Government Program Limits & Eligibility for Medicare, Medicaid and Taxes

• Medicare
• Medicaid
• Taxes

Medicare Limits for Long-Term Care - Year 2024 Source: "Medicare.gov", U.S. Department of Health and Human Services, 1-800-MEDICARE. Medicare is the federal health insurance program for people age 65 years or older, or people under age 65 with permanent kidney failure or for those collecting Social Security Disability for two years.  Visit www.medicare.gov for additional information on Medicare. 

Medicare Eligibility in a Skilled Nursing Facility:
(All five criteria must be met under Medicare.)

• Must be a hospital inpatient for three or more consecutive days, NOT including the day of discharge;
• A physician must indicate skilled care is needed on a daily basis;
• Care in the skilled nursing facility is due to a condition that was treated in the hospital;
• Care must be provided in a Medicare-certified skilled nursing facility; and 
• Coverage for skilled nursing facility days are available (coverage limits have not yet been reached) under Medicare Part A.

Medicare Benefits in a Skilled Nursing Facility:

• First 20 days Medicare pays entire cost.
• Next 80 days patient pays $204.00 per day and Medicare pays the rest.
• After 100 days patient pays the entire cost.

Remember, most patients do not receive Medicare coverage when in a Nursing Facility because Medicare does not cover custodial care, which is the level of care most patients receive.  For those who are eligible, coverage typically lasts two weeks.  Very seldom does someone receive the full 100 days of Medicare coverage.

Medicare Eligibility for Home Health Care (all five criteria must be met):  

• Patient must be homebound (leaving the home is a taxing effort);
• Part-time or intermittent skilled nursing services are required (24-hour skilled care is not covered);
• Patient must be under the care of a physician;
• Care is provided by, or under arrangements made by, a participating, Medicare-certified home health agency;
• Services must be provided under a plan of treatment that is established and periodically reviewed by a physician.  Therapy services must be complex or the patient's medical condition must require services that can only be performed safely and effectively by a qualified therapist or nursing staff.

Medicare Benefit for Home Health Care:

• Medicare pays entire cost for eligible home care services
• Medicare pays for 80% of the cost for eligible Durable Medical Equipment and the patient pays the remaining 20%.

Source: Connecticut Department of Social Services.

Medicaid is the state and federal health insurance program for persons with limited financial resources, or in some cases, extremely high medical expenses.  In simple terms, Medicaid will pay for your long-term care needs only after you are poor (you have very low assets and your income is less than the cost of your care).

Medicaid Eligibility in a Skilled Nursing Facility in Connecticut:

• Care Limits: 

A Physician must certify that care in a skilled nursing facility is both "medically necessary" and "medically appropriate."

• Financial Limits: 

In Connecticut, over 75% of Medicaid recipients were single when they applied (many were previously married and their spouse died) and became eligible after their assets were depleted to $1,600 and all of their income, except $75 ($165 for war time veterans each month, which is used to buy tooth paste, hair cuts, greeting cards, etc.), was used to pay for their care.  Details follow.

Detailed Financial Limits for a Single Person (Nursing Facility):

• Can keep $75 each month in income, (war time veterans can keep $165 per month).  All remaining income (e.g., social security, pension, retirement plans, etc.) must be used to pay for your long-term care.
• Can use income to pay for private medical insurance premiums.
• Can keep the primary residence of any value, if :
  • You are expected to return home after being in the nursing home for a short time; or
  • Your child under 21 lives in the house; or
  • Your adult blind or disabled child lives in the house; or
  • Your brother or sister jointly owns the house and has lived there for at least one year immediately before you went into a nursing facility; or
  • Your son or daughter who was residing in your home for a period of at least two years immediately before the date you went into a nursing home and your son or daughter provided care to you that resulted in you avoiding to have to enter a nursing home for those two years.
• Can have a Burial Plot.
• Can have Term Life Insurance (No cash value).
• Can have Whole Life Insurance when the face value (death benefit) of all policies is less than $1,500.
• Can have certain funeral contracts (prepaid irrevocable or non-refundable up to $10,000 with a Connecticut funeral home or a refundable contract up to $1,800).
• Can have no more than $1,600 in total assets. An asset is anything that can be converted to cash, even if a conversion penalty is imposed.
• Can keep additional amount of assets when a Connecticut Partnership-approved long-term care insurance policy has paid for your care.  The amount you can protect (keep) is equal to the benefits paid by the policy.

Please note that an individual applying for long-term care services under Medicaid is ineligible for payment of long-term care services if his or her equity interest in their home property exceeds $1,033,000 (this amount will be adjusted each year based on the Consumer Price Index).  The $1,033,000 home equity limit does not apply if any of the following individuals is lawfully residing in the home:

• The individual's child who is under age 21; or
• The individual's adult child who is blind or disabled.

In addition, the following individuals may be eligible to receive payment for Medicaid long-term care services even if their home equity exceeds $1,071,000:

• An individual who demonstrates that they cannot obtain a reverse mortgage, home equity loan, or similar instrument; or
• An individual eligible for Medicaid Asset Protection earned through the use of their Connecticut Partnership for Long-Term Care insurance policy in an amount greater than or equal to the amount of home equity in excess of $1,071,000, plus the amount of any other counted assets.

Detailed Financial Limits for a Married Person (Nursing Facility):

• Can have everything a single person is entitled to, but differing income and assets limits apply.
• Can keep the primary residence of any value, when any of the following people live in it:
  • Your spouse;
  • Your child under 21;
  • Your adult blind or disabled child; or
  • Your brother or sister who partly owns the house and has lived there for at least one year before you went into a nursing facility; or.
  • Your son or daughter who was residing in your home for a period of at least two years immediately before the date you went into a nursing home and your son or daughter provided care to you that resulted in you avoiding to have to enter a nursing home for those two years.  
• The "community spouse" can:
  •  keep half of the combined assets of the husband and wife up to $154,140 (which is the maximum amount of assets that can be kept in 2024; the maximum amount is updated in January);
  • keep one vehicle of any value;
  • transfer a portion of the applicant's income to supplement the "community spouse's" income so that it is at least $2,465.00, but no more than $3,853.50 per month subject to spousal impoverishment rules;
  • request a Fair Hearing to designate additional income or income producing assets when needed by the "community spouse" to pay for other expenses, such as, the "community spouse's" prescription drugs.
• The "community spouse's" income is not used to determine Medicaid eligibility, but a portion may be used to help pay for the applicant's care. 

• Must be 65 years of age or older.
• Must meet disability requirements, including the requirement that the recipient would be admitted to a nursing facility in the absence of home care services.
  • A physician must certify that the home & community-based care is both "medically necessary" and "medically appropriate;" and
  • The cost of this care must be less than care in a facility.
• Must meet same asset requirements shown above for nursing facility care.
• Can keep additional amount of assets when a Connecticut Partnership-approved long-term care insurance policy has paid for your care.  The amount you can protect (keep) is equal to the benefits paid by the policy.
• Monthly gross income cannot exceed $2,829 (300% of Supplemental Security Income which is updated in January).  Individuals with monthly gross income that is greater than $2,829 are ineligible. 
• Once determined eligible, individuals must contribute their monthly income that exceeds $2,430 (200% of the Federal Poverty Level which is updated in March) towards the cost of their care.

Please note that an individual applying for long-term care services under Medicaid is ineligible for payment of long-term care services if his or her equity interest in their home property exceeds $1,071,000 (this amount will be adjusted each year based on the Consumer Price Index).  The $1,071,000 home equity limit does not apply if any of the following individuals is lawfully residing in the home:

• The individual; or
• The individual's spouse; or
• The individual's child who is under age 21; or
• The individual's adult child who is blind or disabled.

In addition, the following individuals may be eligible to receive payment for Medicaid long-term care services even if their home equity exceeds $1,071,000:

• An individual who demonstrates that they cannot obtain a reverse mortgage, home equity loan, or similar instrument; or
• An individual eligible for Medicaid Asset Protection earned through the use of their Connecticut Partnership for Long-Term Care insurance policy in an amount greater than or equal to the amount of home equity in excess of $1,071,000, plus the amount of any other counted assets.

Eligibility for State-Funded "Connecticut Home Care Program for Elders":

• Must be 65 years of age or older.
• Must meet functional eligibility requirements.
  • Functional need is a clinical determination made by the Department of Social Services about the applicant's critical need for assistance in the following areas:
    • three or more of the following seven "critical needs" - bathing, dressing, transferring, eating, toileting, preparing meals, and taking medication.
    • a needs factors: (1) Behavioral Need-Requires supervision to prevent harm, (2) Medication supports-requires assistance for administration.
• Asset requirements are less restrictive than Medicaid's requirements.  A single person is allowed to keep up to $46,242 (150% of the minimum Community Spouse Protected Amount which is updated in January), and a married person can keep up to $61,656 (200% of the minimum Community Spouse Protected Amount which is updated in January.)
• Can keep additional amount of assets when a Connecticut Partnership-approved long-term care insurance policy has paid for your care.  The amount you can protect (keep) is equal to the benefits paid by the policy.
• Can transfer a portion of the applicant's income to supplement the "at home" spouse's income so that it is at least $2,465.00 (Updated in January) but no more than $3853.50 (updated in January) per month subject to spousal impoverishment rules.
• Individuals must pay 4.5% of the monthly cost of their care.  In addition, they must contribute their monthly income that exceeds $2,430 (200% of the Federal Poverty Level which is updated in March), this is called Applied Income.  There are certain deductions that are allowed from an individual's income, such as medical insurance premiums and an allowance for their spouse, which may reduce the amount of Applied Income that is due. Individuals residing in Assisted Living Demonstration communities in Glastonbury, Hartford, Middletown and Seymour are exempt from the 4.5% cost sharing requirement but still must contribute Applied Income.

Tax Limits for Long-Term Care Insurance - Year 2024

Source: Federal "Health Insurance Portability and Accountability Act of 1996", "Notice 97-31" released in the Internal Revenue Bulletin 1997-21 on May 27, 1997, and IRS Revenue Procedure 2023-34.

The Health Insurance Portability and Accountability Act of 1996 (the Act) states that "Tax Qualified" long-term care insurance will be treated in the same manner that health and accident insurance is treated under the Federal Income Tax Code.

 This means that:

Benefits paid by a "Tax Qualified" long-term care insurance policy will not be counted as taxable income to the policyholder; and

Premiums paid by an individual for "Tax Qualified" long-term care insurance can be counted as an unreimbursed medical expense for those itemizing their deductions for Federal income tax purposes.  (See chart below for some limitations); and

Premiums paid by an employer for their employee's "Tax Qualified" long-term care insurance can be deducted in the same manner as a health insurance deduction. (Additional Employer Tax benefits)

These provisions only apply to what the Act defines as "Qualified Long-Term Care Insurance Contracts."  A "Tax Qualified" policy is:

·  Any long-term care insurance policy issued prior to January 1, 1997.  These policies are grand fathered under the Act and are considered "Qualified".  Therefore, policies issued by December 31, 1996 are considered "Tax Qualified" for purposes of the Act.

·  Policies issued after January 1, 1997 must meet a set of standards described in the Act in order to be "Tax Qualified" policies.  Therefore, as of January 1, 1997, any long-term care policy wishing to be considered "Tax Qualified" for Federal tax purposes will need to meet all the standards listed in the Act. 

· Please note that all Connecticut Partnership-approved policies are "Tax Qualified."

The Act provides the following schedule for how much of the premiums paid for a "Tax Qualified" policy can be applied as an unreimbursed medical expense for Federal income tax purposes for calendar year 2024.  Individuals can use their actual premium amount up to the limitation noted in the chart.

Please note the deduction under the Act is not a straight tax deduction.  Individuals who have purchased a "Tax Qualified" long-term care insurance policy can count an amount of their premiums, up to the amount noted in the chart above, as an unreimbursed medical expense when they itemize their deductions.  Therefore, in order to benefit from the tax deduction, an individual must:

• Itemize their deductions (use Schedule A); and
• Have an amount of unreimbursed medical expenses that exceeds 10.0 percent of their Adjusted Gross Income (AGI).

The amount an individual can then use for a deduction is the amount that exceeds the 10.0 percent figure.

FOR EXAMPLE:  A 61 year old single woman who has a Federal tax rate of 27%, has unreimbursed medical expenses equal to 10.0% of her AGI before counting her long-term care premium of $3,200.  Under the Act, she can count all of her $3,200 long-term care premium as unreimbursed medical expenses and, therefore, she has $3,200 in excess of the 10.0% of her AGI.  At her tax rate, she will be able to save $864 in taxes because of her long-term care insurance together with her other unreimbursed medical expenses.  Note:  If her unreimbursed medical expenses, including the $3,200 allowed for long-term care premiums, were equal to or less than 10.0% of her AGI, there would be NO tax deduction. 

You should discuss the tax implications of purchasing long-term care insurance with your accountant or tax advisor.

For more information contact:

OPM.CTPartnership@ct.gov
(860) 418-6318