Medicaid Long-Term Care - Budget Seniors

Key Takeaways: Quick Answers About Medicaid Long-Term Care 📝

What’s the 2025 asset limit? 💰 $2,000 in most states—but your home, one car, and wedding rings don’t count.
Can my spouse keep any money? ✅ Yes! Up to $157,920 through the Community Spouse Resource Allowance.
What’s the dreaded “look-back period”? ⏰ 60 months (5 years) in most states—gifts made during this time trigger penalties.
Will Medicaid take my home after I die? 🏠 Possibly—through Estate Recovery—but there are legal ways to protect it.
Where do I apply? 📞 Your local Department of Social Services or Area Agency on Aging.

💵 1. The $2,000 Asset Limit Is Real—But Exemptions Are Massive

In most states in 2025, the individual asset limit for all three Medicaid Long Term Care programs is $2,000. That sounds impossibly low—until you understand what’s actually counted.

Counted Assets 💰	Exempt Assets ✅	💡 Insider Tip
Bank accounts, CDs, savings	Primary home (with limits)	Home exempt if you live there OR have “Intent to Return”
Stocks, bonds, mutual funds	One vehicle (any value)	🐾 Second car counts unless spouse needs it
Cash value life insurance over $1,500	Household furniture/appliances	✅ Irrevocable funeral trusts are exempt
Retirement accounts (IRAs, 401ks—varies by state)	Wedding/engagement rings	🩺 Some states exempt retirement accounts entirely
Rental property income	Personal effects, clothing	Check your state’s specific IRA rules

The asset limit does vary greatly by state, ranging from $1,600 in Connecticut to $17,500 in Illinois to no asset limit in California—though California will reinstate limits in January 2026.

📞 Contact: Your state Medicaid office—find yours at medicaid.gov/about-us/contact-us

🏠 2. Your Home Is Protected—But Only Under These Conditions

The family home is often the largest asset seniors own, yet it doesn’t automatically disqualify you from Medicaid. The home equity interest limit in most states for 2025 is either $730,000 or $1,097,000.

Home Exemption Scenario	Protected?	💡 Critical Detail
You live in the home	✅ Yes	Must be your primary residence
Spouse lives in home	✅ Yes	Protected regardless of your location
You’re in nursing home but intend to return	✅ Yes	“Intent to Return” must be documented
Minor child (under 21) lives there	✅ Yes	Full protection until child turns 21
Disabled child of any age lives there	✅ Yes	Must meet Social Security disability definition
Home equity exceeds state limit	❌ No	Excess equity counts as an asset

⚠️ Warning: While your home is protected during your lifetime, it may be subject to Estate Recovery after death. See Section 8 for protection strategies.

👫 3. The Spousal Protection Rules That Save Marriages from Poverty

When only one spouse of a married couple applies for Medicaid long-term care, Federal Spousal Impoverishment Rules prevent the non-applicant spouse from having too little income and resources from which to live.

Protection Type	2025 Amount	What It Means
Community Spouse Resource Allowance (CSRA)	Up to $157,920	Non-applicant spouse can keep this in assets
Minimum CSRA	$31,584	States cannot set limit below this
Monthly Maintenance Needs Allowance (MMMNA)	Up to $3,948/month	Applicant can transfer income to spouse
Minimum MMMNA	~$2,555/month	Protects spouse’s monthly income needs

Example: John needs nursing home care. His wife Mary can keep up to $157,920 in their joint assets PLUS their home, car, and personal belongings—even if John only has $2,000 remaining in his name.

Medicaid state officials should implement the CSRA when it’s relevant to an application. However, this doesn’t always happen correctly, so applicants or their representatives should also do the calculations and make it clear they will be using the CSRA on their application.

⏰ 4. The 5-Year Look-Back Period: The Rule That Destroys Families

In most states, the Look-Back Period is 60 months (five years), which means the state will look back into the applicant’s financial history for the 60 months prior to their application to see if they have given away any assets or sold them at less than fair market value.

Transaction Type	Penalty?	💡 How to Avoid
Gifting money to children/grandchildren	❌ Yes	Wait 5+ years OR use exempt strategies
Selling home to family below market value	❌ Yes	Must sell at fair market value
Paying family member for care (no contract)	❌ Yes	Use formal Caregiver Agreement
Transferring assets to spouse	✅ No penalty	Spousal transfers always allowed
Transferring home to caregiver child (2+ years care)	✅ No penalty	Child must have lived there 2 years
Transferring home to sibling with equity interest	✅ No penalty	Sibling must have lived there 1 year

The Devastating Penalty Formula:

To calculate the length of a Medicaid applicant’s Penalty Period, the value of all countable assets gifted or sold for under fair market value during the Look-Back Period are added together. This amount is then divided by the Penalty Divisor—the average monthly cost of nursing home care in your state.

Example: You gifted $100,000 to your children 3 years ago. Your state’s average nursing home cost is $10,000/month. Penalty = $100,000 ÷ $10,000 = 10 months of ineligibility—during which you must pay out-of-pocket.

🛡️ 5. Legal Ways to “Spend Down” Assets Without Triggering Penalties

Applicants can legally reduce countable assets by spending them on qualified expenses before applying for Medicaid. Allowable expenses include home repairs, medical costs, prepaid funeral arrangements and paying off debts.

Approved Spend-Down ✅	Violates Look-Back ❌	💡 Documentation Required
Paying off mortgage	Giving money to grandchildren	Mortgage payoff statement
Home repairs/modifications	Charitable donations (some states)	Contractor invoices
Prepaid irrevocable funeral trust	Transferring property for $1	Funeral home contract
Medical equipment (wheelchair ramp, stairlift)	Buying expensive gifts	Receipts + medical necessity letter
Paying outstanding medical bills	Adding children to accounts	Paid bill statements
Purchasing Medicaid-compliant annuity	Creating revocable trusts	Annuity contract
Hiring family caregiver WITH contract	Informal payments to family	Caregiver Agreement

⚠️ Critical Warning: The IRS allows an annual Estate and Gift Tax Exemption of up to $19,000 per recipient without reporting it to the IRS. This federal Gift Tax Exemption does NOT extend to Medicaid’s rules. Gifting under this exemption violates the Medicaid Look-Back Rule.

📊 6. Income Limits: What Most People Get Wrong

In most states in 2025, the individual income limit for Nursing Home Medicaid and HCBS Waivers is $2,901/month. But here’s what the government doesn’t advertise: even if you exceed this limit, you can still qualify.

Program Type	2025 Income Limit	Over the Limit?
Nursing Home Medicaid	$2,901/month (most states)	Use Qualified Income Trust (QIT)
HCBS Waivers	$2,901/month (most states)	Use Miller Trust or Spend-Down
Aged, Blind, Disabled (ABD)	$967-$1,795/month depending on state	Medically Needy Pathway available

The Qualified Income Trust (QIT) Solution:

If your income exceeds Medicaid’s limit, a Qualified Income Trust (also called a Miller Trust) allows you to deposit excess income into a special irrevocable trust. This legally makes you income-eligible while the trust pays your care costs.

State Type	Income Handling	💡 Example
Income Cap States	Must use QIT if over $2,901	If income exceeds the limit, a Qualified Income Trust must be created to facilitate eligibility
Medically Needy States	Excess income pays care costs	NY, CT, CA allow “spend-down” programs

📝 7. The Three Types of Medicaid Long-Term Care—And Which You Need

Program	Care Setting	Level of Care Required	Wait List?
Nursing Home Medicaid	Skilled nursing facilities only	Nursing home level of care	❌ Usually no wait
HCBS Waivers	Home, assisted living, adult day care	Nursing home level (but prefer home)	⚠️ Often YEARS-long wait
Aged, Blind, Disabled (ABD)	Home-based care	Help with daily activities	Varies by state

Long-term care (LTC) is not an entitlement program like regular Medicaid and does not include medical care, doctor visits or hospital stays.

💡 Insider Strategy: If you need home care through HCBS Waivers but face a wait list, apply for Nursing Home Medicaid first (no wait), then transition to HCBS when a slot opens.

🏚️ 8. Estate Recovery: How Medicaid Reclaims Your Home After Death

Medicaid’s Estate Recovery Program, abbreviated as MERP or MER, is a mandatory program through which a state’s Medicaid agency seeks reimbursement of all long-term care costs for which it paid for a Medicaid beneficiary.

Protected From MERP ✅	Vulnerable to MERP ❌	💡 Protection Strategy
Surviving spouse lives in home	Home in probate with no protections	Keep home in spouse’s name only
Minor child (under 21) lives there	Home passes through will	Use Lady Bird Deed or TOD Deed
Disabled child of any age	Home in deceased’s name alone	Transfer to Irrevocable Trust 5+ years before
Sibling with equity who lived there 1+ year	No qualifying heirs	Caregiver Child Exception
Adult child who provided 2+ years in-home care	Estate in “expanded recovery” state	Consult elder law attorney

Probate-Only vs. Expanded Recovery States:

In 27 states, Medicaid Estate Recovery Programs only seek reimbursement from the deceased beneficiary’s probate estate. In 24 states, the MERP can also go after assets that do not go through probate.

Probate-Only States	Expanded Recovery States
Assets must go through probate court	Can pursue non-probate assets too
Joint accounts, life insurance protected	May pursue surviving spouse’s estate
Use TOD/POD designations to protect assets	More aggressive recovery efforts

📞 Contact: Texas MERP Contractor: 1-800-641-9356 | Your state’s info at medicaid.gov

📋 9. Documents You’ll Need: The 60-Month Paper Trail

You will need to provide photocopies for the agency to retain in records. Documentation of the source of all deposits and withdrawals of $2,000 or more is required.

Document Category	What You Need	Time Period
Bank Statements	All pages, all accounts (checking, savings, CDs)	Last 60 months
Retirement Accounts	IRA, 401k, pension statements	Last 60 months
Income Verification	Social Security award letter, pension stubs	Current year
Property Documents	Deed, mortgage statements, tax assessments	Current
Insurance Policies	Life insurance with face values, health insurance cards	Current
Medical Records	Diagnosis documentation, care needs assessment	Recent
Identification	Driver’s license, birth certificate, Social Security card	Current
Large Transaction Proof	Receipts for any withdrawal/deposit over $2,000	Last 60 months

💡 Pro Tip: Missing even one month of bank statements can delay your application by weeks. Request complete transaction histories directly from your bank if statements are unavailable.

📞 10. State-by-State Contact Directory: Where to Apply

State	Application Contact	Phone Number
Florida	Aging and Disability Resource Center (ADRC) or Elder Helpline	1-800-963-5337
New York	Local Department of Social Services (LDSS) or Medicaid Helpline	1-800-541-2831
Texas	Texas Health and Human Services	1-877-541-7905
Pennsylvania	Consumer Service Center	1-866-550-4355
California	County Department of Social Services	Varies by county
All States	Eldercare Locator (Federal)	1-800-677-1116

Online Resources:

Medicaid.gov: Official federal Medicaid information
BenefitsCheckUp.org: NCOA screening tool for all benefits
LongTermCare.gov: Federal long-term care planning site
AARP: State-specific Medicaid guides at aarp.org

📊 Quick Recap: Medicaid Long-Term Care 📝

Asset Limit 💰: $2,000 in most states—but massive exemptions exist
Home Protection 🏠: Exempt while living if you reside there or intend to return
Spousal Protections 👫: Spouse can keep up to $157,920 (CSRA)
Look-Back Period ⏰: 60 months—gifts trigger penalty periods
Legal Spend-Down 🛡️: Home repairs, funeral trusts, medical equipment
Income Limits 📊: $2,901/month—but QITs allow higher-income applicants
Three Program Types 📝: Nursing Home, HCBS Waivers, ABD Medicaid
Estate Recovery 🏚️: Medicaid may reclaim costs from your estate
Documentation 📋: 60 months of financial records required
Application 📞: Start with your Area Agency on Aging

💬 Comment 1: “Can I give away my assets and wait 5 years to apply?”

Short Answer: ⚠️ Technically yes, but this is extremely risky.

The “give away and wait” strategy only works if you can guarantee you won’t need care for 5+ years. If a senior has gifted countable assets during the look-back period and requires a nursing home level of care, they (or their family) will have to pay for this care out of pocket somehow until either the look-back period has passed.

Risk Factor	Consequence	💡 Better Strategy
Unexpected health crisis	Family pays out-of-pocket	Use legal spend-down methods
Can’t predict care needs	Penalty period while needing care	Consult Medicaid planner
Assets gone, no Medicaid	Financial devastation	Keep half, protect half legally

💬 Comment 2: “My parent is in a nursing home NOW—is it too late to plan?”

Short Answer: ✅ Not necessarily—crisis planning strategies exist.

Strategy	How It Works	💡 When Applicable
Spousal Refusal (NY)	Community spouse “refuses” to contribute	Spouse lives at home
Medicaid-Compliant Annuity	Converts assets to income stream	Single or married applicants
Caregiver Agreement	Pay family for past care retroactively	Family provided in-home care
Promissory Notes	Loan assets to family with repayment plan	Complex—requires attorney
Half-a-Loaf Strategy	Gift half, use half to pay penalty period	Requires careful calculation

⚠️ Critical: Crisis planning requires a Medicaid planning attorney. DIY attempts often backfire catastrophically.

💬 Comment 3: “What’s the difference between Medicare and Medicaid for long-term care?”

Short Answer: 🏥 Medicare = short-term rehab only. Medicaid = long-term ongoing care.

Feature	Medicare	Medicaid
Purpose	Post-hospitalization rehab	Ongoing long-term care
Duration	Up to 100 days (limited)	Unlimited if you qualify
Cost	Premium-based insurance	Means-tested (must qualify financially)
Nursing Home Coverage	Only after 3-day hospital stay	Covers ongoing residence
Home Care	Limited skilled nursing only	Personal care assistance
Eligibility	Age 65+ or disabled	Income/asset limits apply

Medicare won’t provide enough to cover the full costs of long-term nursing care. Most families need Medicaid for extended nursing home stays.

💬 Comment 4: “How do I find a Medicaid planner vs. an elder law attorney?”

Short Answer: 📋 Both can help, but they serve different functions.

Professional	What They Do	Cost Range	Best For
Certified Medicaid Planner	Eligibility strategy, application assistance	$2,000-$5,000	Already near eligibility
Elder Law Attorney	Legal document preparation, trust creation	$3,000-$10,000+	Complex asset protection
Hospital Social Worker	Free application help (basic cases)	Free	Already in nursing home
Area Agency on Aging	General guidance, referrals	Free	Starting point

📞 Find Help:

National Academy of Elder Law Attorneys: naela.org
Medicaid Planning Assistance: medicaidplanningassistance.org
Eldercare Locator: 1-800-677-1116

💬 Comment 5: “Can I protect my home from Medicaid with a trust?”

Short Answer: ✅ Yes, but timing is everything.

With an irrevocable trust, the grantor cannot change or revoke the trust. Irrevocable trusts made during the look-back period are considered gifts. However, irrevocable trusts made prior to the look-back period are not considered countable assets.

Trust Type	Protects Home?	Look-Back Impact	💡 Timing
Revocable Living Trust	❌ No	Considered your asset	Never protects for Medicaid
Irrevocable Trust (within 5 years)	❌ No	Triggers penalty period	Wait 5 years after transfer
Irrevocable Trust (before 5 years)	✅ Yes	Outside look-back	Plan at least 5 years ahead
Medicaid Asset Protection Trust	✅ Yes	Must be 5+ years before application	Consult attorney early

💬 Comment 6: “What if I’m denied Medicaid—can I appeal?”

Short Answer: ✅ Absolutely—and you should.

If you disagree with the eligibility decision, you have appeal rights.

Appeal Step	Timeline	What To Do
Request Fair Hearing	Usually 30-90 days from denial	Submit written request immediately
Gather Documentation	Before hearing date	Get missing paperwork
Present Your Case	At scheduled hearing	Bring representative or attorney
State Decision	30-60 days after hearing	Written decision mailed
Further Appeal	Varies by state	May go to state court

💡 Common Denial Reasons (and Fixes):

Missing documents → Resubmit with complete records
Over asset limit → Show exempt assets weren’t counted correctly
Look-back violation → Request hardship waiver or wait out penalty

💬 Comment 7: “What’s a ‘Personal Needs Allowance’ and how much do I keep?”

Short Answer: 💵 It’s the small amount nursing home residents keep for personal expenses.

Nursing Home Medicaid recipients have to give most of their income to the state to help cover the cost of care. They are only allowed to keep a Personal Needs Allowance, which varies by state, ranging from $30/month in Alabama and South Carolina to $200/month in Alaska.

State	Personal Needs Allowance	What It Covers
Alabama, South Carolina	$30/month	Haircuts, phone calls, snacks
Most states	$50-$75/month	Personal items not covered
Alaska	$200/month	More flexibility
New York	$50/month	Basic personal expenses

Plus: You can keep enough to pay Medicare premiums if you’re dually eligible.

💬 Comment 8: “Is there a wait list for Medicaid long-term care?”

Short Answer: ⚠️ For nursing home care, usually no. For home care, often YES—sometimes years.

Program	Wait List?	Average Wait
Nursing Home Medicaid	❌ Usually none	Apply and get approved
HCBS Waivers (Home Care)	✅ Often very long	Months to YEARS
PACE Programs	⚠️ Sometimes	Varies by location

There is no waitlist for nursing home Medicaid but there is a very long waitlist for assisted living and in-home Medicaid assistance.

💡 Strategy: Get on HCBS wait lists immediately, even if you don’t need services yet. Some states allow “protective filing” that holds your place.

💬 Comment 9: “Can Medicaid take my home while I’m still alive?”

Short Answer: 🏠 No—with important exceptions.

Medicaid cannot force the sale of your home while you’re living if:

You live there (or intend to return)
Your spouse lives there
A dependent relative lives there
Your equity is below state limits ($730,000 or $1,097,000)

However: Medicaid can put a lien on a recipient’s home as part of the estate recovery process, but not every state will do this. The lien prevents transfer but doesn’t force sale until after death.

💬 Comment 10: “What happens to my spouse’s income when I go on Medicaid?”

Short Answer: 💰 Your spouse keeps ALL of their own income—and may get some of yours.

When an applicant is married, the income of the non-applicant spouse is not counted towards the applicant spouse’s eligibility. Furthermore, under certain circumstances, monthly income can be transferred from the applicant spouse to the non-applicant spouse.

Income Scenario	What Happens	💡 Example
Spouse has own income	100% theirs to keep	Spouse keeps $2,000 pension
Spouse income below MMMNA	Can receive income from applicant	Transfer up to $3,948/month
Both incomes combined	Only applicant’s counts	Spouse’s income ignored

📞 Master Contact Directory: Medicaid Long-Term Care Resources

Resource	Phone	Website	Best For
Eldercare Locator	1-800-677-1116	eldercare.acl.gov	Finding local services
Medicare/Medicaid Info	1-800-633-4227	medicare.gov	Dual eligibility questions
AARP	1-888-687-2277	aarp.org/caregiving	Caregiver resources
Benefits CheckUp (NCOA)	—	benefitscheckup.org	Screening for all benefits
Long-Term Care Ombudsman	Varies by state	ltcombudsman.org	Complaints about care
National Academy of Elder Law Attorneys	—	naela.org	Find qualified attorney

Medicaid long-term care is a lifeline for millions of American families facing the crushing costs of aging. The rules are complex, the penalties for mistakes severe, but the protections are real—if you know how to use them. Start planning early, document everything, and don’t hesitate to seek professional help. Your family’s financial future may depend on it. 💚

Healthcare & Medicare