How to Become Eligible for Medicaid Long Term Care Through the Medically Needy Pathway

Summary
Medically Needy Medicaid is a program for people who are above Medicaid’s income limits but still need help from Medicaid programs, including Long Term Care programs, to pay care costs. To be considered medically needy, also called taking the “Medically Needy pathway,” one must spend a large portion of their income on medical bills every month. The Medically Needy pathway is not available in every state and those that do offer it have different rules regarding income.

 

Medically Needy Medicaid Overview

Medically Needy Medicaid is for Medicaid applicants who have monthly income above their state’s Medicaid income limit. Medically Needy is also called “spending down” on medical expenses to become eligible, and it is an option in 32 states and Washington, D.C. (for full list, see below). Specific rules can be very different depending on the state.

 ”Spending down” for Medicaid eligibility is most commonly done by spending down assets. However, the Medically Needy pathway allows one to spend down income. More on spending down assets.

 

How Does the Medically Needy Pathway to Medicaid Eligibility Work?

In states where the Medically Needy pathway exists for applicants above the Medicaid income limit, a certain amount of money must be “spent down” on medical bills before Medically Needy Medicaid will pay for the same services as Medicaid. The Medically Needy Income Limits (MNIL) are the amount one has left over after paying medical bills. Put another way, MNIL is one’s income minus monthly healthcare costs.

The MNIL may be called by a different name, depending on the state. “Share of cost”, for example, is the term used in California. It is the dollar amount of medical bills that must be paid before Medicaid will pay the rest of one’s medical expenses that month. Share of cost is therefore like the deductible on a health insurance policy. The higher an individual’s income, the higher their share of cost will be.

 Did You Know? The amount one spends on Medicare premiums may count toward spending down toward the Medically Needy pathway.

 

Example

Here is an example of when the Medically Needy pathway would apply to someone otherwise over the Medicaid income limit: Jack makes $4,000 per month in income and spends $3,500 on medical bills. This leaves him with $500 in monthly income after healthcare expenses. If he lives in a state that has a Medical Needy Income Limit above $500 (in California, for instance, the Medical Needs Allowance is $600 in 2022), then he would qualify for Medicaid coverage of care services via Medically Needy Medicaid.

For a full list of states’ Medically Needy Income Limits, see below.

 

For Which Types of Long Term Care Does Medically Needy Medicaid Apply?

The three types of Medicaid which will pay for long term care to help seniors and those with chronic illnesses (including Alzheimer’s and Parkinson’s disease) are Nursing Home Medicaid, Home and Community Based Services Waivers, and Aged, Blind and Disabled Medicaid. These benefits will pay for a high level of care in an institution or in one’s home, depending on needs.

Whether the Medically Needy pathway to eligibility depends on the state and that state’s specific rules around the different types of Medicaid. Unfortunately, one cannot generalize at the national level.

Nursing Home Medicaid
The income limit in most (but not all) states for an individual to qualify for Nursing Home Medicaid coverage is $2,523 per month in 2022. Someone who needs a Nursing Facility Level of Care but who has income higher than the limit would qualify for Medically Needy Medicaid if they spend a disproportionate amount of money on healthcare. See the chart below. For more on Nursing Home Medicaid, click here.

Home and Community Based Services Waivers
For HCBS Medicaid waivers that pay for care in one’s own home or assisted living community, the income limits are often the same as Nursing Home Medicaid: $2,523 in most states in 2022 (though remember this figure varies). Someone who earns above their state’s income limit but has high monthly medical costs could potentially qualify for Medically Needy Medicaid to pay for the same services as waivers. See the chart below. For more on HCBS waivers, click here.

Aged, Blind and Disabled Medicaid
ABD Medicaid is another benefits program that pays seniors’ medical costs, but its income limits are often lower than the other types of Medicaid Long Term Care described above. A common ABD income limit in 2022 is $841 per month. The amount an applicant must spend down on medical bills to qualify for ABD Medicaid through the Medically Needy pathway is likely different than for other programs.

ABD Medicaid is also different from waivers and nursing home Medicaid in that ABD applicants who are married must combine incomes with the spouse when they apply, whereas with those other types of Medicaid programs an applicant’s income is counted separately from the spouse’s income.

 

What Are Allowable Medical Expenses for Medically Needy Spend-Down?

In every state with Medically Needy Medicaid, money spent on Medicare or other health insurance premiums counts as “spending down,” meaning it may be deducted from an applicant’s income when determining eligibility.

Other spend-down expenses allowed will depend on the state. Medicaid may consider any of these to be medical expenses:
– Doctor bills
– Hospital services
– Prescriptions (drugs and/or equipment)
– Nursing home services
– Eyeglasses
– In-home help with Activities of Daily Living
– Portion of assisted living costs allocated for assistance with the activities of daily living (may be state-dependent)
– Therapies
– Transportation to medical appointments

 

How to Apply for the Medically Needy Pathway to Eligibility

Someone who wants Medically Needy Medicaid would determine that they are ineligible by comparing personal income to the state Medicaid limit, and then applying for Medically Needy through the local Medicaid office (click here for contacts).

Applicants for Medically Needy Medicaid will need the following documentation to prove medical expenses:
– Medical bills
– Medical receipts
– Cancelled checks that paid bills

 

States’ Monthly Income Limits for Medically Needy Medicaid

This is a table of Medically Needy income limits by state. In these 32 states, and Washington, D.C., if one spends down income on medical bills and is left with less than the amounts listed, one would qualify for Medicaid to pay for services through the Medically Needy Pathway:

Monthly Income Limit for Medically Needy Pathway to Medicaid Long Term Care Eligibility – Updated Feb. 2022
State Individual Couple
Arkansas $108 $217
California $600 $934
Connecticut (may vary depending on region) $941 $1,526
District of Columbia $690 $726
Florida $180 $241
Georgia $317 $375
Hawaii $469 $632
Illinois $1,073 $1,452
Iowa $483 $483
Kansas $475 $475
Kentucky $235 $291
Louisiana $100 $192
Maine $315 $341
Maryland $350 $392
Massachusetts $522 $650
Michigan $1,133 $1,526
Minnesota $870 $1,177
Missouri $913 $1,235
Montana $525 $525
Nebraska $392 $392
New Hampshire $591 $675
New Jersey $367 $434
New York $934 $1,367
North Carolina $242 $317
North Dakota $891 $1,205
Pennsylvania $425 $442
Rhode Island $1,008 $1,050
Utah $1,074 $1,452
Vermont (may vary depending on region) $1,166 $1,166
Virginia (may vary depending on region) $337 $429
Washington $841 $841
West Virginia $200 $275
Wisconsin $1,133 $1,526