When does Medicaid pay for long-term care?
A common misconception about Medicaid is that it’s only for poor people. In fact, Medicaid pays for 50 to 60% of all long-term care in the United States; it’s the de facto long-term care insurance plan for the middle class. As AARP puts it:
Medicaid provides a critical safety net not only for low-income people, but also for formerly middle-income people who have spent their life savings paying for long-term services and supports.
If you or your parents might need long-term care, you need to understand basic Medicaid eligibility. Many people are eligible sooner than they think; many others would be eligible if they had planned ahead.
- Elderly (age 65+), blind, or disabled
- U.S. citizen (or, in some cases, a legal resident)
- Wisconsin resident
- Needs significant help with activities of daily living (in other words, has a medical need for long-term care)
Financial eligibility—if single
- The cost of long-term care must exceed your income (rarely a problem).
- Assets must be below $2,000, not counting income received this month, a home you intend to return to or live in, and a car used for your transportation.
Financial eligibility—if married
- The cost of long-term care must exceed your income (but not your spouse’s).
- Your combined assets must be below $52,000-150,620 (as of 2023) (your exact number is based on your total assets on a certain date), not counting income received this month, your home, two cars, and your spouse’s retirement accounts.
This is a greatly simplified summary of eligibility for long-term care Medicaid programs. Every situation is different, and there’s a lot of inaccurate or incomplete information out there. The only way to know the complete picture of your eligibility is to talk to an elder law attorney.
Most people are not eligible for Medicaid immediately upon admission to a long-term care facility; they must spend down their savings first. And the numbers above don’t tell the whole story. You should also know that:
- It’s often wise to spend your money on things like prepaid funeral arrangements, home improvements, or a new car. This can be a better use of your money than paying the long-term care bill and help you qualify for Medicaid sooner.
- You can use a Medicaid-compliant annuity or promissory note to allow your spouse to keep more than the $52,000-150,620 above. This planning requires a lawyer.
- Where you fall in that $52,000-150,620 range depends on your total assets on a certain date. You might be able to get a higher number if you plan ahead with a lawyer.
- Divestment—any transfer of assets for less than fair market value—in the past 5 years will make you ineligible for Medicaid. The most common divestments are making gifts and paying relatives informally for care and other services. A lawyer can help you avoid or correct these divestments.