Reasons For Medicaid Long Term Care Denials & What to Do About Them
If one applies for Medicaid Long Term Care and is denied, it is still possible to receive Medicaid benefits. There are several reasons a person might receive a denial, and while Medicaid is different in every state, there is usally a process for someone who is initially denied Medicaid benefits—including Nursing Home Medicaid and Home and Community Based Services waivers for long term care—to nonetheless receive those services.
The Basics of Medicaid Denial & Next Steps
At a basic level, this is what you need to know about being denied for Medicaid programs including Long Term Care, and what to do next. If one receives a Medicaid denial letter, it is most often due to assets or income above the limits. Another possible reason is human error. One has three options upon a denial of Medicaid:
1) Request a reversal
Now, let’s get a little more in-depth on the process of becoming Medicaid-eligible after a denial of benefits.
Understanding the Reason Why One Was Denied Medicaid Benefits
Medicaid programs for Long Term Care include Nursing Home Medicaid and Home and Community Based Services waivers. If one goes through the long and detailed process of applying for services through these programs, a letter of approval or denial should come back within 90 days.
A Medicaid denial letter should state the exact reason an applicant was not approved for benefits. Those reasons could be due to the following:
– being above the financial limits
– having physical/functional needs that aren’t severe enough for approval
– a mistake on the application.
Mistakes are common on Medicaid applications! These are complicated documents that take a long time to fill out correctly.
It is common for one to immediately appeal a denial, but that is not necessarily the correct next step to get Medicaid to change its mind.
Financial Criteria: How To Know One’s Specific Limits
The most common reason an applicant is denied Medicaid is income or assets above the eligibility criteria. In most states, an applicant’s monthly income must be less than $2,523 per month in 2022, and their assets (including money in bank accounts) must be less than $2,000.
These figures will vary depending on many factors, including state of residence, marital status and the type of Medicaid for which one is applying, so it’s a good idea to get case-specific criteria via our quick-and-easy Medicaid Eligibility Requirements Finder tool.
Denied Medicaid Because of Income or Assets Above the Limit
If Medicaid offices inform an applicant that their benefits were denied due to not meeting financial eligibility criteria, meaning income or assets are above the limits, then the first thing to do is double check the limits.
Denied Because of Income
If an applicant feels the denial is simply incorrect because they do not have income above the state’s limit, then the easiest step is to request a reversal. The process of requesting a reversal following a Medicaid denial is simple: One contacts the Medicaid caseworker who handled their application (usually by phone or email), and reviews the documentation to find any errors that were made and identify the reason for an unfair or incorrect denial. This simple step can frequently cause a denial to be reversed.
When requesting a reversal with a Medicaid caseworker, be sure to be respectful. It might become necessary to take the case to a supervisor, or someone else slightly higher in the hierarchy at your state’s Medicaid offices.
It might be a good idea to contact a professional Medicaid planner to review an application and Medicaid denial letter before requesting a reversal, especially if one has complicated financial and/or marital issues.
If the Medicaid denial was correct, and the applicant does in fact have income above the limits in their state, it is possible to lower one’s countable income and reapply. Methods to lower income for the purposes of applying for Medicaid include:
– Qualified Income Trusts – where a bank holds excess income in a special account
– Medically Needy Pathway – for applicants who spend part of their income on medical care.
– Transfer of Income to a Spouse – for applicants whose spouses have very little income of their own.
Denied Because of Assets
If an applicant is denied Medicaid Long Term Care benefits because of assets above the state’s limit, the first step is to double check the eligibility criteria. If a mistake has been made, then contacting one’s Medicaid caseworker and requesting a reversal (see above) might be all it takes to turn a denial into an approval.
Even if a denial is not a mistake, someone who is denied Medicaid benefits can still become Medicaid-eligible, reapply for services, and be accepted into the program. The most common reason a person is denied Medicaid is too much value in their assets, which include money in bank accounts, stocks and bonds, and vacation properties.
Fortunately, there is a lot of wiggle room when it comes to which assets are or are not considered countable when one applies for Medicaid. Certain strategies, including gifting excess assets to family members through the “Half a Loaf” method for buying an annuity, or establishing an asset protection trust (details on these Medicaid Planning strategies), can enable someone who is over the Medicaid financial limits to become eligible.
More often, someone with excess assets can become eligible via Medicaid Spend Down. The following are allowable methods for spending down excess assets to become eligible for Medicaid:
– Life Care Agreements: paying a caregiver
– Paying off debt including credit cards, vehicle loans, and mortgages
– Buying medical equipment not covered by insurance, like hearing aids
– Installing home modifications including wheelchair ramps
– Vehicle repairs
– Irrevocable funeral trusts that cover the future cost of one’s burial and funeral
More on these strategies. Specifics can vary depending on the state, but spending down in some form is allowed in every state, so long as one does not violate Medicaid Look-Back Period.
The look-back period is usually five years (except in California where it is 2.5 years). The applicant cannot spend assets or income in a way that violates Medicaid’s look-back rules before applying for benefits. As an example, someone could not simply give their money away to a family member before applying for Medicaid. Someone who violated the Look-Back rules can still be approved for Medicaid benefits, but with a period of ineligibility. More how the Medicaid Look-Back works.
How Re-Applying for Medicaid Changes Dates of Coverage
After utilizing techniques to lower one’s countable income or assets, an applicant can re-apply for Medicaid. Unfortunately, this resets the application date. In many states Medicaid will cover an applicant from the date of application, meaning costs of care may be reimbursed, but someone who is denied benefits and reapplies is not going to be paid back for costs before the date one reapplies.
However, remember that retroactive Medicaid will cover costs of care up to three months before an application is submitted, and this might even be an option for someone who is denied benefits and then reapplies. Unfortunately, retroactive Medicaid is not available in some states. More on retroactive eligibility for Medicaid.
One can reapply for Medicaid immediately after receiving a denial letter; there is no window or time period an applicant must wait before reapplying.
Denied Medicaid Due to Level of Care
It is possible for an applicant to be denied Medicaid benefits because their level of care need does not meet Medicaid’s criteria. An example would be someone who applies for Nursing Home Medicaid when full-time nursing is not actually necessary.
It is also possible that one could be denied benefits through Medicaid’s Home and Community Based Services waivers due to not having a high enough level of care need. In other words, someone who applies for Nursing Home Medicaid and HCBS waivers must have a demonstrable functional need for the services provided (there is often a physical assessment by a health professional who works for Medicaid). Aged, Blind and Disabled Medicaid, which also provides long-term care services, is different in that it does not have a care-need requirement and only financial criteria is considered when applying.
If one receives a letter of denial for Medicaid benefits due to not meeting the level of care need, and feels this was a mistake, it’s important to first review the application. In particular, make sure the Physician’s Statement was correctly filled out, signed and dated by the applicant’s doctor.
If a mistake was made, then reversing a denial may be as simple as contacting the Medicaid caseworker and requesting a review of the application.
Note that different states have different level of care requirements for their Medicaid Long Term Care programs.
Denied Medicaid By Mistake
Up to 25% of Medicaid denials are due to mistakes either in filling out an application or made by the Medicaid caseworker who reviewed the provided documents and either missed something or made an error in the process. If one feels they were denied for incorrect reasons, contacting the local Medicaid office and requesting a reversal is the fastest and best way to turn around a denial.
It might be a good idea to hire a Certified Medicaid Planner to review one’s application before requesting a reversal. CMPs are experts on the complicated application process, and can make it much more likely that one’s benefits will be approved.