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: The income limit is $2,742 a month per applicant. If only one spouse needs nursing home benefits, usually only that spouse’s income is counted toward this limit.
Note that nursing home enrollees are not allowed to keep all of their income up to this limit. Enrollees must pay nearly their entire income toward their care, other than a small personal needs allowance of $50/month and money for health insurance premiums (such as Medicare Part B and Medigap).
Assets limits: The asset limit is $2,000 per applicant. If only one spouse needs Medicaid, spousal impoverishment rules allow the other spouse to keep up to $148,620.
Certain assets are never counted, including many household effects, family heirlooms, certain prepaid burial arrangements, and one car. An applicant 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, which is provided at home, in an assisted living facility or another “community” setting. Programs offering this care are called Home and Community Based Services (HCBS) waivers, because recipients continue living in the community and don’t have to enter a nursing home. In Tennessee, HCBS enrollees must need a nursing home level of care or be “at risk” of entering a nursing home.
Income limits: The income limit is $2,742 a month per applicant. When only one spouse needs HCBS and the other spouse doesn’t have Medicaid, the income limit for single applicants is used – and usually only the applicant’s income is counted.
Assets limits: The asset limit is $2,000 per applicant. If only one spouse needs Medicaid, spousal impoverishment rules allow the other spouse to keep up to $148,620.
HCBS recipients can’t have more than $688,000 in home equity.
Qualifying for Medicaid LTSS with income above the eligibility limit in Tennessee
The income limit for Medicaid LTSS programs in Tennessee is $2,742 a month (for single applicants). Individuals with higher incomes can qualify for Medicaid nursing home benefits or HCBS by depositing income into a Qualified Income Trust, which is also called a “Miller Trust.”
After income is placed in the Miller Trust, nursing home enrollees have to pay nearly all of it toward their care. However, Tennessee allows HCBS recipients to keep a personal needs allowance equal to the income limit to pay for health and living related expenses.
Spousal impoverishment protections in Tennessee
Eligibility rules for Medicaid LTSS programs differ from other Medicaid benefits when only one spouse is applying. When this occurs, only income received by the applying spouse is counted. With other Medicaid benefits, income of both spouses is counted – regardless of who is applying.
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. These rules apply when one spouse receives Medicaid LTSS coverage, and the other spouse doesn’t have Medicaid.
In Tennessee in 2022, these “community spouses” were allowed to keep:
Medicaid home equity limit in Tennessee
States are required to limit the home equity applicants for Medicaid nursing home and HCBS benefits can have. States set these home equity levels based on a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
Tennessee uses the federal minimum home equity limit – meaning applicants with more than $688,000 in home equity are ineligible for LTSS programs.
Penalties for transferring assets in Tennessee
Because long-term care is expensive, individuals can have an incentive to give away or transfer assets to qualify for Medicaid LTSS. To curb these asset transfers, federal law requires states to institute a penalty period for applicants seeking nursing home benefits who have given away or transferred assets for less than their value. Most states also have a penalty period for HCBS.
Tennessee chooses to have an asset transfer penalty for both nursing home care and HCBS. This penalty is based on a 60-month lookback period when asset transfers and gifts are not allowed. The penalty is calculated by dividing the value of asset transfers and gifts by the monthly cost of nursing home care (which is about $6,852 in 2023).
Estate recovery in Tennessee
A state’s Medicaid agency is required to attempt to recover what it paid for LTSS and related medical expenses for enrollees covered starting at the age of 55. States can choose to also recover the cost of other Medicaid benefits, and to recover from estates of enrollees who didn’t receive LTSS.
Tennessee has chosen to only recover from Medicaid enrollees who received long-term care while 55 or older.
When Medicaid coverage was administered by an insurer (i.e., a Medicaid managed care plan), 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. Most Tennessee Medicaid beneficiaries who don’t have Medicare are enrolled in Medicaid managed care plans, but this is not the case for enrollees who are 65 or older or have disabilities.
