Becoming Medicaid Eligible When Exceeding the Financial Limits
Many people have researched Medicaid Long Term Care eligibility and have been discouraged by the strict income and assets limits. If you have not done so, use our Medicaid Eligibility Requirements Finder tool. However, should the applicant’s finances exceed the limits that one finds by using the tool, be aware that there are other pathways to Medicaid eligibility. The alternate pathways that exist, their rules and even their names are different in every state, so the reader should be prepared to do some research.
Other Pathways to Become Eligible for Medicaid Long Term Care When Over the Financial Limits
Medicaid has specifically been designed to help people receive care that aren’t able to cover the costs themselves. This means that some of the most obvious criteria for qualification are based on your financial status, specifically your income and the value of your assets. However, it isn’t that straightforward to determine your eligibility.
Medicaid is funded by each state and then given matching funds from the federal government. Each state must meet broad criteria from the federal government to receive those funds, but they still have significant leeway in how benefits are allocated. This means that where you live will have a significant impact on your ability to qualify. Additionally, it also means that there is not a one size fits all approach. If you’ve heard that somebody in a similar situation in a different state didn’t qualify, it may not be true of your situation. However, even if you don’t qualify at first glance, there are other possible options to help you qualify to receive care.
Some of the possible avenues to Medicaid can be employed if you are over the income limit but not over the asset limit. Others work if you are only over on assets, but not income. Finally, a few will work if you are over on both income and assets. However, for any of these avenues to work, you must meet certain medical requirements which vary from state to state. Even if none of alternative pathways to eligibility described below are relevant to your loved one’s situation, one might still become eligible by working with a professional Medicaid planner.
Medically Needy Pathway to Medicaid Long Term Care Eligibility
The Medically Needy Pathway is an approach that considers the applicant’s income and the cost of their care. If their income exceeds the cost of their care by less than a certain amount, then the individual can qualify for Medicaid long term care assistance. This amount is called the Medically Needy Income Limits (MNIL) and it designated by each state in which there is a Medically Needy program or by area within a state. Currently, 32 states and Washington DC offer the Medically Needy pathway. The MNIL ranges for approximately $100 / month to as much as $1,500 / month.
As an example, in California in 2022, the Medically Needy Income Limit for a single individual is $600 / month. If an applicant is assessed as requiring $3,000 in care each month and their income is $2,500 each month, they could qualify for Medicaid through the Medically Needy pathway ($3,000 – $2,500 = $500. $500 is less than CA’s MNIL of $600.)
As of 2022, the following states offer Medically Needy pathways to eligibility.
– District of Columbia
– New Hampshire
– New Jersey
– New York
– North Carolina
– North Dakota
– Rhode Island
– West Virginia
Using Qualified Income Trusts / Miller Trusts to Become Medicaid Eligible
These trusts go by several other names: Miller trusts, income diversion trusts, income cap trusts, irrevocable income trusts, d4B trusts, and income only trusts, to name a few. They are utilized mostly in states that do not allow the Medically Needy pathway described above. The practical difference between the Medically Needy pathway and a Qualified Income Trust is that with a qualified income trust, excess income (over the Medicaid limit) is placed in a trust instead of going directly to Medicaid. This way, whatever portion of a Medicaid recipient’s income goes into the trust is not counted as income, so now that recipient meets the income limit set by Medicaid in the state where they live.
It is also important to know that a Medicaid recipient’s entire income must go into the trust in some states. Then some money from that trust is used to cover that individual’s expenses and a monthly personal needs allowance that the Medicaid recipient receives.
A QIT is established by setting up a bank account and drawing up a trust document that will lay down some ground rules for the trust. The Medicaid applicant can set up their trust, or in many cases, it is their guardian or power of attorney. Someone must also be named the trustee of this trust account. The trustee must follow all the guidelines that are established in the trust document. While this trustee cannot be the Medicaid applicant, they can be a relative, perhaps one of the applicant’s children who are now adults. The trustee is not the beneficiary of the trust. The state in which the Medicaid recipient lives must be the beneficiary of the trust. QIT’s are irrevocable so they cannot be canceled or altered.
Working with a Medicaid Planning Professional
When someone cannot meet the financial requirements for Medicaid and they do not qualify using any of the approaches described here, they will often retain a private Medicaid planner to help them in meeting the Medicaid requirements. Medicaid planners employ various financial mechanisms to help their clients become eligible. Intimidating names such as Modern Half a Loaf, Medicaid Divorce, Spousal Refusal and Asset Protection Trusts reflect the complexity in utilizing these approaches and underscores the importance of retaining a professional to do so. Failure to implement these strategies correctly can result in Medicaid denials or costly penalties.
There are many different types of Medicaid Planners. However, public employees such as Case Managers and State Health Insurance Programs Counselor are likely unable to assist with planning, just Medicaid application support. Beware of Commission-Based Medicaid Planners who do not charge a fee but take a large commission on any Asset Protection Trusts they sell such as a Medicaid annuity.
It is recommended one work with either a Certified Medicaid Planning professional or an Elder Law Attorney. Worth noting though is not all Elder Law Attorney serve as Medicaid planners and they are typically more expensive.