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 who are seeking Medicaid long-term care benefits have to undergo a level of care assessment.
Medicaid nursing home coverage
Most seniors used to receive long-term care in nursing homes. Today, more Americans receive long-term care in their homes. But some seniors have medical conditions that make nursing home care a better choice.
Income limits: The income limit is $1,133 a month if single and $1,527 a month if married and both spouses are applying.
When only one spouse needs Medicaid coverage for nursing home care, the income limit for single applicants is used and usually only the applying spouse’s income is counted.
However, this doesn’t mean nursing home enrollees can keep all of their income up to this limit. Enrollees must pay nearly all their income to their nursing home, other than a small personal needs allowance (of $121 a month) and money to pay for health insurance premiums (such as Medicare Part B and Medigap).
Assets limits: The asset limit is $3,000 if single and $6,000 if married (and both spouses are applying). If only one spouse has Medicaid, the other spouse can keep up to $148,620 — although not all assets are counted against this limit.
Applicants are not allowed to have more than $688,000 in home equity.
Home and Community Based Services (HCBS) waivers
Every state’s Medicaid program covers community-based LTSS services for applicants who are still able to live safely at home with some assistance. Medicaid programs that pay for this type of support are called Home and Community Based Services (HCBS) waivers.
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, the income limit for single applicants is used and typically only the applicant’s income is counted.
Asset limits: The asset limit is $3,000 if single and $6,000 if married (and both spouses are applying). If only one spouse has Medicaid, the other spouse can keep up to $148,620.
Applicants are not allowed to have more than $688,000 in home equity.
Spousal impoverishment protections in Minnesota
Spousal impoverishment rules allow the “community spouse” of a Medicaid LTSS beneficiary to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their spouse’s income. This provision is especially helpful for community spouses of nursing home enrollees, who have to pay nearly all their income toward their care.
In Minnesota as of 2022, these spousal impoverishment rules allowed community spouses to keep:
Medicaid home equity limit in Minnesota
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. States set these home equity levels based on a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
Minnesota has chosen to use the most restrictive limit on home equity – meaning Medicaid LTSS beneficiaries can have no more than $688,000 in equity.
Penalties for transferring assets in Minnesota
Because long-term care is expensive, individuals may consider transferring their assets to meet eligibility requirements for Medicaid LTSS. To curb these asset transfers, federal law requires states to have a penalty period for applicants for Medicaid nursing home care if they give away or transfer assets for less than their value. States can choose to also have a penalty period for HCBS.
Minnesota has chosen to have a penalty period that applies to both nursing home care and HCBS. The penalty period’s length is based on the value of the asset transfers or gifts made during the 60 months before receiving Medicaid. This penalty is calculated by dividing the value of what was transferred or given away by the monthly cost of nursing home care (which is $9,312 in Minnesota in 2023). Medicaid will not cover an applicant’s LTSS during this period.
Estate recovery in Minnesota
State Medicaid agencies must attempt to recover what they paid long-term related costs while a beneficiary was 55 or older. States can also recover the cost of all other Medicaid benefits. This is called estate recovery.
Minnesota recovers from the estates of beneficiaries who received Medicaid coverage for LTSS beginning at the age of 55. The state also recovers what Medicaid spent on care for enrollees under 55 who were permanently institutionalized.
When Medicaid coverage is administered by a Managed Care Organization (MCO) (i.e., a private insurer contracted to provide Medicaid benefits), the state will attempt to recover what it paid that MCO. That means the estate recovery amount could be more or less than the actual cost of Medicaid services received.
Minnesota will delay its estate recovery if a beneficiary is survived by either their spouse or a child who is under 21 or disabled. If this happens, estate recovery would occur after the spouse’s death – or once the child turns 21 or is no longer considered disabled.
This Department of Human Services (DHS) brochure explains the estate recovery rules in Minnesota.
