How Your State Impacts Your Medicaid Eligibility Requirements

Summary
Medicaid is a public insurance program paid for jointly by each state and the federal government. States must provide certain mandatory benefits and obey specific guidelines before the federal government will match the state’s contribution. The federal guidelines are very broad, giving each state a great deal of flexibility in designing its programs. Variations occur in income and asset limits, home equity values, benefits, and level of care requirements to name just a few. The nuances are extensive.

You can learn more about your specific eligibility criteria by using our Medicaid Eligibility Requirements Finder tool. Alternatively read on to understand the how and why of state variations in Medicaid long term rules.

 

 Note if your state is not yet linked below, you can still learn its eligibility requirements using our search tool here.

 

Eligibility Variations by State

There are some general Medicaid rules that apply across state borders. Medicaid Long Term Care eligibility is based on your income, your assets and your care needs. However, the amount of income or assets are set by individual states and vary every year.

One of the reasons states Medicaid eligibility requirements can vary so much is that each state needs to balance its annual budget. Every state must consider the needs of its citizens with its own financial constraints. This is accomplished by the policies each state chooses to implement. Limiting benefits and sharing costs with Medicaid recipients are some of the methods a state uses to offer this insurance to its residents.

 

Definition of Assets

While the definition of “countable assets” varies little from state to state, the limits on values of individual assets and the value of total assets does change. For example, in all states an owner-occupied home is an exempt (not counted) asset up to a certain dollar amount, but that dollar amount changes from state to state. For 2022, Louisiana sets it home equity limit at $636,000, Maine at $955,000 and California has no upper limit on home equity.

The way individual states value IRAs, Pensions, and 401Ks can vary greatly. Some states will count them as assets, and others will count them as income. Obviously, this can have a major impact on eligibility and even motivates some couples to apply for Medicaid out-of-state.

 

Asset Limits

State Medicaid programs set total countable asset limits for applicants. In 2022, these are as low $1,600 for a single applicant in Connecticut to as higher as $16,800 in the neighboring state of New York. For married couples these same states set the limits at $3,200 and $24,600, respectively.

 

Spousal Asset Transfers (Community Spouse Resource Allowance)

When a Medicaid applicant is married but only one spouse is applying for Medicaid, the applying spouse will be able to transfer some assets to the non-applicant spouse. This is referred to as the “community spouse resource allowance.” The dollar value of the assets allowed to be transferred to the community spouse varies from state to state and can change every year. In 2022, Minnesota allows a spousal transfer up to $137,400 while Arizona only allows 50% of that amount.

 

Asset Protections

Medicaid law allows certain ways for assets to be protected from Medicaid. Asset protection is especially important for seniors who wish to preserve their money out of habit or pass it on to their surviving loved ones. Many individuals falsely believe that they can simply transfer their assets to another family member. Unfortunately, this may disqualify them from receiving Medicaid benefits for a specific period of time. However, there are legal and non-punishable routes that one can utilize to reduce their assets without violating Medicaid rules.

These involve complicated financial mechanisms with imposing names such as Medicaid Assets Protection Trusts, Irrevocable Funeral Trusts, Lady Bird Deeds and Annuities and Promissory Notes. More will be written about these techniques as time allows but for now be aware that the technicalities on how to implement these approaches are different in every state.

 

Look Back Period

It is common for individuals who will apply for Medicaid to first dispense their assets in various ways. Sometimes individuals will choose to give some of their assets to their children, grandchildren, or some other friend or relative. Medicaid will often want to see your financial statements so that they can check for circumstances like these, and the time they go back to review assets transfers is called the look-back period. The length of which varies from state to state. They are primarily concerned with whether you received fair market value for any assets you no longer have. If they discover you gave away money or assets during the look-back period, they could penalize you by postponing your Medicaid coverage.

The look-back period goes back 60 months preceding the date of Medicaid application in all states with the exception of California and New York. In those states, the look-back is 30 months but only for certain types of Medicaid.

 

Income Limits

The income limits for Medicaid eligibility vary considerably by state but also by type of Medicaid program. For example, many states set a fixed limit on income for single applicants applying for nursing home care in 2022 at $2,523 per month. Other states, set no upper limit on monthly income but require the applicant to surrender all of their income to the Medicaid nursing home in which they will reside. Still other states have a floating income limit saying simply one’s income cannot exceed their monthly cost of care in a nursing home.

 

Income Transfers (Monthly Maintenance Needs Allowance)

If a married couple who only has one individual receiving benefits applies for Medicaid, the non-applicant spouse may qualify for the Monthly Maintenance Needs Allowance. There are both Minimum and Maximum Monthly Maintenance Needs Allowance and these figures differ in many states. If the non-applicant spouse makes little or no money, the other spouse could transfer some of their monthly income. This limit is often $3,435 but can vary based on location. In some situations, the spouse is eligible to receive more than this to cover specific costs such as shelter and utilities.

 

Qualified Income Trusts / Miller Trusts

Some states, known as “income cap states,” allows applicants to put income over the Medicaid monthly limit into a Qualified Income Trust, also known as a Miller Trust. In doing so, the applicant reduces their income to a level below the state’s monthly limit. The state becomes the beneficiary of the trust.

 

Medically Needy

Some states have a “medically needy pathway” to eligibility where Medicaid takes into consideration both the applicant’s income and their cost of care. Should the difference between these dollar amounts be less than a specific amount (which varies by state), the candidate can qualify.

 

Level of Care Requirements

Apart from financial differences, the medical need for Medicaid also changes considerably from state to state. Medicaid requires most long-term care beneficiaries to require a “nursing facility level of care” (NFLOC). The definition of NFLOC varies from state to state as does the screenings and processes required to confirm an applicant has a NFLOC need. A few states simply require applicants to require assistance with a certain number of activities of daily living (such as eating, mobility, toileting). Other states rely totally on a clinical evaluation of the applicant, but most state utilize a combination of these two approaches.

 

Moving to Another State to Become Eligible

 Families should be aware that in moving an elderly loved one on Medicaid from one state to another, that individual may not be qualified for Medicaid from a medical need perspective in their new state of residence.

Applying for Medicaid in a state in which you don’t currently reside (or more accurately in a state to which you just moved) has become an approach to gaining eligibility. As discussed above, some states are more lenient from a financial perspective. Other states have a shorter look-back period, so persons having made certain large financial transactions might be ineligible in one state but not in another. Of course, families will often make the move for non-financial reasons. Most obviously to be nearer to other family members such as their children or to live in a milder climate. The important thing is to be aware that just because someone qualifies for Medicaid Long Term Care does not mean they will automatically qualify in another state. Furthermore, to even apply in the new state of residence one must disenroll from the Medicaid program in their old state of residence.