Medicaid and Access to Healthcare

Medicaid for Long Term Care

Medicaid can cover the costs of long-term care in the nursing home. Medicaid can also help cover the cost of services in the community, known as Home and Community Based Services (HCBS). Some popular HCBS programs include the MI Choice Waiver, the Program of All-Inclusive Care for the Elderly (PACE), and Home Help. There are different rules to qualify for Medicaid, depending on care needs or the location where you will receive Medicaid services.

Medicaid in the Nursing Home

Medicare may cover some short-term stays in a nursing home, but for long-term stays, many will need to use Medicaid to cover the costs of care. To qualify for Medicaid in the nursing home, residents must meet both the income and assets tests.

Income

For many people, meeting the income test to receive Medicaid in the nursing home is pretty simple. To meet the income test, a nursing home resident cannot have an income higher than the “countable expense of long-term care.” With some exceptions, the countable expense of long-term care is what a nursing home charges for its private pay rate. Many nursing homes charge anywhere from $8,000-$10,000 per month for private pay, so if a resident’s monthly income is less than that amount, they can meet the income test to qualify for Medicaid.

Assets

A person’s assets must be below a certain amount to qualify for Medicaid. A person’s assets include cash, personal property, and real property. Real property is land and the things on it. Personal property includes investments, retirement accounts, life insurance policies, and trusts.

Not all assets are included when calculating a person’s total asset amount. Some common excluded assets are:

Homestead*: a home that the person owns. This includes the home, all adjoining land, and any other buildings on the land.
- If the person owns more than one home, they can only exclude the principal place of residence.
One vehicle
Household and personal items
Certain pre-paid funeral expenses
The value of some life insurance policies. If life insurance policies owned by one person have face values (the amount paid to beneficiaries when the policyholder dies) that total $1,500 or less, the cash surrender value (the money a policyholder receives for canceling their policy before it matures or they pass away) can be excluded as an asset.

*You cannot exclude the value of the home if there is not a spouse, child under 21, or blind or disabled child living in the home Bold -(and) the equity of the home exceeds a certain amount ($713,000 as of 1/1/2024)

For a single (unmarried) person seeking Medicaid in the nursing home a person’s assets cannot total more than $2,000. For couples both seeking Medicaid in the nursing home, MI Choice Waiver, or PACE, their joint assets cannot total more than $3,000.

If a married person is seeking Medicaid in the nursing home, there are more complicated rules to determine the asset limits. These rules can allow the couple to have a much higher asset amount and still let one of the spouses qualify for Medicaid.

Divestments (transfer of assets/income)

Transferring assets or income for less than fair market value Italics - (for the purpose of qualifying for Medicaid) is called a “divestment.” If Medicaid determines you have made a divestment, they can impose a divestment penalty in which Medicaid will not pay for long term care such as nursing home care, home and community based services (such as MI Choice and PACE), Home Help, and home health services. This penalty does not apply to payments for other Medicaid services.

Medicaid will look back five (5) years for any divestments (the “look back period”) from the first date a person is eligible for Medicaid and in the nursing home, approved for MI Choice or PACE services, or is eligible for Home Help or Home Health services. Medicaid will use the value of the divested resources and the cost of care to calculate the Divestment Period (the period that Medicaid will not pay for long-term care services).

Not all transfers are a divestment. For example:

Receiving fair market value in return for the asset is not a divestment. If you sell your car at fair market value, this would not be a divestment.
Transfers to a spouse or for the sole benefit of the spouse are not a divestment.
Transfers to a blind or disabled child or solely for the benefit of a blind or disabled child are not a divestment.
Transfers exclusively for a purpose other than to qualify or remain eligible for Medicaid are not divestment. The state gives the following example:
- Mr. Smith, age 40, was in good health when he gave his vacation cottage to his nephew. The next day Mr. Smith was in an automobile accident. His injuries require long-term care. The transfer was not divestment because Mr. Smith could not anticipate his need for long-term care services.
  - In this example, Mr. Smith did not give away the cottage, so his assets would be low enough to qualify for Medicaid. Because he gave away the asset with no thought of qualifying for Medicaid, this is not a divestment.

Medicaid Patient Pay Amount

The Patient Pay Amount is the amount of money the resident must pay to the nursing home each month to maintain Medicaid eligibility. The Patient Pay Amount is based on the person’s total monthly income minus any allowable deductions. In most cases, there will be very little money left for the resident after deductions and payment to the nursing home.

The following can be deducted when calculating the monthly Patient Pay Amount:

Patient allowance: Also known as the personal needs allowance, this allows a resident to keep $60 for themselves each month (or potentially $90 if the person is a veteran or receives VA benefits). For many residents, this may be the only money they are allowed to keep each month.
Home Maintenance Expenses: The Home Maintenance Disregard allows Medicaid residents who expect to stay in a facility for less than six (6) months to request to use some of their income for care and maintenance of their home. This can include costs for things like mortgage or rent payments, property taxes, homeowner’s insurance, and utilities. This benefit helps ensure the resident has a home to return to after the stay in the facility. This benefit is available for a maximum of six (6) months.
Community Spouse Income Allowance: If one spouse is in a nursing home, the spouse still in the community may not be able to afford to pay for living expenses. The Community Spouse Income Allowance allows nursing home residents to divert some of their income to help meet the needs of the spouse living in the community.
Family allowance: Some family members of nursing home residents can also receive money each month. These family members must live with the community spouse and be either spouse’s:
Married and unmarried children under the age of 21; or
Married and unmarried children age 21 and over if they are claimed as dependents on either spouse's federal tax return; or
Siblings and parents if they are claimed as dependents on either spouse's federal tax return.
Children's allowance: Residents without a community spouse can divert some income to their unmarried children who live at home, as long as the child is under 18 years old and does not receive Family Independence Program (FIP) or Supplemental Security Income (SSI) benefits.
Health insurance premiums: Residents can deduct the cost they pay for health insurance premiums, including Medicare, vision, and dental insurance. Any premium costs the resident pays for another member of their fiscal group are also included, even if the coverage is not for the residents themselves.
Guardianship/conservator expenses: If the resident has a court-appointed guardian or conservator, they can deduct $83 each month to help pay the cost of guardianship/conservator expenses.

Medicaid in the Community

To qualify for Medicaid in the community, a person must meet both the income and assets tests. These amounts can vary depending on whether the person applies for straight Medicaid or gets Medicaid from a home and community based services program like MI Choice or the Program of All-Inclusive Care for the Elderly (PACE).

MI Choice and PACE have additional rules beyond Income and Assets. For a more detailed explanation, view our MI Choice and PACE eligibility pages.

Income

The income limit for someone in MI Choice or PACE is much higher than for someone in traditional Medicaid. The rules allow a person to have income up to 300% of the Supplemental Security Income (SSI) amount. In 2024, that equals $2,829.00 per month. Unfortunately, that amount is a Bold - (hard limit). If a person’s income is $2,829.01 per month, they will not qualify, and there is no way to spend down or disregard income to qualify.

The MI Health Link Waiver has the same income limit, but this benefit does not work the same way as it does in MI Choice and PACE. A person applying for MI Choice and PACE gets immediate access to the 300% SSI income limit, meaning that if their income is less than $2,829 per month at the time of application, they can qualify for Medicaid and enroll in MI Choice or PACE. A person can only get into the MI Health Link Waiver if they are already enrolled in MI Health Link, and to enroll in MI Health Link the person has to qualify for Bold - (traditional) Medicaid first. However, if the person enrolls in MI Health Link and then qualifies for and enrolls in the MI Health Link Waiver, their monthly income limit would expand to $2,829 per month. Essentially, the higher income limit in the MI Health Link Waiver is only helpful for people whose income increases after they are already enrolled in the MI Health Link Waiver.

Assets

Not all assets are included when calculating a person’s total asset amount. Some common excluded assets are:

Homestead*: a home that the person owns. This includes the home, all adjoining land, and any other buildings on the land.
- If the person owns more than one home, they can only exclude the principal place of residence.
One vehicle
Household and personal items
Certain pre-paid funeral expenses
The value of some life insurance policies. If life insurance policies owned by one person have face values (the amount paid to beneficiaries when the policyholder dies) that total $1,500 or less, the cash surrender value (the money a policyholder receives for canceling their policy before it matures or they pass away) can be excluded as an asset.

*You cannot exclude the value of the home if there is not a spouse, child under 21, or blind or disabled child living in the home and the equity of the home exceeds a certain amount ($713,000 as of 1/1/2024)

For a single (unmarried) person seeking Medicaid in the nursing home, MI Choice Waiver, or PACE, a person’s assets cannot total more than $2,000. For couples both seeking Medicaid in the nursing home, MI Choice Waiver, or PACE, their joint assets cannot total more than $3,000.

If a married person is seeking Medicaid in the nursing home, MI Choice Waiver, or PACE, there are more complicated rules to determine the asset limits. These rules can allow the couple to have a much higher asset amount and still let one of the spouses qualify for Medicaid.

Divestments (transfer of assets/income)

Not all transfers are a divestment. For example:

Receiving fair market value in return for the asset is not a divestment. If you sell your car at fair market value, this would not be a divestment.
Transfers to a spouse or for the sole benefit of the spouse are not a divestment.
Transfers to a blind or disabled child, or solely for the benefit of a blind or disabled child are not a divestment.
Transfers exclusively for a purpose other than to qualify or remain eligible for Medicaid are not divestment. The state gives the following example:
- Mr. Smith, age 40, was in good health when he gave his vacation cottage to his nephew. The next day Mr. Smith was in an automobile accident. His injuries require long-term care. The transfer was not divestment because Mr. Smith could not anticipate his need for long-term care services.
  - In this example, Mr. Smith did not give away the cottage so his assets would be low enough to qualify for Medicaid. Because he gave away the asset with no thought of qualifying for Medicaid, this is not a divestment.