For people in Michigan who are looking ahead to the possibility of needing Medicaid, it is important to understand how assets and income can affect eligibility. The rules can determine whether someone qualifies or what they need to do to qualify.
Medicaid is a federal health care program that is targeted to low-income households. It is an important component of planning for old age because Medicaid can fund long-term care facility stays, while Medicare generally does not. Staying in these facilities can be enormously expensive when paying out of pocket. For that reason, many people choose to spend down their assets and intentionally reduce their income so that they can qualify for Medicare and get coverage.
The limits for assets and income can change over time, but they are strict. For example, currently, a single applicant must have less than $2,000 in assets and less than $2,500 in monthly income to qualify. A house is usually exempt from asset calculations. Any money an applicant earns counts as income. Medicaid looks back five years to ensure that the applicant has lived below the income and wealth levels for a substantial amount of time. That means planning for Medicaid needs to start several years ahead of the anticipated date of need for services. Exceeding the income or wealth levels during the lookback period will result in Medicaid billing the applicant until they have paid off the equivalent of the extra funds.
There is a large amount of money at stake when it comes to Medicaid qualification for long-term care, and the rules for income and assets are complex.