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Medicaid eligibility for nursing home care

The Medicaid program is the largest single payer of nursing home bills in America, and is the payer of last resort for those who do not have the resources to pay for their own care.

Medicaid eligibility rules are complicated and differ from state to state. It is important to get the advice of an experienced Medicaid planning professional before applying for Medicaid benefits. Because the Medicaid rules require an applicant's finances to be reviewed as far back as five years before the application date, now is the time to get advice if there may be a need for Medicaid benefits in the future.
Medicaid is a need-based government health-care program. Medicaid accounts for approximately 42% of nursing home expenditures.*

To qualify for Medicaid nursing home coverage, an applicant must meet three eligibility tests.

  • Category test: Applicants must be at least one of the following: age 65 or older, disabled, or blind.

  • Income test: In "spend-down" states, the applicant must spend his or her monthly income (minus a small personal needs allowance) on medical or nursing home expenses.

    In "income-cap" states, a spend down of income is not allowed. Income of even $1 over the monthly income amount allowed by the state will disqualify an applicant from receiving Medicaid (although planning opportunities may exist to allow eligibility under certain conditions).

  • Asset test: The applicant is allowed to own only minimal assets (generally $2,000 for an individual, $3,000 for a married couple if both are applying), but certain assets are exempt from this calculation. Exempt assets (such as certain prepaid burial contracts) may be purchased to reduce the applicant's assets below the allowable figure. Certain transfers (such as limited transfers to a spouse who is not covered by Medicaid, transfers to a disabled child, etc.) are also allowed to reduce the applicant's assets.

* Source: Centers for Medicare & Medicaid Services, 2009