Medicaid: What Is It & How Does It Work?

What Is Medicaid?

Medicaid is a tax-funded, federal health program administered locally by each state using funds from the federal government. If you look at any paystub withholding, you’ll notice that a portion of your paycheck is specifically designated for Medicaid. Each of us pays into Medicaid in case we ever need to use it ourselves. 

Generally, Medicaid is used to help those who meet certain income requirements and are under 18, over 65, disabled, or otherwise unable to work. Depending on the age group, Medicaid can cover a wide variety of medical needs. In certain cases, it acts as a health insurance plan for typical health services. In other cases, it can provide services for people with disabilities. For the purpose of this article, however, we are going to focus on how Medicaid provides long-term care to seniors and those who meet certain eligibility rules.

Each state has specific rules to qualify, but once qualified, Medicaid will cover the cost of nursing home expenditures, in-home care, assisted living, or residential group homes. Some states treat Medicaid similarly to a health insurance program, albeit with strict eligibility requirements, while other states provide HCBS (home and community-based services) waivers or vouchers to cover costs. Eligibility can vary depending on state, so it’s best to research coverage for your specific state. Feel free to use Senior Planning’s nationwide Medicaid guide to answer any questions about your specific state; just click your state on the interactive map. 

Medicaid Coverage and Qualifications

To receive coverage for long-term care, residents of a given state must meet a number of requirements. After meeting these requirements, they may be eligible for coverage across a number of areas. Similar to health insurance coverage, not all healthcare providers accept Medicaid, which is worth keeping in mind when you begin your search for long-term care. The general eligibility requirements for receiving Medicaid for long-term care are:

• Being a resident of the state in which you apply.
• Being age 65+, disabled, or blind.
• Having income and assets under required levels.
• Have a need for long-term care.

To receive Medicaid for long-term care, a recipient must have less than a certain amount of income and assets. You should read more about what assets are exempt from Medicaid spend-down. 

Medicaid coverage may cover the costs of:

• Room and board at a long-term care community.
• Assistance with day-to-day activities.
• Home accessibility.
• In-home care

Receiving Long-Term Care at a Long-term Care Facility

One of the most popular ways seniors use Medicaid is to help cover the costs of long-term care facilities.  

Nursing Homes, Assisted Living, and Residential Group Homes

Medicaid pays for nursing homes in the entirety of the United States. But as mentioned, the qualifications for coverage under Medicaid vary state to state. A person might be covered in Maryland, but not be covered in Nevada. Also, Medicaid is non-transferable, meaning that if a person moves, they must re-apply in their new state. 

Medicaid coverage, for some time, was restricted to long-term care in dedicated skilled nursing facilities. Under this arrangement, Medicaid would cover costs associated with room and board, nursing, and assistance with day-to-day living. As you may know, skilled nursing is the highest level of care offered outside of a hospital setting, meaning it is generally too high of a level of care for most seniors. Because of this, Medicaid long-term care expanded to cover assisted living facilities and residential group homes. This expansion ensures that seniors with no way of taking care of themselves, but still below the skilled nursing level, have some way of receiving care. 

In-home Care

In some states, Medicaid will cover the costs of in-home care up to a certain amount of hours each week. This is great if a person does not need 24/7 care or has a family member who can fill in the extra hours. It depends on your individual care plan. Some states also allow for Medicaid money to pay a family member as caregiver if the person in need of care would rather not have a paid professional. This is great because family members generally provide care free-of-charge, often sacrificing their own jobs or livelihoods to take care of a loved one. Some states pay for in-home care directly through the Medicaid program on an hourly basis, while others grant monthly vouchers that can be used on care.

Will Medicaid take my Income? 

For in-home care, Medicaid will let you keep your income. For care a long-term care facility, however, recipients are required to give up nearly all income to pay for care as their share of cost before Medicaid will pay. In a way this makes sense—after all, nursing homes provide for basically every need a person can have. Share of cost is not 100% of a person’s income. Medicaid grants a small personal needs allowance, which can be anywhere from $50.00/month to $200/month. This can be used for anything a person wants and does not have to be care related. 

Will Medicaid take Income from Married Couples?

Medicaid treats married couples differently than single applicants. Medicaid also treats married couples differently if both spouses need care or if only one does. For instance, if one member of a married couple is in a nursing home and the other is not, then Medicaid does not take nearly as much of the income from the member of the couple in the nursing home.

Instead, part of that person’s income is directed to their spouse. This is due to “Spousal Protection Laws”, which are designed to keep the elderly from becoming impoverished by their loved ones’ medical costs. The spouse who is not in a care facility is known as the community spouse. 

Will Medicaid take my Assets?

Again, like income, this varies on whether or not an applicant is single, married, or has dependents. Medicaid considers some assets exempt and some as countable. This is generally the biggest fear most people have before they begin a Medicaid application, so you may be glad to learn there are ways to protect assets if you are planning ahead. Senior Planning specializes in asset protection. And if we can’t protect the asset, we will still help you get Medicaid coverage. Improper handling of assets can be cause for benefit denial so it’s worth your time to talk to a professional before beginning your Medicaid application. Medicaid does a 5-year look back, which means that any transfers, gifts, sales, etc. within the last 60 months can count against an applicant’s eligibility.  

Is There a Waitlist for State Medicaid Services?

Beyond the application process, which can take some time, Medicaid services are granted without use of a waitlist to citizens who meet the eligibility requirements. Medicaid services are granted as an entitlement, which exempts eligible applicants from being put on a waitlist in order to avoid the possibility of people going without necessary care. Basically, once someone is approved, services start immediately. 

Although Medicaid uses federal monies, it is administered by the state you reside in. State medical services differ from federal services, offering a broader range of home and community services. Again, care providers must be contracted with Medicaid for them to accept the benefit. 

How long is the Application Process? 

The application process depends based on age group and state. For long-term care specifically, you can expect the application process to take around three months. The reason it takes this long is because the state must review an applicant’s personal history, medical history, and financial history. The applicant must prove that they truly need the care being offered. What this means is that an applicant must need assistance with most of their Activities of Daily Living (ADLs). ADLs include bathing, grooming, eating, cooking, walking, using the bathroom, and other essential activities. 

Financially, a person must show they are below a certain asset limit as well as a certain monthly income limit. Some states put a hard cap on income while others allow you to spend down on qualified medical expenses until the income limit is met. If you live in a state with a hard income cap then you may need to create what is known as an income only trust or a Miller Trust. Give us a call today if you think you might need help with a Miller Trust and we’d be more than happy to explain. 

Due to the in-depth nature of the application, applying as early as possible is advised. 

How to Apply For Medicaid? 

The most common way to apply for Medicaid is directly through your local Medicaid office or through a community health center. This strategy works great if your finances are below the limits and you clearly meet the medical eligibility requirements. 

For those that are uncertain whether or not their finances are eligible or if they are on the edge medically, a common way to apply is through a Medicaid long-term care planning agency like Senior Planning. Senior Planning can help determine whether or not you will be approved.  We can also help you every step of the way. 

We offer a Medicaid planning service which takes the guesswork out of the application. We will obtain medical records on your behalf, providing as much information as possible to the state to prevent any unnecessary denials. We will also request specific financial documents to show financial eligibility. In cases where an application’s financials are not in line with the requirements, we will help reorganize assets. For more information on Senior Planning’s application service, please visit our website completely dedicated to ALTCS by clicking the link.