When to Apply for Medicaid: A Guide for Persons with Dementia & Their Families

The best time for dementia patients to apply for Medicaid depends on several factors, including how long it takes to apply for Medicaid and hear back from the state, the applicant’s financial situation, healthcare needs and the progress of their dementia. There are other variables, like the applicant’s state of residence and marital status, but there are some consistent consequences for applying at the wrong time. Doing it too early means wasting time on an application process that can last months, potentially wasting money with pre-mature asset reduction planning strategies, and dealing with the consequences of a denial. Applying too late means paying out-of-pocket for care that could have been covered by Medicaid.

How Long It Takes to Apply for Medicaid Long-Term Care

According to Eldercare Resource Planning, a Medicaid planning company, it takes an average of more than five months for professionals to prepare a Medicaid application, submit it, and hear back from the state. That includes an average of 79 days to prepare the application, which will take considerably longer for a non-professional. The most time-consuming part of the preparation process is gathering all of the necessary financial paperwork in order to prove the applicant meets Medicaid’s financial eligibility requirements.

After a Medicaid application has been submitted, it takes an average of 83 days for the state to respond, but that doesn’t include time to deal with a denial. Most Medicaid applications are denied the first time around, including those submitted by professionals, but most of these denials can be handled by a quick fix (submitting missing paperwork, completing a blank section, etc.) that can take just a few days. If there is no quick fix, an appeal and fair hearing can add another month to the process.

Given that it can take a solid six months to apply for Medicaid and start receiving benefits, dementia patients can actually start the application process before they meet Medicaid’s medical eligibility requirements, which we will discuss next.

Impact of Healthcare Needs and Dementia Progress

Applicants have to meet a medical or functional requirement to qualify for Medicaid long-term care. For Nursing Home Medicaid and for most Home and Community Based Services (HCBS) Waivers, which cover long-term care in the home and, in most states, in assisted living and memory care, that medical requirement is needing a Nursing Facility Level of Care (NFLOC). Some HCBS Waivers, however, only require applicants to be “at risk” of needing a NFLOC.

How a NFLOC is defined and evaluated for Medicaid purposes depends on the state. But one constant across all states is extremely significant for dementia patients – a diagnosis of Alzheimer’s disease or any other dementia does not guarantee a NFLOC designation in any state. However, many dementia patients will meet the NFLOC requirements in their state, and almost all will eventually meet them due to the progressive nature of the disease.

While HCBS Waivers provide most of Medicaid’s coverage in the community (in private homes, assisted living, memory care, group homes, etc.), seniors can also receive some long-term care benefits in the community via Aged, Blind and Disabled (ABD) Medicaid. To qualify for long-term care benefits through ABD Medicaid, applicants must show a need for that specific benefit. In essence, they qualify for one long-term care benefit at a time, and they are not required to need a NFLOC. ABD Medicaid is also known as regular or state Medicaid for seniors.

Dementia Progress

As discussed above, it takes an average of 79 days (almost three months) for professional Medicaid planners to complete an average Medicaid application, and it will take someone with no experience much longer. This information, plus knowing the state’s definition of a NFLOC and understanding the progress of the applicant’s dementia, can help seniors and families apply for Medicaid at the right time.

If the applicant is clearly in the middle stages of their disease and there is noticeable decline, then it could be the right time to start preparing the application in earnest, even if the senior isn’t eligible because they don’t fully meet the NFLOC requirements for the state. That’s because in the three months or more it will take to gather any last documents, prepare the application and schedule an appointment with the state for an in-person evaluation, the dementia may have progressed to the point where the senior will be medically eligible because they will meet the NFLOC requirements at that point.

Every state takes into consideration the applicant’s ability to complete the Activities of Daily Living (mobility, bathing, dressing/grooming, eating, toileting), but in some states needing help with three of these activities might be required for a NFLOC designation, while in other states it’s needing help with two. Every state will conduct an in-person evaluation, consult with the applicant’s care providers and evaluate the applicant’s behavior and cognitive functioning, but how much weight they put on each of these factors can vary.

Of course it’s hard to know just how fast someone’s dementia will progress and what their exact healthcare needs might be three months in the future. So, consulting with the dementia patient’s primary care provider and any other caregivers before attempting to use this strategy is recommended. In addition, one must know the exact medical requirements for the Medicaid program they are applying for and, if that requirement is needing a NFLOC, the exact definition of NFLOC in the state.

This Level of Care Assessment service is designed to help Medicaid applicants navigate this challenging process. It does this through an evaluation that replicates the medical evaluations used in the applicant’s state in order to provide them with a clear picture of their Medicaid eligibility.

Impact of Financial Situation

In addition to meeting a medical requirement, Medicaid long-term care applicants need to meet two financial eligibility requirements – an income limit and an asset limit. In most states, the individual asset limit is $2,000 (NY, CA and IL are notably exceptions). Most seniors have assets beyond that limit, so they should not apply for Medicaid until they have consulted with a professional about qualifying for Medicaid financially.

Since we know it takes an average of six months to apply for Medicaid and start receiving benefits, seniors who are paying out-of-pocket for long-term care should begin that application process when they can afford to pay for their own care for six months. For example, Jane lives in a state with a $2,000 asset limit. She has $50,000 in assets and pays $5,000/month for long-term care in her home. So, six months of care will cost her $30,000, which means when she gets down to $30,000 in assets she should start the application process.

This is a complicated strategy and trying to get the timing right so there’s no lapse in coverage or other issues can be a challenge. That’s why we recommend consulting with a planning professional like an Elder Law Attorney or a Certified Medicaid Planner before attempting this on your own.

Applicants who are over their income limit can reduce their income using either the Medically Needy Pathway or a Qualified Income Trust (QIT). It might take a few days to set up a QIT, but otherwise both of these options can be used at any time, so being over income does not have an impact on the timing of a Medicaid application. However, these are also complex strategies and should not be used without consulting a professional.

Medicaid’s asset and income limits can vary by state, Medicaid program and the applicant’s marital status. To see if you or your loved one meets the financial requirements in your state, click here to use a free eligibility test.

Impact of Waitlists

After spending months preparing a Medicaid application and waiting for a response from the state, some eligible applicants seeking Home and Community Based Services (HCBS) have to wait even longer for their benefits. That’s because most HCBS Waivers have a limited number of enrollment spots, and once those spots are full additional applicants are placed on a waitlist that could last months or even years.

If a dementia patient is applying for an HCBS Waiver that has a waitlist, that should also factor that into the timing of their application. For example, if they estimate they will be on the waitlist for three months, they should probably start the application process nine months before they run out of money to pay for care on their own – six months for the average time it takes to apply and hear back from the state, plus three months to be on the waitlist.