How to Apply for Long Term Care in a Medicaid Nursing Home

Summary
Applying to receive Medicaid Long Term Care in a Nursing Facility is a time-consuming process, but getting each step correct will ultimately land you or your loved one in the right nursing home with expenses paid by your state’s Medicaid. The process differs depending on the applicant’s financial situation.

 

Step 1: Gather Eligibility Criteria for Nursing Home Medicaid

The information you’ll need to complete the application for yourself or a loved one to receive Nursing Home Medicaid will have specific details and nuances that vary depending on your state. You can read a full article on Nursing Home Eligibility at this link, or use a search tool that provides specific eligibility criteria for where you live and your marital status.

 Medicaid is not Medicare – While both are government-run health insurance programs, Medicare is for all Americans 65 and older while Medicaid is for Americans with limited financial means. Medicaid will pay for long term care in a nursing home and Medicare will not.

Very generally, however, we can say that being accepted to receive Nursing Home Medicaid (or “institutional Medicaid”) depends on meeting two levels of criteria:

1) Functional needs: Broadly, functional or physical needs means a person requires help with activities of daily living (ADLs), which are the independent actions we take every day to keep ourselves healthy, like bathing or eating. An assessment by a medical professional (see below) determines functional needs.

2) Financial needs: Medicaid is for people who are low-income with limited assets. What this means in your specific state might be different from others, but usually someone who has income under $2,523 per month (in 2022) and less than $2,000 in countable assets would qualify financially.

Again, there is a lot of nuance that goes into determining Medicaid eligibility in your state. Some states, for instance, might consider the ability to perform instrumental activities of daily living (IADLs) like shopping and cooking to be factors toward becoming eligible for nursing home benefits. The financial requirements can be quite complex as well, depending on assets, like investments and property, and the applicant’s marital status.

 Nursing Home Medicaid is an entitlement, which means anyone who meets the qualifications must receive the benefits from their state, without going on a waiting list.

 

Step 2: Assessing Medical Eligibility for Nursing Home Medicaid

In every state, an individual receiving Nursing Home Medicaid must require a Nursing Facility Level of Care (often abbreviated NFLOC). Because nursing homes are expensive, with average costs in the U.S. at more than $250 per day, Medicaid does not want to pay for someone to receive nursing-level care outside the home if it isn’t absolutely necessary. It may be much more affordable to make home modifications like installing grab bars or security systems for remote monitoring, and Medicaid will pay for these through programs like Home and Community Based Services waivers, if your loved one qualifies, rather than an expensive move into nursing care.

Assessments are how it is determined someone needs NFLOC and is therefore functionally eligible for Nursing Home Medicaid.

Pre-Admission Assessments for Nursing Home Care
Every state has its own standard screening process to decide whether Medicaid applicants need a nursing home. A general term for the required screening is “pre-admission level of care screening”. There may be a simple questionnaire you fill out at home, or a more involved evaluation with your physician, as some states have more levels of assessment requirements than others. A Medicaid applicant might need help with a specific number of ADLs, or a doctor’s diagnosis of a specific medical condition might be required. Because there is so much variance, someone who is eligible for Medicaid in one state might not be eligible in another.

In every state, however, federal law requires a Pre-Admission Screening and Resident Review (PASRR) that assesses serious mental illness (SMI) and intellectual disabilities (ID). Specific needs for the individual are then evaluated against the nursing home they are moving into, to ensure a good fit. The PASRR might be a combination of all required assessments to determine nursing needs, or it may be required in addition to other screenings required in your state, depending on where you live. This is because a person without SMI or ID might still need nursing care.

 Medicaid Pending Nursing Homes
In most states, Medicaid will not pay for a nursing home unless the individual has been admitted, but nursing homes won’t admit someone unless they have a means to pay. A way around this paradox is “Medicaid pending” nursing homes. Some nursing homes will accept Medicaid-pending residents who are awaiting an approval letter from Medicaid. If approved, Medicaid will pay the home retroactively. If rejected, the resident would unfortunately be evicted unless they can find another way to cover costs.

 

Step 3: Assessing Financial Eligibility for Nursing Home Medicaid

Once you know the specific eligibility requirements for your state and marital status, it’s time to begin the labor-intensive process of assessing your loved one’s finances and determining if they are under or over the income and asset limits. Once assessed, there are two paths: either they are financially eligible or not. But, again, it’s more complicated! Just because someone’s monthly income is above the state requirement does not mean they can’t get Medicaid. For more, see below.

Assessing Income
You will need to gather documentation proving the applicant’s income. Save these and get them organized. The documents required to apply for Medicaid Nursing Home benefits will be some or all of these forms:
– Current pay stubs
– Benefit verification letter for Social Security, Supplemental Security Income (SSI), retirement, disability, or Medicare
– Pension statement
– Alimony checks
– Dividend checks
– Signed letter from family members providing support
– Income tax return

Again, requirements will vary depending on which state you live in, but you’ll need to be able to demonstrate monthly income. If you cannot provide the documents described above, there is the option of asking your state Medicaid office for a Self-Declaration of Income form, which is also acceptable if necessary.

Assessing Assets
Asset limits for Medicaid applicants are complicated. Unlike with income, married couples’ assets are combined and considered jointly owned. Your state Medicaid office will look at “countable assets” and “exempt assets” when considering an application. Countable assets are considered “liquid,” which means they can quickly be converted into cash. These include money in the applicant’s bank account, stocks, bonds, and CDs or certificates of deposit. Countable assets also include vacation properties.

Exempt assets include the applicant’s primary home, vehicles, furniture, appliances, clothes, funeral and burial trusts, and some low-value life insurance policies. Exempt assets are not counted toward the asset limit.

This will obviously depend on which state you apply in, but the following documents would be part of an application to show the Medicaid office the value of your assets and which are countable (meaning they count toward the asset limit) and which are exempt:
– Checking, savings, credit union, and CD account statements
– Life insurance policies
– Deeds or appraisals for the home and other property
– Copies of stocks and bonds
– Deeds to burial plots
– Copies of annuities, IRAs, 401(k) retirement accounts
– Deeds for prepaid burial plots and receipts for prepaid funerals

 

Step 4a: Applicant is Financially Eligible for Nursing Home Medicaid

If the applicant is financially eligible, proceed to Step 5a.

Step 5a: Have a Professional, Informal Eligibility Assessment

Once you have made the decision that the applicant will be financially eligible, it is recommended you confirm this assessment with a professional. Submitting your application correctly the first time is a lot of work, but it’s still much easier than having to appeal a denial. Any mistakes make a delay or denial of benefits more likely, even if the applicant is eligible.

One way to get help is a benefits counselor at your local Area Agency on Aging. AAA offices are meant to help with exactly this sort of issue for older adults, and they will be experts on your specific state requirements. They’re also free. The downside of getting help from AAA, however, is that they’re busy and may not be able to assist as soon as you’d like. To find your local AAA office, click here.

Another option to get help with your Medicaid application is a Certified Medicaid Planner. Unlike the AAA benefits counselor, CMPs are paid services. CMPs will, however, offer an initial consultation for free. https://cmpboard.org/ For much more on Medicaid planning, see below.

 

Step 4b: Applicant is Financially Ineligible for Nursing Home Medicaid

If you have gathered information and realized that the person applying for Nursing Home Medicaid is not financially eligible due to being over the monthly income or asset limit, there are still avenues for people over the limits to receive Nursing Home Medicaid benefits, as Medicaid offers various ways to become eligible for applicants who may seem at first to be above their limits.

 

Step 5b: Investigate Alternate Pathways to Eligibility for Nursing Home Medicaid

Medically Needy Medicaid
Medically Needy Medicaid is available in 36 states, and Washington D.C., and is for getting Medicaid benefits to people who spend a significant amount of their income on care costs, even if their monthly income is above the Medicaid income limit. Another way of describing Medically Needy Medicaid is to say that an applicant becomes eligible if the difference between their monthly cost of care and their monthly income is less than a specific amount set by the state.

For example, if the Medically Needy Income Limit in your state is $600, someone who makes $3,000 per month would need to spend more than $2,400 on medical expenses to be eligible for Nursing Home Medicaid despite earning more than the monthly income limit for Medicaid.

Miller Trusts or Qualified Income Trusts
Another option is Miller Trusts or Qualified Income Trusts (QITs), which can get complicated but would be described basically as special accounts for someone to deposit income that put them over the Medicaid limit. Money in the trust would not count toward eligibility and would only be accessible by the applicant for specific purposes. The trust is managed by someone who is not the Medicaid applicant and can be used to pay for medical expenses not covered by Medicaid. Not every state allows for Miller Trusts or QITs.

“Spending Down” and Look Back Periods
When over the asset limit, an applicant has the option to “spend down” their assets on healthcare costs. Importantly, this does not mean quickly dumping money to get under the limits, because there are look back periods (five years in most states) that allow state Medicaid offices to review finances over that amount of time. Someone trying to spend down their assets, therefore, needs to follow particular rules about how that spending down occurs.

Put another way, assets considered countable toward Medicaid eligibility become uncountable when spent or invested in certain ways. Some of these options include the following:
– Purchasing an irrevocable funeral expense trust
– Medicaid compliant annuities
– Transferring ownership of a property through a ladybird deed or enhanced life estate deed
– Medicaid Asset Protection Trusts
– “Half a Loaf” gifting strategies

Because some strategies violate the look back rule, and there are so many nuances when it comes to varying state Medicaid rules, anyone who is over the income or asset limits but hopes to qualify for Nursing Home Medicaid should hire a Medicaid planner.

Medicaid Planning
Certified Medicaid planners are experts at assessing finances to determine whether someone’s income and assets make them unqualified for benefits including Nursing Home Medicaid. Planners then advise strategies for getting under the limits. Medicaid Planners will know exactly which strategy is best for you and your loved one, so that your application for Nursing Home Medicaid has the best chance of being approved.

Elder Law Attorneys are another type of expert in Medicaid eligibility rules in their state and licensed to establish the trusts described above that can put someone who would otherwise be ineligible under the income and/or asset limits to be accepted for Medicaid benefits. A downside is that they charge hourly and can be expensive, at hundreds of dollars per hour.

Someone who has significantly more assets than the state’s Medicaid limit, or a complex marriage situation, will benefit from hiring certified Medicaid planners or elder law attorneys. You may also be able to get free benefits counselling from resources like your local Area Agency on Aging but help with financing is probably going to require spending money on a professional expert like the two types described above.

 

Step 6: Complete and Submit Your Application for Nursing Home Medicaid

There are several types of Medicaid programs in every state, so find your local Medicaid office at this link, and be sure you get the correct information and application for the specific “eligibility group” you want to apply under—in this case Nursing Home Medicaid or “institutional Medicaid.”

Most states allow you to submit your application for benefits in multiple ways: in person, by mail, or online. The online application is likely to result in a faster determination, approved or denied, than submitting physical documents in person or through the traditional mail.

 

Step 7: Awaiting Approval for Nursing Home Medicaid

How long does it take after applying to receive a Medicaid determination letter? The law requires an application for Medicaid (no matter which type) to be approved or denied within 90 days. However, there is not really a mechanism to enforce this, and it’s possible your state Medicaid office will take longer than those 90 days to process your application and give you an answer. The time between applying for Medicaid and getting an answer is called “Medicaid pending.”