As we discussed in our article “Paying for Long Term Care,” there are multiple options for how to pay for the cost of Long Term Care (LTC). One of those options involves qualifying for Medicaid benefits, which is based on an individual's assets and monthly income. The basic qualifications are as follows:
A single person can qualify for Medicaid benefits if they have less than $50 per month in income, and if their Countable Assets are less than $2,000. (for more on what assets are “Countable,” see our article “Countable Assets and Medicaid.”) A single person can also have a car and a pre-paid funeral plan.
At first, it might be tempting to wonder how anyone can qualify for Medicaid, since almost everyone has income above $50 per month and assets over $2,000. While this is true, the income limit is how much income a person is allowed to keep on a monthly basis. This means that an individual with income of $3,500 per month can still qualify for benefits, but they must pay all but $50 per month (i.e. $3,460) to the LTC facility before Medicaid will pay anything.
When a married person is applying for Medicaid benefits, the calculations are more complicated. Generally speaking, the same income and asset limits as above, apply for the spouse who will be in Long Term Care (called the “institutionalized spouse”), but the other spouse (called the “community spouse”) is also affected by the Medicaid qualification. The community spouse is allowed to keep a minimum income to meet their needs, and is also allowed to keep a certain portion of their assets. The community spouse is allowed to keep a minimum monthly income of $2,030, and is allowed to keep one-half of their combined Countable Assets, subject to a minimum of $24,180 and a maximum of $120,900.
When looking at the income of a married couple for Medicaid qualification purposes, the Community spouse (CS) is allowed to keep all of their income. However, the institutionalized spouse (IS) cannot have any more than $2,205/mo in income. If the IS has more than the $2,205/mo in income then they must use a Miller Trust to account for that excess income. However, if the CS has less than $2,030/mo of income then part of the IS monthly income can be moved over to the CS side of the ledger to bring the CS up to at least $2,030/mo of income. In certain circumstances there are ways to increase this to $3,023/mo. An example would be as follows: If the IS has monthly income of $3,500, and the CS has income of $1,000, then the CS could keep $1,030 of the IS's income, and only $2,470 would be paid to the LTC facility each month.
The above information is summarized in the table below:
For the most part, qualifying for Medicaid will depend on a person's assets. If a person has too much in assets, they will not qualify until they spend their assets down to the required level. For example, if Mary, a single woman, has a bank account with $3,000, a CD worth $50,000 and a life insurance policy with a cash value of $2,000, she is over the resource limit and will be denied benefits. In order to qualify she will need to cash out her life insurance policy and spend all of her assets down so that the combination of the three assets is less than $2,000 (she'll have to spend a total of $53,000). If John is married to Mary, and they have a total of $600,000, then a total of $477,100 will have to be spent down (leaving Mary with $2,000 and John with $120,900).
The most effective planning you can do is “early planning” or “proactive planning.” This is planning done before someone is already in the nursing home, or before the family knows that nursing home care will definitely be needed.
Looking at these requirements can be overwhelming and it is a lot of information to take in. You must also consider that these requirements change from year to year. There are also many scenarios and sub-requirements that affect how these basic requirements are calculated. One of these is a second marriage or having a lot of non-liquid assets like real estate. It is very important for you to have a knowledgeable and competent individual to help you navigate the many rules and scenarios involved.
If you have any questions about how to qualify for Medicaid, call our office and schedule an appointment for a free half-hour consultation with one of our elder law attorneys. Call us at 419-872-7670 to make your appointment today.