Qualifying for Medicaid to Pay for Long-Term Care

Spend-down. Look-back. Penalty Period. Uncompensated Transfer. These are just some of the terms Medicaid uses to determine eligibility for long-term care coverage. Medicaid is a combined federal and state program that pays for long-term care at home (community Medicaid) or in a nursing facility (institutional Medicaid). Asset, income and gift rules vary for community Medicaid versus institutional Medicaid.

To qualify for community Medicaid, an individual cannot make more than about $1,700 per month and cannot own more than about $30,000 in assets. A married couple cannot make more than about $2,300 per month and cannot own more than about $40,000 in assets. Applicants can “spend down” excess income to the allowed amount by paying for medical expenses.

To qualify for institutional Medicaid, an individual can keep $50 per month (the excess goes to the nursing home) and cannot own more than about $30,000 in assets. For married couples, the spouse at home can keep about $3,700 per month and can own between about $75,000 and $130,000 in assets. If the spouse at home makes more than $3,700 per month, she may have to contribute some of the excess to the spouse’s cost of care. For married couples, the residence, up to value of about $1,000,000 and one car are exempt (not counted as assets). Everyone can have a burial trust worth up to $1,500 or any amount in an irrevocable pre-paid funeral trust.

Community Medicaid and institutional Medicaid also differ in “look-back” and gift rules. An institutional Medicaid application asks if you transferred (gifted) any assets in the last five years, hence the “five-year look-back period.” If the answer is yes, the transfer creates a penalty period, which causes a period of ineligibility for Medicaid coverage.

Community Medicaid does not currently have a look-back period, so you may transfer assets out of your name this month and qualify for Medicaid next month. New York is considering imposing a new thirty month look-back for community care in 2024. Now is the time to act to protect your assets.