The government sets strict guidelines when determining who is eligible for Medicaid and the long-term care services that come with it. In general, those who qualify will have limited income and assets. Income is defined as wages, salaries or pension benefits. Dividends from stocks and bonds as well as interest from bank accounts may also qualify as income. Each state has different requirements as to how much an individual can make while still qualifying for Medicaid.
Generally, the state will count all income that is owed to an individual. For instance, there are no deductions for taxes paid on earned income. If an individual earns money jointly with a spouse, half of the earnings will be allocated to each spouse. This may occur if a couple had rental income that was counted as joint income or in certain other circumstances.
Those who are considered part of the medically needy group may be able to qualify even if they make more than state guidelines allow. Those who are above the threshold are allowed to spend down their money as they incur the obligation to pay for a medical expense and get down to the state threshold. While the spend down amount may be high in some cases, the type of care needed could make it easy to cover this obligation.
Paying for long-term care needs later in life may be easier if covering those expenses is part of an estate plan. Elder care planning can take place during any part of life and may be made easier with the help of an estate planning attorney. An attorney may be able to create and help complete documents such as powers of attorney or medical directives. It may also be possible to put money away into accounts specifically used to cover health care expenses.
Source: LongTermCare.gov, "Financial Requirements", December 27, 2014