Medicare beneficiaries increasingly rely on long-term services and supports (LTSS) – or long-term care – which is generally not covered by Medicare. In fact, 20 percent of Medicare beneficiaries who lived at home received some assistance with LTSS in 2015, and more seniors will need those services as the population ages. Medicaid may fill this gap in Medicare coverage for long-term care, but its complex eligibility rules — which vary from state to state — can be hard to navigate.
Medicaid nursing home coverage
Income limits: The income limit is $2,349 a month per person and $4,698 a month if married (and both spouses are applying). When only one spouse needs nursing home benefits, the income limit for single applicants is used; typically only income received by the applying spouse is counted toward that limit.
Despite an income limit, Indiana nursing home enrollees aren’t allowed to keep most of this income. While they can keep money to pay for health insurance premiums (such as Medicare Part B, Medicare Advantage and Medigap) and a $52 personal needs allowance, the rest of income the enrollee’s income must go to the nursing home.
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 let the other spouse can keep as much as $128,640. (Note that some assets are not counted toward the limit; examples of excluded assets include household effects, family heirlooms, certain prepaid burial arrangements, and one car.) Applicants are also not allowed to have more than $595,000 in home equity.
Home and Community Based Waiver (HCBS) services
Every state’s Medicaid program covers community-based long-term care services, which are offered in an enrollee’s home, adult day care center, assisted living facility, or similar setting. Medicaid programs offering this care are called Home and Community Based Services (HCBS) waivers because recipients receive benefits while living at home rather than in a nursing home.
Income limits: The income limit is $2,349 a month per person and $4,698 a month if married (and both spouses are applying). If only one spouse needs HCBS and the other spouse doesn’t have Medicaid, the income limit for single applicants is used and often only the applying spouse’s income is counted.
Unlike most states, Indiana allows enrollees to keep all of their income up to this limit as a personal needs allowance.
Asset limits: The asset limit for Medicaid nursing home coverage is $2,000 if single and $3,000 if married (and both spouses are applying). If only one spouse has Medicaid, federal rules let the other spouse keep up to $128,640.
HCBS recipients are not allowed to have more than $595,000 in home equity.
Spousal impoverishment protections in Indiana
For Medicaid LTSS programs, only the applying spouse’s income is factored into eligibility limits. With other Medicaid benefits, the income of both spouses is counted no matter who needs the coverage.
Spousal impoverishment rules allow spouses of Medicaid LTSS recipients to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s monthly income if the community spouse doesn’t have Medicaid coverage. This rule is helpful for couples when one spouse needs nursing home care but the other still lives at home, because the LTSS-covered spouse would otherwise have to pay nearly all their income toward their care.
In Indiana in 2020, the community spouse can keep:
Qualifying for Medicaid LTSS with income above the eligibility limit in Indiana
The Indiana Medicaid spend-down does not cover LTSS benefits, but applicants can qualify for those services by depositing income each month into a Qualified Income Trust, which is also called a “Miller Trust.” Even though it is deposited in the Miller Trust beforehand, nursing home enrollees have to pay nearly all their income toward their care. However, Indiana allows HCBS recipients to retain all their income up to the eligibility limit (of $2,349 a month per person) as a personal needs allowance to pay for living and health-related expenses.
Medicaid applicants in Indiana can use a QIT to qualify for Medicaid nursing home or HCBS benefits, but not for regular Medicaid ABD benefits (if they don’t also need LTSS coverage).
A few states require Medicaid LTSS applicants using a QIT to have incomes below the regional cost of nursing home care, but Indiana does not limit which beneficiaries can use a QIT.
Permitted home equity in Indiana
Federal law requires states to restrict eligibility for Medicaid nursing home and HCBS to applicants with a home equity interest below a specific dollar amount. In 2020, each state sets its limit within the federal limits (minimum of $595,000 and maximum of $893,000).
Indiana requires Medicaid LTSS applicants to have a home equity interest of $595,000 or less.
Penalties for transferring assets in Indiana
Because long-term care is expensive, individuals may consider giving away or transferring assets to meet eligibility requirements for Medicaid LTSS benefits. To discourage asset transfers, federal law requires states to define a penalty period for nursing home care applicants who give away or transfer assets for less than market value. States can also have a penalty period for HCBS. Medicaid will not pay for LTSS during this period.
Indiana chooses to have a penalty period for nursing home benefits and HCBS. This penalty is based on a 60-month lookback period when asset transfers and gifts aren’t allowed. The penalty’s length is calculated by dividing the amount of money transferred or given away by the monthly private pay cost of nursing home care (which is $6,681 in 2020).
These regulations govern the Medicaid lookback and penalty periods in Indiana.
Estate recovery in Indiana
Medicaid agencies have to attempt to recover or “claw back” what they paid for LTSS and related medical costs while enrollees were 55 or older. States can choose to claw back payments for all Medicaid benefits received beginning at that age, and to recover from enrollees who didn’t receive LTSS.
Indiana chooses to recover from any enrollee 55 or older who receives Medicaid. The state may also recover from estates of enrollees younger than 55 who were permanently institutionalized in a nursing home, intermediate care facility for individuals with intellectual and developmental disabilities (IDD), or other institutional setting.
When Medicaid coverage was administered by a Managed Care Organization (MCO) (i.e., a private insurer with whom the state contracts to administer Medicaid benefits), Indiana will attempt to recover what it paid the MCO. This means the state could try to recover more (or less) than the actual cost of Medicaid services received.
Congress exempted Medicare premiums and cost sharing from Medicaid estate recovery starting with benefits paid after December 31, 2009, but Medicaid will attempt to recover the cost of MSP benefits received that date.
