Medicaid

Funded by a federal-state partnership, Medicaid pays for health services for certain categories of the poor (including the aged poor, those who are blind or disabled, and low-income families with dependent children). The federal government contributes between 50% and 83% of the payments made under each state's program; the state pays the remainder. About 10% of the elderly receive services under Medicaid, accounting for about 40% of all Medicaid expenditures. Medicaid is the major public payer for long-term care; it contributed about 50% of the $103.2 billion spent for nursing home services in 2002.

Services covered under federal guidelines include inpatient and outpatient hospital care, laboratory and x-ray services, physician services, and skilled nursing care and home health services for people > 21 yr. States may cover certain other services and items, including prescription drugs, dental services, eyeglasses, and nursing home care. Each state determines eligibility requirements (in California the program is known as MediCal), which therefore vary, but individuals receiving funds from cash-assistance programs (eg, the Supplemental Security Income program) must be included. Several states offer enriched packages of Medicaid services under waiver programs, which are intended to delay or prevent nursing home admission by providing additional home and community-based services (eg, day care, personal care, respite care).

In most states, individuals qualify for Medicaid benefits if their income minus medical expenses is at or below poverty level. In some states, eligibility depends on income level without offsetting medical expenses. Assets, excluding equity in a home and certain others, are also considered. If the remaining assets exceed the limit, the person is not eligible for Medicaid, even if income is low. Thus, the elderly may have to spend down (ie, pay for care from personal savings until stringent state eligibility requirements are met) to qualify for Medicaid. The amount of monthly income that the spouse of a nursing home resident may keep varies by state (with a minimum of $1,561 and a maximum of $2,377 in 2005), Similarly, there is variation by state in the limit on the amount of the couple's assets that may be kept by the community spouse (typically ½ of the couple's assets, with a minimum of $19,020 to a maximum of $95,100). Divestment of assets during the 30 months before entrance into a nursing home may delay eligibility for Medicaid benefits. Medicaid denies coverage for a period of time that is determined by the amount of improperly divested funds divided by the average monthly cost of nursing home care in the state. For example, if a person gives away $10,000 in a state where the average monthly cost of care is $3,500, Medicaid coverage is delayed by 3 months.

This topic was last updated May 2005.