As the U.S. population ages, a higher percentage of Medicare beneficiaries need long-term care. Medicare generally doesn’t help pay for long-term care, but Medicaid can fill the gap for many Americans. However, eligibility requirements vary from state to state and across the various programs within a state.
Applicants seeking Medicaid long-term care benefits must undergo a needs assessment.
Medicaid nursing home coverage
Income limits: Massachusetts income limits for nursing home coverage are $1,063 a month if single and $1,437 a month if married (and both spouses need nursing home care).
When only one spouse needs Medicaid, the income limit for single applicants applies – and usually only the applicant’s income is counted.
However, nursing home enrollees are not allowed to keep all of their income up to the income limit. Enrollees must pay nearly all their income each month toward their care, although they can keep a small personal needs allowance (of $72.80 a 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, the other spouse can keep up to $128,640.
Certain assets are never counted, including many household effects, family heirlooms, certain prepaid burial arrangements, and one car.
In Massachusetts, applicants for Medicaid nursing home care can’t have more than $893,000 in home equity.
Home and Community Based Services (HCBS) waivers
Medicaid covers community-based LTSS services for applicants who need care, but can still live safely at home or an assisted living facility. Programs that pay for this care are called Home and Community-Based Services (HCBS) waivers because recipients continue living in the community.
Income limits: The income limit is $2,349 a month if single and $4,698 a month if married (and both spouses are applying).
The income limit for single applicants is used when only one spouse needs HCBS, and usually only the applicant’s income is counted.
Asset limits: The asset limit is $2,000 if single and $3,000 if married (and both spouses are applying).
In Massachusetts, HCBS recipients are not allowed to have more than $893,000 in home equity.
Spousal impoverishment protections in Massachusetts
Eligibility rules for Medicaid LTSS programs differ from other Medicaid benefits. When only one spouse is applying, only that individual’s income is counted. With most other Medicaid benefits, the income of both spouses is counted – regardless of who is applying.
If one spouse doesn’t need LTSS, spousal impoverishment rules allow that spouse to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s income.
In Massachusetts in 2020, these spousal impoverishment rules allow community spouses to keep:
Medicaid home equity limit in Massachusetts
Federal law requires states to limit eligibility for Medicaid nursing home and HCBS to applicants with a home equity interest below a specific dollar amount. In 2020, states set this home equity level based on a federal minimum of $595,000 and maximum of $893,000.
Massachusetts has chosen to use the highest allowed home equity limit – which means applicants for Medicaid LTSS can’t have more than $893,000 in home equity.
Penalties for transferring assets in Massachusetts
Because long-term care is expensive, individuals may consider reducing the value of their assets by giving gifts or selling them at below market value in order to qualify for Medicaid LTSS. To curb these asset transfers, federal law requires states to have a penalty period for Medicaid nursing home applicants who give away or transfer assets for less than their value. States can choose to also have a penalty period for HCBS. Medicaid will not cover LTSS during this period.
Massachusetts has chosen to have a penalty period that applies to nursing home care and HCBS. This penalty is based transfers or gifts made during a 60-month lookback period prior to receiving LTSS. The penalty period is calculated by dividing the amount of money transferred or given away by the cost of care (this is based on a daily rate of about $367 in Massachusetts).
Estate recovery in Massachusetts
State Medicaid agencies have to try to recover long-term related costs that were paid on behalf of beneficiaries after age 55. States also have the option to pursue recoveries for all other Medicaid benefits. This is called estate recovery.
Massachusetts has chosen to recover the cost of all Medicaid benefits. This means that Medicaid expansion enrollees are subject to estate recovery (Massachusetts grants exemptions in some circumstances).
When Medicaid coverage was administered by an insurer, the state will attempt to recover what it paid that insurer. That means the estate recovery amount could be 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 what it paid for MSP benefits through that date.
