The costs of care in nursing homes and assisted living facilities can mount swiftly. As a result, patients who need these types of services often seek coverage through Medicaid. The rules on Medicaid coverage for long-term care vary by state, but the federal government requires every state to cover care in nursing homes, as well as home health care costs for people who would qualify for nursing home care. Medicaid may or may not cover assisted living facilities, housekeeping assistants, live-in nurses, and home health aides. Each state determines the scope of what is covered in these areas.
However, not every nursing home or assisted living facility accepts Medicaid payments. This requires the facility to undergo inspections to make sure that they are complying with federal standards, which some facilities may not want to do.
Any service provided by a nursing home or other medical facility must be medically necessary for Medicaid to cover it. If your loved one or you are entering a nursing home, for example, you will need to ask your doctor to certify that living in the nursing home is necessary. There is no age requirement for Medicaid coverage of long-term care, though. If a child has a disability, Medicaid can cover related long-term care if they are eligible, their state covers that service, and it is medically necessary.
Only people with income and assets below a certain level can qualify for Medicaid. These thresholds often are based on the guidelines for the Supplemental Security Income (SSI) program. States may apply more generous thresholds to Medicaid coverage for long-term care than to other areas covered by Medicaid. Even if you do not meet the threshold because your income and assets are too high, you may still qualify if your medical expenses would deplete your resources to the extent that you would qualify based on your remaining resources.
Spending Down Assets
If you are above the Medicaid limit, you can spend down your income and assets until you fall within the limit. Sometimes a patient will start by paying for their long-term care from their own resources and then switch to Medicaid when their resources have dwindled enough to make them eligible.
Spending down assets does not mean that you must spend them only on your care, but you should be aware of rules preventing certain types of asset transfers. You cannot give away assets for less than their fair market value within the last five years before applying for Medicaid. Otherwise, you will be ineligible for Medicaid during a certain penalty period. This will start once you have spent down your assets enough to qualify for Medicaid. The penalty period will be calculated by dividing the fair market value of the asset that was improperly transferred by the average monthly cost of a nursing home in your state.
Contributing to the Cost of Care
Outside a small allowance for your personal needs, you will need to contribute your income to paying for long-term care, regardless of whether you are receiving it in a nursing home or at your home. The personal needs allowance will depend on where you live. It may be smaller if you live with a spouse. You may be able to create a trust that will contain any income that you receive above the Medicaid threshold. This helps you qualify for Medicaid while preserving the funds to repay the state after your death. Any remaining amount in the trust can go to your heirs, although there may be very little left.
These rules for contributing income apply only to the person who is receiving long-term care. Under the Medicaid spousal protection rules, their spouse does not need to contribute all of their resources to paying for the care. The amount of income and assets that they can keep varies greatly by state.
Medicaid sometimes will pursue reimbursement after a recipient’s death for the costs spent on their long-term care. This can happen if you get long-term care through Medicaid when you are over 55, and it also can happen if you are permanently placed in a care facility before turning 55. Medicaid will not take action against your estate as long as your spouse is still alive or as long as you have any minor or disabled children.