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.
Medicaid nursing home coverage
Income limits: An applicant’s income must be less than what Medicaid pays for nursing home care. If only one spouse needs Medicaid, usually only that spouse’s income is counted toward the eligibility limit.
However, this doesn’t mean applicants can keep all of their income up to the cost of care. Nursing home enrollees must pay nearly all their income toward their care, other than a small personal needs allowance ($30/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 needs Medicaid, the other can keep up to $148,620.
Certain assets are never counted, including many household effects, family heirlooms, certain prepaid burial arrangements, and one car. Medicaid long-term care enrollees can’t have more than $688,000 in home equity.
Home and Community Based Services (HCBS) waivers
Every state’s Medicaid program covers community-based long-term care services, which are provided at an enrollee’s home, adult day care center, assisted living facility, or another location in the community. These services are called Home and Community-Based Services (HCBS) because recipients continue living in the community, rather than entering a nursing home. In North Carolina, HCBS recipients must need help with at least two activities of daily living.
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 applying spouse’s income is counted.
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 can keep up to $148,620.
HCBS enrollees can’t have more than $688,000 in home equity.
Spousal impoverishment protections in North Carolina
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 spouses of Medicaid LTSS recipients to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s income, along with resource and housing allowances. This rule applies when one spouse receives Medicaid coverage for LTSS, and the other spouse doesn’t have Medicaid.
In North Carolina in 2022, these spousal impoverishment rules allowed these ‘community spouses’ to keep:
Medicaid home equity limit in North Carolina
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.
North Carolina uses the federal minimum home equity limit – meaning that applicants with more than $688,000 in home equity are not eligible for LTSS programs.
Penalties for transferring assets in North Carolina
Because long-term care is expensive, individuals can have an incentive to give away or transfer assets to make themselves eligible 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.
North Carolina has chosen to have an asset transfer penalty for nursing home care and HCBS. The state bases this penalty on a 60-month lookback period where asset transfers and gifts are not allowed. The penalty’s length is determined by dividing the amount transferred or given away by the monthly cost of nursing home care (which is $7,110.00 per month in North Carolina in 2023).
Estate recovery in North Carolina
A state’s Medicaid agency is required to recover what it paid for LTSS and related medical costs beginning at the age of 55. States can also pursue estate recovery for other Medicaid costs (and recover from enrollees who didn’t receive LTSS) if the enrollee was 55 or older.
North Carolina usually limits its estate recoveries to enrollees who received Medicaid nursing home care or HCBS beginning at the age of 55, although it does recover from estates of enrollees if they were permanently institutionalized.
When Medicaid coverage was administered by an insurer, the state will attempt to recover what it paid the insurer. That means the estate recovery amount could be more (or less) than the actual cost of Medicaid services received.
North Carolina may grant an exemption to estate recovery in cases where recovering from an estate would cause undue hardship.
