In general, you must meet both income and asset requirements to qualify for Medicaid. All taxable and non-taxable income is taken into consideration, as well as all assets you own. States must cover certain groups but have the option to cover others as well. Mandatory eligibility groups include children under 19; pregnant women; adults not receiving SSI who are blind or disabled; and elderly individuals.
State Medicaid programs cover different groups of people, but all have two things in common: eligibility requirements and income limits. Eligibility is based on an individual’s age, family size, disability, and other factors. Most states’ Medicaid programs allow people who satisfy these criteria to get free or cheap medical treatment. With the help of online websites, you’ll be able to know how to qualify for Medi-Cal.
In addition, Medicaid requires all states to provide coverage for several “mandatory” services. These include hospital and physician visits, home health services, and nursing facility services for seniors and people with disabilities. States can — and must do — add other “optional” services to their programs, such as prescription drug coverage, dental care, eye care, and hearing aids. People with countable assets exceeding a state’s Medicaid limit can become eligible by “spending down” their excess assets. Typically, this means incurring high medical expenses that reduce disposable income to below the Medicaid eligibility standard. Examples of spending down assets might include:
- Paying past-due medical bills.
- Paying for in-home care.
- Redoing a home to make it more wheelchair accessible.
It is important to note that assets cannot be given away or sold under fair market value, as doing so violates the Medicaid look-back rule and may result in a penalty period of Medicaid ineligibility.
Under the Affordable Care Act (ACA), most Medicaid eligibility determinations are based on an individual’s modified adjusted gross income (MAGI). MAGI includes all sources of income, such as wages, Social Security benefits, pensions, investments, interest or dividends, and other income. Unlike different types of government assistance, MAGI does not exclude community spouse income.
While federal rules set the foundation, states have significant flexibility to implement Medicaid programs and determine who can receive coverage. Within broad federal guidelines, eligibility is based on a person’s income, financial resources and healthcare needs. Generally, to qualify for Medicaid, an individual’s income must be below a certain threshold. Generally, the point is 138% of the Federal Poverty Level (FPL), although some eligibility groups have higher FPL income limits.
In addition, a person’s assets may not exceed specific limits. Generally, the most common assets excluded from consideration are cash, checking or savings accounts, personal property and some investments. In addition, a person must be a legal resident of the United States and a citizen or eligible noncitizen to be considered for Medicaid.
In addition to income requirements, Medicaid has asset (also called resource) requirements that must be met to qualify for long-term care services. The amount of assets that can be owned is determined by state rules based on the person’s family situation, health condition, and other factors. Countable assets typically include cash, stocks and bonds, investments, vacation homes, bank accounts (checking, savings, money market), personal items, a car, burial funds up to $1,500 or the cash value of a life insurance policy with a funeral allowance, and any remaining funds from Covid-19 stimulus checks. However, there are several exemptions to the countable asset rule, such as one’s primary home and one car for household use. In addition, states may apply regulations known as “disregards” to reduce the value of countable assets. Married couples are considered jointly owned in calculating assets for Regular Medicaid and the Community Spouse Resource Allowance but not for institutional Medicaid (nursing home or HCBS waiver). There is also a 60-month Medicaid Look-Back Period, during which Medicaid scrutinizes all asset transfers to ensure they were made for less than fair market value.
The amount of countable assets an individual has that needs to be spent down is a Medicaid eligibility factor and varies by state. It can be a complex calculation because states determine what is countable. The process includes the following:
- Taking the person’s total income.
- Subtracting some deductions.
- Comparing that to Medicaid’s income limit.
Many items can be used to meet a spend-down requirement, such as past paid or unpaid medical bills (providers must have submitted these bills before the Medicaid application date), EPIC expenses, and certain over-the-counter drugs that are medically necessary. Past hospital bills can also be used, but only if they are from three months or more before the Medicaid application date. Older accounts can be used as long as they are viable (the provider can still seek payment in court). A “Miller Trust” or Qualified Income Trust (QIT) can also accomplish a spend down. It allows persons with excess income to convert that extra money into an account used to pay medical bills. The trust must be established at least six months before seeking Medicaid, and the person’s monthly spend will be based on the account’s total value. While it is generally best to use spend downs to reduce an individual’s assets, the rules are complex and vary by state. For example, some states have a look-back period that prevents individuals from giving away assets for less than they are worth. It can lead to a penalty that delays when one can apply for Medicaid.