Long-term care is an increasingly needed benefit in the U.S. given the aging population, but it is generally not covered under Medicare. However, Medicaid does cover long-term services and supports (LTSS) for people who meet eligibility requirements.
Medicaid nursing home coverage
Most seniors who needed long-term care used to receive it in nursing homes. Today, more enrollees receive long-term care at home. But medical conditions or living situations can make nursing home care a better choice.
Income limits: The income limit is $2,742 a month if single and $5,484 a month if married (and both spouses are applying). Only income of the spouse who needs nursing home benefits is counted toward this limit.
Even though the income limit is $2,742 a month (if single), nursing home enrollees are not allowed to keep all of their income up to this limit. Instead, they have to pay all but a small portion of it toward their care, but can keep a small personal needs allowance (of $50 each month) and money to pay for health insurance premiums (such as Medicare Part B and Medigap).
Assets limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses are applying). If only one spouse has Medicaid, federal rules allow the other to keep up to $148,620. Certain assets are never counted toward this asset limit, including many household effects, family heirlooms, certain prepaid burial arrangements, and one car.
Home and Community Based Waiver (HCBS) services
Every state’s Medicaid program covers long-term care services called Home and Community-Based Waiver (HCBS) services. These services provide coverage for care provided to the beneficiary in a community setting (i.e., not in a nursing home). Applicants must show that they can live safely in their home or assisted living facility.
Income limits: The income limit is $2,742 a month if single and $5,484 a month if married (and both spouses are applying). When only one spouse needs HCBS, only income received by that spouse is counted toward this limit.
Asset limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses are applying). Federal rules allow spouses who don’t have Medicaid to keep up to $148,620.
Spousal impoverishment protections in Iowa
Normally with Medicaid benefits, the income of both spouses is counted for determining eligibility. However, Medicaid LTSS looks at just the applying spouse’s income.
Spousal impoverishment rules allow the non-applying or “community spouse” of a Medicaid LTSS recipient to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s income.
In Iowa in 2022, spousal impoverishment rules allow community spouses to keep:
Qualifying for Medicaid using a Miller Trust in Iowa
As an alternative to Medicaid spend-down, Iowa allows these applicants to become eligible for LTSS benefits by depositing income each month into a Qualified Income Trust, which is also called a “Miller Trust.”
Even though it is first deposited into the Miller Trust, nursing home enrollees must pay almost all of this income toward nursing home care. However, Iowa allows HCBS recipients to keep all their income up to the Medicaid eligibility limit as a personal needs allowance.
Medicaid applicants in Iowa can use a Miller Trust to qualify for Medicaid nursing home or HCBS benefits, but not regular Medicaid ABD (if they don’t also need long-term care Medicaid).
Iowa requires that applicants have incomes below 125% of the cost of institutional care in order to qualify for Medicaid long-term care using a Miller Trust. Individuals with higher incomes can usually afford those services without help from Medicaid.
Permitted home equity in Iowa
Federal law requires states to limit the home equity of enrollees who receive Medicaid coverage for nursing home care or HCBS. States set these home equity levels based on a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
In 2023, Iowa limits Medicaid LTSS applicants to a home equity interest of $688,000 or less.
Penalties for transferring assets in Iowa
Individuals sometimes give away or transfer assets to others so they can qualify for Medicaid LTSS benefits. To discourage asset transfers, federal law requires states to have a penalty period for Medicaid nursing home applicants who “gift” or transfer assets for less than market value, and allows states to use a penalty period for HCBS.
Iowa has a penalty period for HCBS and nursing home benefits. This penalty is based on a 60-month lookback period, when applicants aren’t allowed to make these asset transfers or gifts, and is calculated by dividing the amount of money transferred or given away by the private pay rate for nursing home care. (That rate is $7,786.35 per month in Iowa in 2023)
This manual contains more information about the asset transfer penalty in Iowa.
Estate recovery in Iowa
State Medicaid agencies must attempt to recover what they paid for LTSS and related medical expenses while an enrollee was 55 or older. States can also recover payments for all other Medicaid benefits, and recover from enrollees who didn’t receive long-term care. Estate recovery is sometimes called a claw back.
Iowa chooses to pursue estate recovery against all recipients of Medicaid-covered services who were 55 or older. This includes people aged 55 or older who were enrolled in Iowa’s ACA Medicaid expansion, the Iowa Health and Wellness Program. The state also recovers from the estates of beneficiaries under the age of 55 if they were permanently institutionalized.
When Medicaid coverage was administered by an insurer (called a Managed Care Organization), the state will attempt to recover what it paid that insurer. This amount could be more or less than the actual cost of Medicaid services received.
Iowa Medicaid may waive estate recovery in certain circumstances, including if inheritors of an estate have a monthly income below 200% of the federal poverty level or they have less than $10,000 in savings.
