Medicaid, a state-federal public health insurance program, helps people with low incomes pay for a wide range of long-term care to help you stay in your home or live comfortably at a nursing home care facility. But if your income is too high to qualify for Medicaid, don’t worry. Your state Medicaid program has solutions to help you become Medicaid-eligible.

What long-term care does Medicaid cover?

Medicaid could cover your stay in a nursing home, which are facilities that provide around-the-clock nursing care, social activities and personal care for older adults who can no longer live safely independently. Depending on the state, Medicaid may also cover your stay in other long-term care facilities such as assisted living, family care homes and memory-care units.

If you’re eligible for Medicaid, it will pay all of your care costs at Medicaid-approved nursing homes for services such as:¹

• Personal hygiene supplies
• Meals
• Medications (prescription and over-the-counter)
• Rehabilitation services
• Room and bed maintenance
• Skilled nursing care

If you don’t live in a nursing home, Medicaid can still offer some long-term care services through its Home and Community-Based Services (HCBS) Medicaid waivers. Also known as 1915(c) waivers, these are exceptions your state Medicaid program may make to provide some services at home or through local older adult programs that would normally be covered in nursing home care.²

Those services include:²

• Home health aides
• Personal care
• Housekeeping assistance
• Adult day programs
• Respite care
• Case management

These waivers can also be used for older adults who reside in independent living facilities and find out later on that they need help with activities of daily living, such as dressing and bathing.  Independent living facilities are residential communities for older adults who want the freedom to live on their own without the added responsibility of owning a home.

What is the Medicaid income limit?

The standard Medicaid income limit for older adults in need of nursing home care or long-term care through HCBS waivers is $2,829 a month for an individual and $5,658 a month for a married couple.³ However, some states have much lower limits or, in the case of nursing home care, none at all.³ States with no income limits may require older adults to use most of their monthly income on the cost of nursing home care, with the exception of a personal needs allowance.³

How can I get help if my income is over the limit?

If you make too much money to qualify for Medicaid, your state may offer the following options to reduce your income:

Medically needy Medicaid

Over 30 states plus the District of Columbia offer medically needy programs that help you qualify for Medicaid after you spend down your extra income to a monthly medically needy income limit. The limit is based on your cost of living and the number of people in your home.⁴

Examples of income you may need to spend down before reaching your medically needy income limit include:⁵

• Salary
• Wages
• Social Security disability payments like Social Security Disability Insurance (SSDI)
• Social Security retirement payments
• Veterans benefits
• Pensions

Before you can spend down your income on long-term care, you may first need to spend down your assets, such as financial accounts and property you own. Because each state has different rules about how you can spend down your assets, you should talk with your Medicaid caseworker to make sure you’re following guidelines correctly.

Qualified Income Trust

Also known as a Miller trust, a qualified income trust allows you to set aside monthly income that exceeds the Medicaid income limit into a financial account you are not allowed to touch.⁶

Before you open a bank account to form a trust, you should consult a lawyer familiar with older adult legal issues who can get your trust in writing and make sure it follows your state’s qualified income trust guidelines.6 You will also have to choose someone you can rely on, such as a family member, to be your trustee. The trustee is the person who will manage your money.

Twenty-five states offer these qualified income trusts as an option to reduce your income and each state will have different rules on how much income you are required to place in the trust.⁶

Types of income you can place in the trust include:⁶

• Social Security payments
• Pension funds

You can't include these the following types of income in the trust:

• Veterans Affairs Aid and Attendance benefits
• Veterans Affairs housebound allowances
• Medical reimbursements

Your designated trustee must also distribute payments at the end of the month to cover the services such as:⁶

• Your personal needs allowance for things such as entertainment and clothes
• Health care costs not covered by Medicaid like medical treatments or hospital stays

Qualified income trusts are irrevocable, meaning you cannot make any changes to them once they are formed. A Medicaid caseworker can let you know whether qualified income trusts are the best option for you to become Medicaid-eligible.

What if my spouse doesn’t need long-term care?

You may have concerns about how your spouse will be taken care of since most of your income will go toward your long-term care. Fortunately, Medicaid has a provision that allows your spouse to keep a portion of your income called Spousal Impoverishment Protection (SIP).

Under Medicaid SIP, you generally do not have to spend down your spouse’s income, and they are allowed to keep a portion of your joint assets, such as retirement accounts.⁷ However, SIP rules about what counts as income or assets differ from state to state.

When you receive long-term care, your spouse—also known as the community spouse—is entitled to a minimum monthly maintenance needs allowance of your income. This money helps the community spouse avoid financial hardship while allowing you to still qualify for Medicaid.

Some states also have a maximum monthly maintenance allowance to adjust for a community spouse’s cost of living, while others may just use one standard monthly maintenance allowance limit.⁸ The 2024 federal minimum monthly maintenance needs allowance is $2,465 and the federal maximum is $3,853.50.⁹

For example: Let’s say you live in a nursing home and your monthly income is $3000, but your spouse lives at home on a monthly income of $900. If your state’s minimum monthly maintenance needs allowance is $2,465, you can transfer $1,565 of your income to your spouse because $1,565 + $900 = $2,465.

If you have a qualified income trust, your trustee is responsible for distributing minimum monthly maintenance needs allowance from the trust to your spouse.⁶

Similar to the minimum monthly maintenance needs allowance, there is also a community spouse resource allowance that determines how many assets a community spouse is allowed to keep. The federal minimum is $30,828 and the maximum is $154,140.⁹ However, each state will have its own rules on what countable assets are.

Have more questions about Medicaid and long-term care? Talk with your local State Health Insurance Assistance Program to make sure you are following your state Medicaid program’s guidelines.

Sources

1. National Council on Aging. Does Medicaid Pay for Nursing Homes? A Comprehensive Guide. Found on the Internet at https://www.ncoa.org/article/does-medicaid-pay-for-nursing-homes-a-comprehensive-guide

2. Medicaid.gov. Home & community based services 1915(c). Found on the internet at https://www.medicaid.gov/medicaid/home-community-based-services/home-community-based-services-authorities/home-community-based-services-1915c/index.htm

3. MedicaidLongTermCare.org. Medicaid Long Term Care Income Eligibility Chart. Found on the Internet at https://www.medicaidlongtermcare.org/eligibility/income-chart/

4. U.S. Department of Health and Human Services. Implementation Guide: Medicaid State Plan Eligibility Medically Needy Income Level. Found on the Internet at https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/ig%2520medically%2520needy%2520income%2520level_5.pdf

5. LongTermCare.gov. Medicaid Eligibility. Found on the Internet at https://acl.gov/ltc/medicare-medicaid-and-more/medicaid/medicaid-eligibility

6. Nerdwallet. What Is a Miller Trust? How It Works, How to Set One Up. June 2, 2023. Found on the Internet at https://www.nerdwallet.com/article/investing/estate-planning/miller-trust

7. Everette James, et al. Making Spousal Impoverishment Protections Permanent.”Health Affairs Forefront. Sept. 7, 2021. Found on the internet at https://www.healthaffairs.org/content/forefront/making-spousal-impoverishment-protections-permanent)

8. MedicaidLongTermCare.org. Medicaid’s Minimum Monthly Maintenance Needs Allowance. Found on the Internet at https://www.medicaidlongtermcare.org/protection/monthly-maintenance-needs-allowance

9. Department of Health & Human Services. CMCS Informational Bulletin. Nov. 14, 2023. Found on the internet at https://www.medicaid.gov/sites/default/files/2023-11/cib11142024.pdf