How to Apply for Medicaid: A Guide for Dementia Patients and Their Families

Medicaid can cover long-term care expenses at home, in memory care and in nursing homes for qualified individuals with dementia. This coverage is the only way many families can help their loved ones with dementia continue living at home, or pay for the services they need in memory care, or afford long-term stays in nursing homes. Applying for Medicaid is complicated, but this page will help simplify matters by providing an overview of the steps dementia patients and their families should take during the application process.

Applying for Medicaid in Six Steps

The first way to simplify the Medicaid application process for dementia patients and their families is to break it down into more manageable steps. Here are the six we suggest:

1) Choose the appropriate Medicaid program
2) Assess medical eligibility
3) Assess financial eligibility and gather financial documents
4) Implement planning strategies
5) Complete and submit application
6) Wait for approval and find facility

Choose the Appropriate Medicaid Program for Dementia

The three main Medicaid long-term care programs that provide coverage for seniors with dementia are Nursing Home Medicaid, Home and Community Based Services (HCBS) Waivers and Aged, Blind and Disabled (ABD) Medicaid. The first step in the Medicaid application process is deciding which one of these programs is most appropriate for the individual with dementia.

Nursing Home Medicaid covers the full cost of long-term stays in nursing homes for qualified applicants. This includes room and board, medications, nursing services, doctors’ visits and all necessary medical care. It does not include a private room or amenities like TV and phone.

HCBS Waivers cover long-term care services at home and, in most states, in memory care and assisted living residences for qualified applicants. In order to qualify, applicants must need a Nursing Facility Level of Care (NFLOC), which means they need the kind of constant care and supervision usually associated with a nursing home, and is discussed more below. It should be noted that HCBS Waivers will not cover room and board expenses in memory care or assisted living, just long-term care services and supports, but there are other assistance programs and options that can help Medicaid beneficiaries cover those room and board costs, such as Supplemental Security Income (SSI), Optional State Supplementation (OSS) programs) and family supplementation.

ABD Medicaid will also cover long-term care benefits at home and, in some states, in memory care or assisted living residences for qualified applicants. However, the coverage is, in general, not as comprehensive as HCBS Waiver coverage in the same settings, but the medical requirements for ABD Medicaid are not as strict as the HCBS Waiver requirement of needing a NFLOC. The financial requirements for ABD Medicaid, on the other hand, are less strict than those for HCBS Waivers. The medical and financial requirements for all three of these programs are detailed below.

Assess Medical Eligibility for Dementia Patient

All Nursing Home Medicaid applicants and most HCBS Waivers applicants must need a Nursing Facility Level of Care (NFLOC) in order to be approved. A few HCBS Waiver programs only require applicants to be at risk of needing a NFLOC. In order to receive a long-term care benefit through ABD Medicaid, applicants must show a need for that particular benefit, so they essentially qualify one benefit at a time.

As mentioned above, a NFLOC means the individual needs the type of constant care and supervision usually associated with a nursing home. Exactly how a NFLOC is defined and measured can change depending on the state, which we will discuss, but in no state does a diagnosis of dementia guarantee a NFLOC. Many dementia patients, especially those in the later stages of the disease, will require a NFLOC, but it’s important for families to know that a dementia diagnosis does not automatically equate to a NFLOC.

All states will assess Medicaid applicants to determine their medical needs and if they meet the relevant medical requirements. These assessments will all evaluate an individual’s ability to complete the Activities of Daily Living – mobility, bathing, dressing/grooming, eating, toileting. In some states, needing help with three of these five activities is required for a NFLOC designation, while other states might only require needing help with two of them. These assessments will also evaluate any cognitive or behavioral issues, and both of those could certainly come into play with dementia patients, and they will include recommendations from the applicant’s healthcare providers.

Assess Financial Eligibility and Gather Financial Documents

In order to qualify, Medicaid applicants must also meet two financial eligibility requirements – an asset limit and an income limit. These limits can change depending on the state, the Medicaid program and the applicant’s marital status, but in general they are low since Medicaid is intended for individuals with limited financial resources. Click here to use a tool that will help you find the eligibility requirements for a specific situation.

After finding their limits, the next part of this step is determining if they meet those limits. To see if the dementia patients meets their asset limit, add up all of their countable assets, which include banks accounts, certificates of deposit, bonds, stocks, cash and anything that can be easily liquidated into cash, as well as vacation homes, non-primary vehicles and luxury items. Some assets are exempt (not countable), such as personal items, primary vehicles, household furniture and appliances and, in many cases, the applicant’s home. Or, click here to use a free online test to see if they are eligible.

To see if a dementia patient meets their income limit, add up all of their countable income. Almost all income is counted, including wages, salary, pension payments, Social Security benefits, alimony and rental income.

While calculating the total value of a dementia patient’s income and assets, the patient and their family or representatives should also be gathering official documents that detail all of these financial resources. These will need to be submitted along with the Medicaid application to prove that the applicant meets their financial limits. The burden of proof is on the applicant to show they meet the limits, and not on the state to prove they don’t, so they documentation must be complete and accurate. Gathering these documents is often the most time-consuming part of the application process, so it’s important to start gathering as soon as possible. They might include bank records, life insurance policies, vehicle titles, home deeds, income tax returns, pension statements, Social Security benefits letters, etc.

If the dementia patient doesn’t meet their financial requirements, they can use Medicaid Planning strategies to help them qualify, which we will discuss next. If they do meet their requirements, they can complete and submit their application, which is discussed further down the page.

Implement Medicaid Planning Strategies

If a person with dementia does not meet their financial requirements for Medicaid, there are planning strategies they can use to become eligible. For those that don’t meet their income limit, they may be able to use the Medically Needy Pathway or a Qualified Income Trust to become eligible, depending on their state, financial situation and medical expenses.

For dementia patients who don’t meet their asset limit for Medicaid eligibility, they can “spend down” their excess assets until they reach their limit, as long as they only spend on themselves or their spouse (if they’re married). Spending on anyone else – which includes paying for a grandchild’s education, donating to a charity, or giving away an old car – is a violation of the Look-Back Period and lead to the application being denied and a penalty period of ineligibility. They could also reduce their assets by purchasing a Medicaid Compliant Annuity or an Irrevocable Funeral Trust, or by utilizing a Medicaid Asset Protection Trust.

If a dementia patient does not meet their medical requirements, they can plan ahead for a time when they will meet the requirements due to the progressive nature of the disease. Some HCBS Waivers have waitlists, and some states will place applicants on these waitlists before checking to see if they meet the eligibility requirements. So, someone with dementia who is applying for one of these HCBS Waivers but doesn’t yet meet the medical requirement of needing a NFLOC could apply and get on the waitlist, which can be months long in some cases, with the assumption that by the time they reach the top of the waitlist their dementia will have progressed to the point that they do need a NFLOC.

All of these strategies can be complicated, so we recommend consulting with a professional before attempting them on your own.

Complete and Submit the Medicaid Application

There are numerous types of Medicaid applications, so it’s important to find the application for the correct program. If the individual with dementia is applying for an HCBS Waiver, they need to be sure it’s the correct one, because some states have multiple HCBS Waivers. If they are applying for ABD Medicaid, they will need to indicate what long-term care benefits they need on the application.

These applications can be digital and completed and submitted online, or they can be hard copy and completed by hand and submitted in person or by mail. To find the right application, dementia patients and their families can communicate with their local Medicaid office by using this “Contact Your State Medicaid Agency” tool.

Prior to submitting the application, the dementia patient and their family should find a qualified person to check it. Medicaid applications are complex and it’s easy to make a mistake while completing them, especially the sections pertaining to financial eligibility. The state Medicaid office might offer this service, or one can try to find assistance through their local Area Agency on Aging. They can also contact a professional like a Certified Medicaid Planner.

Wait for Approval and Find a Facility

States are required by federal law to approve or deny Medicaid applications within 45 days, or 90 days for applications that require a disability determination. However, extensions are allowed, and it can take longer.

After they have submitted their application but before they have received a reply, applicants have “Medicaid Pending” status. Some nursing homes and caregivers will accept dementia patients with Medicaid Pending status without expecting any payment until their Medicaid application is approved, at which time the state will cover the applicant’s expenses during that in-between period as long as they were eligible during that time and their application was approved. However, if their application is denied, the individual will be responsible for their expenses during this time.

For applicants who are hoping to move into a nursing home, memory care residence or assisted living facility after they have been approved for Medicaid, they can use this waiting period to look for a facility that meets their needs, if they haven’t already found one. Dementia patients and their families who are looking for a nursing home can start with Nursing Home Compare, which is a searchable database of more than 15,000 nursing homes across the country. It’s operated by the Centers for Medicare & Medicaid and it can be filtered by overall ratings, health inspections, staffing and whether or not the facility accepts Medicaid.

Individuals with dementia who are looking for a memory care or assisted living residence can receive free assistance finding a facility that meets their needs by clicking here.