, and skilled nursing home care. (There are exceptions in certain states)

The disadvantage to relying on Medicaid is that you will be very limited in your choices of nursing homes, or may be forced to go to a nursing home, since Medicaid usually does NOT pay for home care.

We have summarized the criteria for Medicaid eligibility for your income and assets, whether you are married or single. *We have also provided a chart for you that shows you what your state specific criteria is.

Income Limits

The income of a Medicaid nursing-home patient--usually Social Security and pension income--must generally be used to pay the costs of long-term care. The patient may keep a "personal-needs allowance" which averages $30 per month.* (This varies by state)

However, if the Medicaid nursing-home patient is married, the at-home spouse has the right to keep a certain amount of income, which can vary between $1,452 and $2,232.* If the at-home spouse has income that is coming in their name alone they are allowed to keep that income as well and it does not have to go toward their spouse's long-term care costs.

Generally speaking, if the individual has enough income to pay for their own care they will not qualify for Medicaid even if they meet the asset requirements below. If a couple has enough income to provide the at-home spouse with the minimum income requirements and pay for the nursing home spouses long-term care, they will not qualify for Medicaid even if they meet the asset requirements.

Asset Limits

Before a Medicaid applicant can qualify for Medicaid they must "spend down" their assets, such as cash, stocks, and most other items with cash value, until only $2,000 remains, (this varies by state).

If there is an at-home spouse, they may keep assets ranging between $17,856 and $89,280 depending on which state you live in. Any assets above that have to be "spent down". This does not include the house and car and a few other assets. In determining Medicaid eligibility, the couple's assets are evenly divided. The nursing home patient spends their half down to the state's criteria which averages around $2,000, (This varies by state). The only way the at-home spouse can keep the maximum of $89,280 is if half of their assets are equal to or exceed the maximum of $89,280. If this is not the case, the at-home spouse will get to keep 50% of their assets. They are allowed to keep at least the minimum asset allowance (see chart). There are a few states that automatically allow the at-home spouse to keep the maximum of $89,280 if the couple have that much in assets (We have put a * by those states for you on the chart below).

Transferring Your Assets to Qualify for Medicaid

Many people think a solution to qualify for Medicaid is to falsely impoverish themselves by giving their assets away. The 1993 budget bill (OBRA '93) changed the transfer of asset guidelines to qualify for Medicaid's nursing home benefit dramatically. This legislation requires the Medicaid program to "look back" 36 months (30 months for CA) prior to the application for Medicaid's nursing home benefit to see if assets have been transferred (i.e. to children or others) The look-back period is 60 months if assets were transferred to an irrevocable trust. The applicant is ineligible for the number of months equal to the amount of the transfer divided by the state's average cost of nursing home care.

Estate Recovery for Medicaid Benefits

Federal Law requires every state to recover what it spent for the care at the death of the second spouse. State rules and practices for estate recovery vary significantly. Some states are more strict than others. In some states, placing a lien on your home is part of the estate recovery act.

Last Updated (Tuesday, 03 March 2009 00:11)

 
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