Medicare beneficiaries increasingly rely on long-term care, and the portion of seniors needing these services will keep rising as the population ages. However, long-term care is mostly not covered by Medicare. While Medicaid fills the gap in Medicare coverage for long-term care, its complex eligibility rules can make qualifying for benefits difficult. What’s more – eligibility rules vary significantly from state to state.
Applicants for Medicaid long-term care benefits have to undergo a needs assessment.
Medicaid nursing home coverage
Most seniors used to receive long-term care in nursing homes. Today, more beneficiaries receive those services at home. But some seniors have medical or living situations that make nursing home care a better choice.
Income limits: The income limit is $1,133 a month if single and $1,526 a month if married (and both spouses are applying).
If only one spouse needs Medicaid, the income limit for single applicants is used – and usually only the applicant’s income is counted.
Note that nursing home enrollees are not allowed to keep their income up to this limit, and have to pay all but a small portion of it to their nursing home. Enrollees can keep a $30 personal needs allowance 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). Spousal impoverishment rules allow spouses who don’t need Medicaid to keep up to $112,344.
Certain assets are never counted, including many household effects, family heirlooms, certain prepaid burial arrangements, and one car.
Home and Community Based Services (HCBS) waivers
Every state’s Medicaid program covers community-based long-term services, which are provided in an enrollee’s home, adult day care center, or another community setting. Programs that pay for these services are called Home and Community Based Services (HCBS) waivers because recipients continue living in the community, rather than entering a nursing home.
Income limits: The income limit is $1,133 a month if single and $1,526 a month if married (and both spouses are applying).
If only one spouse needs Medicaid, the income limit for single applicants is used – 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). Spouses who don’t need Medicaid can keep up to $112,344.
Spousal impoverishment protections in Illinois
Eligibility rules for Medicaid LTSS programs differ from other Medicaid benefits when only one spouse is applying. When this occurs, only the applying spouse’s income is counted. (Normally with Medicaid benefits, the income of both spouses is counted – regardless of who is applying.)
Spousal impoverishment rules allow the “community spouses” of Medicaid LTSS recipients (i.e. the spouses who do not receive Medicaid) to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s monthly income.
In Illinois as of 2022, these spousal impoverishment rules allow community spouses to keep:
Permitted home value in Illinois
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. States set these home equity levels based on a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
Illinois requires Medicaid LTSS applicants to have no more than $688,000 in home equity.
Penalties for transferring assets in Illinois
Because long-term care is expensive, individuals sometimes have an incentive to give away or transfer assets to others to become eligible for Medicaid LTSS benefits. To curb asset transfers, federal law requires states to have a penalty period for Medicaid LTSS applicants who give away or transfer assets for less than their value. States can also have a penalty period for HCBS. Medicaid will not pay for LTSS during this penalty period.
Illinois has an asset transfer penalty for nursing home care and HCBS. This penalty is based on a 60-month lookback period during which asset transfers and gifts are prohibited. The penalty’s length is determined by dividing the amount of money transferred or given away by the monthly cost of care in the enrollee’s nursing home.
Estate recovery in Illinois
Medicaid agencies have to attempt to recover what they paid for long-term care related costs while a beneficiary was 55 or older. The law also allows states to recover the cost of all other Medicaid benefits received beginning at that age. This is called estate recovery.
Illinois has chosen to recover the cost of all Medicaid benefits from every Medicaid AABD enrollee who was 55 or older. The state also recovers from the estates of younger enrollees if they were “permanently institutionalized.” But unlike some other states, Medicaid estate recovery is not used for non-AABD enrollees, so Medicaid expansion enrollees in Illinois are not subject to Medicaid estate recovery.
