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.
Long-Term Care Medicaid is called Choices for Care in Vermont.
Medicaid nursing home coverage
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 Medicaid, the income limit for single applicants is used – and only the applicant’s income is counted.
However, this income limit doesn’t mean an applicant can keep all of this income up to the limit. Nursing home enrollees must pay nearly their entire income toward their care, other than a $72.66 personal needs allowance and the cost of 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. Enrollees aren’t allowed to have more than $688,000 in home equity.
Home and Community Based Waiver (HCBS) services
Every state’s Medicaid program covers community-based LTSS services. These services are called Home and Community-Based Waiver (HCBS) services because recipients continue living in the community, rather than entering a nursing home.
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 Medicaid, the income limit for single applicants is used – and 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.
Spousal impoverishment protections in Vermont
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 community spouses of Medicaid LTSS recipients to keep a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s monthly income.
In Vermont in 2022, these spousal impoverishment rules allowed community spouses to keep:
Medicaid home equity limit in Vermont
Federal law requires states to limit eligibility for Medicaid nursing homes and HCBS to applicants with a home equity interest below a specific dollar amount. States set this home equity limit by choosing between a federal minimum of $688,000 and maximum of $1,033,000 in 2023.
Vermont 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 Vermont
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 institute a penalty period for Medicaid nursing home applicants who give away or transfer assets for less than their value. States can also have a penalty period for community-based LTSS.
Vermont has an asset transfer penalty for both nursing home care and HCBS. The state uses a 60-month lookback period to calculate this asset transfer penalty – meaning that asset transfers or gifts made during this period may result in ineligibility. This penalty is calculated by dividing the value of asset transfers and gifts by the monthly cost of nursing home care (about $10,422 in Vermont in 2023).
Estate recovery in Vermont
A state’s Medicaid agency is required to recover what it paid for LTSS and related medical costs while an enrollee was 55 or older. The law allows states to also pursue estate recovery against beneficiaries who did not receive LTSS, and beneficiaries who were under 55 and permanently institutionalized.
Vermont has chosen to only recover from the estates of enrollees who receive LTSS when they were 55 or older. This means the Medicaid expansion population in Vermont is not subject to Medicaid estate recovery, even for the Medicaid coverage they receive from 55 to 64 years of age, unless they also need LTSS during that time.
In states where private Medicaid managed care organizations (health insurance companies) provide coverage, Medicaid estate recovery involves the state recovering the amount it paid the insurer for the beneficiary’s coverage. But Vermont does not use private Medicaid managed care organizations.
Vermont will grant an exemption to estate recovery in cases where recovering from an estate would cause undue hardship, or when the estate consists only of personal property valued at less than $2,000.
