Medicaid Eligibility in Maryland

Medicaid is a federal program that is administered and managed by the states. The Medicaid program provides low-cost or free healthcare to qualifying individuals.  Since health insurance does not cover long-term nursing home care, Medicaid is often essential for individuals and families with a loved one in a nursing home.  Without careful planning, nursing home residents can be required to pay the nursing home out of pocket until they run out of money.

Federal law outlines the baseline requirements for Medicaid eligibility.  However, each state has their own rules for Medicaid eligibility.  Medicaid eligibility requirements are complex, and seemingly small mistakes will cause a Medicaid application to be denied.  Therefore, this article is only intended to outline the basic requirements for Medicaid eligibility in Maryland.

Basic Requirements for Applicant

In order to qualify for Medicaid, a person must be one of the following:

• Pregnant, or responsible for a child 18 years of age or younger;

• Blind;

• Disabled, or have a disabled household family member; or

• Be 65 years of age or older.

Further, a person must be a resident of Maryland in order to qualify for and receive Medicaid benefits through the state of Maryland.

Income Requirements

In addition to being an eligible person, an applicant must meet strict income and asset limits in order to qualify for and continue to receive Medicaid benefits.  Medicaid has a broad definition of income.  Any wages, annuity payments, retirement income, social security payments, etc. will be considered income. 

Many states place a cap on an applicant’s income.  If an individual’s monthly income is above the state income limit, the individual is not eligible for Medicaid unless additional planning is done to deal with the excess income.  However, Maryland is not an income cap state.  In states with no income cap, monthly income must still be less than the monthly cost of staying in a nursing home.  Medicaid’s rational is that the government should not pay for an individual’s long-term care if their income alone can cover the costs.

Once a person becomes eligible for Medicaid, they are required to pay their monthly income to the nursing home minus certain allowable deductions.  Maryland allows a Medicaid recipient to keep $93 a month of their income for what is called a “personal needs allowance”.  Recipients are also allowed to keep monthly income to cover Medicare or private health insurance premiums. 

For married couples where one spouse is on Medicaid, Maryland requires that the community spouse, the spouse not receiving Medicaid, be allowed to keep a minimum monthly income.  This rule is to protect the community spouse from becoming impoverished while the other spouse receives long-term care.  In Maryland, the community spouse is required to have a monthly income of at least $2,288.00.  If the community spouse’s monthly income is less than that amount, he or she may be allowed to take income from the Medicaid spouse in order to reach the minimum monthly income.

Asset Requirements

Everything you own is considered an asset.  Medicaid has strict requirements regarding assets an individual is allowed to have while on Medicaid.  However, certain assets are excluded from your total countable assets.  You can keep excluded, or non-countable, assets and it will not affect your Medicaid eligibility.  Most notably, a primary residence, one vehicle, and tangible household items are generally excluded.  However, bank accounts, stocks, real property other than the primary residence, and life insurance policies with a cash value greater than $1,500 are generally counted for determining Medicaid eligibility. 

In Maryland, a single Medicaid applicant cannot have assets above $2,500.  For a married couple where both spouses are applying for Medicaid, the asset limit is $5,000.  For a married couple where only one spouse is applying for Medicaid, the Medicaid spouse cannot have assets above $2,500 and the community spouse will have assets between $27,480 and $137,400 depending on the couple’s total countable assets.

Typically, people are told that they must continue to pay nursing home bills until their assets are below $2,500, then they can apply for Medicaid.  However, an elder law attorney can help you protect most or all of your assets while also immediately qualifying for Medicaid.

Medicaid Look-Back Period

Another common hurdle in becoming eligible for Medicaid is dealing with Medicaid’s look-back period.  Medicaid does not allow people to become eligible for benefits by gifting away excess assets.  To prevent this, Medicaid looks at any uncompensated transfers or gifts made in the five years preceding a Medicaid application.  Medicaid will assess a penalty of time a person is ineligible for benefits based on the amount of gifts made in the previous five years.  This is calculated by using a “penalty period divisor”.  In Maryland, the monthly penalty period divisor is $10,190.  In other words, if a person made gifts totaling $30,000 in the five years prior to applying to Medicaid, they would be ineligible for benefits for 2.9 months. ($30,000/$10,190 = 2.9 month penalty period). 

Often, penalty periods are part of the planning strategy to preserve assets, especially in crisis planning situations.  Whether the penalty period is due to prior gifting or part of an asset protection plan, careful and detailed planning is needed to best deal with payments during the penalty period.

If you would like more information on how to protect all of your assets, avoid paying out of pocket for nursing home bills, and become immediately eligible for Medicaid, call me today at 800-841-0065 or email me at dakota@warnerlawfirmpllc.com.

*Medicaid rules change frequently and content in this article may no longer be up to date.  This article is for informational purposes only and is not legal advice.