If you need long-term care and cannot afford to pay for either the genuine care you need or any form of insurance or annuity protection, you will need to apply for coverage under the Medicaid program. This program provides managed care to people who are disabled or age 65 or over and have income and assets that fall below certain federal and state thresholds.
It is often challenging to qualify for Medicaid, but the following steps can help determine if you are eligible and improve your odds of obtaining coverage.
Learn About Medicaid Asset Limits and Eligibility Requirements
Although Medicaid is federally funded, it is administered at the state level, and each state has its own set of rules and regulations of this program. The income and asset levels allowed differ from one state to another, so be sure to find out where your balance sheet falls in relation to the threshold.
If you are single, you generally cannot have more than $2,000 worth of cash or other assets outside of your residence, vehicle, and other necessary items unless your state has a higher limit.
If you are married and your spouse is still able to live independently (community spouse), he or she is allowed to retain 50% (or in some states 100%) of your joint assets up to a threshhold of $128,640 as of January 2020. Your single or joint income usually cannot exceed 138% of the federal poverty level, although several states have thresholds above this amount.
In nearly all cases, you will also have to prove via medical documents that you are disabled. However, certain exceptions apply (such as women with breast or cervical cancer or anyone diagnosed with tuberculosis). You must also be either a U.S. citizen or have a green card and prove your residency within the state. (Another list of exceptions to these parameters apply, such as those who were victims of human trafficking or are classified by Medicaid as “medically needy.”)
Start the Spend-Down Process
If your assets or income exceed the thresholds for your state, you will need to reduce your estate. If you plan a minimum of 5 years in advance (or 30 months in California), you can gift your assets or belongings to your children or another responsible party you can count on to use them on your behalf.
You may also be able to create a spend-down trust in some cases, depending on the laws in your state. But this arrangement has restrictions and any funds remaining in the trust after death cannot be passed on to a relative.
- As of 2018, many states have changed their work requirements for Medicaid applicants.
- Applicants must meet specific federal and state income level thresholds to qualify for Medicaid.
- Experts recommend that potential applicants speak to both an elder care lawyer and a financial advisor about "spending down" their assets in order to qualify for Medicaid.
Apply for Coverage
There are several ways you can begin applying for Medicaid. You can go to www.medicaid.gov, www.healthcare.gov, or the website for your state’s Medicaid agency. If you do not have online access, Medicaid has local eligibility offices in each state where you can file your application, or you can apply over the phone.
One of the most common reasons people are denied coverage is incomplete information on the application. Before you begin filling out an application, gather these documents to submit:
- Birth certificate or drivers license (to prove your age)
- Proof of citizenship
- Documentation of all assets and income
- Copies of your mortgage, lease, rent payment receipts, utility bills, or other documents that prove where you live
- Medical records documenting your disability
- Information about any other health insurance coverage you may have
Be sure to check with your particular state to see if they require different or additional documentation, along with the standard documents listed above.
Work Requirements and Medicaid in 2018 and Beyond
In January 2018, the Trump administration allowed for the states to create and implement new eligibility requirements for adults without children or disabilities. These new requirements now allow states to remove Medicaid coverage from childless adults, who are not disabled, who do not have jobs, or are not involved in work-related or volunteer programs.
According to the Pew Charitable Trusts, since 2017, at least 15 states have either applied for or received permission to impose work requirements. The nonpartisan research and policy Center on Budget and Policy Priorities reported that in 2018, Arkansas, the first state to implement the new requirements, removed over 18,000 Medicaid beneficiaries off the rolls because they no longer met the new guidelines.
Get Some Expert Help
Before or during the Medicaid application process, you may want to consult with two experts who can help you increase your chances of getting coverage. The first expert is an attorney who specializes in elder law and thoroughly understands the Medicaid laws in your state. The other person is a financial advisor, who can assist you with creating a Medicaid trust or other spend down actions you need to take.
The Bottom Line
Qualifying for Medicaid is not an easy process, and with state-by-state changes it is not getting any easier to register. Get all of the help you can from a financial advisor and a qualified elder care attorney before you begin this process to maximize your chances of acceptance.
Also, be prepared to plan ahead and drastically reduce the size of your acceptable estate through a gifting or donation program to meet the thresholds for your state.
(For further reading, see: Medicaid vs. Medicare.)