Medicaid is a health insurance program for low-income individuals of all ages. While the program provides coverage for diverse groups of Alabama residents, the focus here is on long-term care Medicaid eligibility for Alabama elders, aged 65 and over. In addition to nursing home care, Alabama Medicaid pays for many non-medical support services that help frail seniors remain living in their homes. There are three categories of Medicaid long-term care programs for which AL seniors may be eligible.
1) Institutional / Nursing Home Medicaid – An entitlement; anyone who meets the requirements will receive assistance. Benefits are provided in nursing home facilities.
2) Medicaid Waivers / Home and Community Based Services (HCBS) – Not an entitlement; there are a limited number of enrollment slots and waiting lists may exist. Intended to prevent and delay the need for nursing home admissions, benefits are provided at home, adult day care, and in single adult foster care homes. More on Waivers.
3) Regular Medicaid / Medicaid for Elderly and Disabled (E&D) – An entitlement; anyone who is eligible will receive services. Various long-term care benefits, such as personal care assistance or adult day care, may be available.
Medicaid is jointly funded by the state and federal government. However, it is administered by the state through the Alabama Medicaid Agency.
The American Council on Aging now offers a free, quick and easy Medicaid Eligibility Test for seniors.
The three categories of Medicaid long-term care programs have varying financial and medical (functional) eligibility requirements. Further complicating financial eligibility is that the requirements change annually, vary with marital status, and that Alabama offers multiple pathways towards Medicaid eligibility.
Simplified Eligibility Criteria: Single Nursing Home Applicant
AL seniors must have limited income and assets, and a medical need to qualify for Medicaid long-term care. In 2024, a single Nursing Home Medicaid applicant must meet the following criteria: 1) Income under $2,829 / month 2) Assets under $2,000 3) Require a Nursing Home Level of Care.
The table below provides a quick reference to allow Alabama seniors to determine if they might be immediately eligible for a Medicaid long-term care program.
Alternatively, one can take the Medicaid Eligibility Test. IMPORTANT: Not meeting all of the criteria does not mean one is ineligible or cannot become eligible for AL Medicaid. More.
| 2024 Alabama Medicaid Long-Term Care Eligibility for Seniors | |||||||||
| Type of Medicaid | Single | Married (both spouses applying) | Married (one spouse applying) | ||||||
| Income Limit | Asset Limit | Level of Care Required | Income Limit | Asset Limit | Level of Care Required | Income Limit | Asset Limit | Level of Care Required | |
| Institutional / Nursing Home Medicaid | $2,829 / month* | $2,000 | Nursing Home | $5,658 / month ($2,829 / month per spouse)* | $4,000 ($2,000 per spouse) | Nursing Home | $2,829 / month for applicant* | $2,000 for applicant & $154,140 for non-applicant | Nursing Home |
| Medicaid Waivers / Home and Community Based Services | $2,829 / month† | $2,000 | Nursing Home | $5,658 / month ($2,829 / month per spouse)† | $4,000 ($2,000 per spouse) | Nursing Home | $2,829 / month for applicant† | $2,000 for applicant & $154,140 for non-applicant | Nursing Home |
| Regular Medicaid / Medicaid for Elderly and Disabled | $963 / month | $2,000 | Help with ADLs | $1,435 / month | $3,000 | Help with ADLs | $1,435 / month | $3,000 | Help with ADLs |
*All of a beneficiary’s monthly income, minus a Personal Needs Allowance of $30 / month, Medicare premiums, and potentially a Monthly Maintenance Needs Allowance for a non-applicant spouse, must go towards nursing home costs.
†Based on one’s living setting, a beneficiary may not be able to keep monthly income up to this level.
Countable vs. Non-Countable Income
Nearly any income from any source that a Medicaid applicant receives is counted towards Medicaid’s income limit. This includes employment wages, alimony payments, railroad retirement, black lung, pension payments, Social Security Disability Income, Social Security Income, IRA withdrawals, and stock dividends. Nationally, Holocaust restitution payments do not count as income. Furthermore, in AL, the VA Aid & Attendance Allowance, which is above and beyond the Basic VA Pension, does not count as income.
Treatment of Income for a Couple
When only one spouse of a married couple applies for Nursing Home Medicaid or a Medicaid Waiver, only the income of the applicant is counted. The income of the non-applicant spouse is disregarded and does not impact their spouse’s income eligibility. The non-applicant spouse, however, may be entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their applicant spouse. This is a Spousal Impoverishment Rule and is the minimum amount of monthly income to which a non-applicant spouse is entitled.
The MMMNA in AL is $2,555 / month (eff. 7/1/24 – 6/30/25). If a non-applicant spouse has monthly income under this amount, income can be transferred to them from their applicant spouse to bring their monthly income up to this level. If the non-applicant spouse has income equivalent to $2,555 / month or more, the applicant spouse cannot transfer any monthly income to the non-applicant spouse.
Income is counted differently when only one spouse applies for Regular Medicaid / Medicaid for Elderly and Disabled; the income of both the applicant spouse and non-applicant spouse is calculated towards the income eligibility of the applicant. Furthermore, there is no Monthly Maintenance Needs Allowance for a non-applicant spouse. More on how Medicaid counts income.
Countable vs. Non-Countable Assets
The value of countable assets are added together and counted towards Medicaid’s asset limit. Examples include cash, stocks, bonds, investments, promissory notes, bank accounts (credit union, savings, and checking), and real estate in which one does not reside. In Alabama, IRA’s and 401K’s are also counted. There are also many assets that Medicaid does not count; they are exempt. The combined face value of life insurance policies, in 2024, are exempt up to $5,000. Prepaid burial contracts and burial funds are also exempt up to $5,000. However, the exemption amount for burial funds is decreased by the face value of one’s life insurance policies. Other exemptions include personal belongings, such as clothing, household furnishings, an automobile, and generally one’s primary home.
Treatment of Assets for a Couple
All assets of a married couple are considered jointly owned. This is true regardless of the long-term care Medicaid program for which one is applying and regardless of if one or both spouses are applicants. However, a Spousal Impoverishment Provision permits the non-applicant spouse of a Medicaid Nursing Home or Waiver applicant a Community Spouse Resource Allowance (CSRA). In 2024, the CSRA allows the community spouse (the non-applicant spouse) to retain 50% of the couple’s assets, up to a maximum of $154,140. If the non-applicant’s share of the assets falls under $30,828, 100% of the assets, up to $30,828 can be retained by the non-applicant. There is no CSRA for a non-applicant spouse of a Regular Medicaid applicant.
Medicaid’s Look-Back Rule
It is vital that one does not give away assets or sell them for less than fair market value within 60 months of applying for Nursing Home Medicaid or a Medicaid Waiver. This is because Alabama has a Medicaid Look-Back Period that immediately precedes one’s application date. During this 5 year period, the Medicaid agency scrutinizes all asset transfers. If assets have been transferred for under fair market value, a Penalty Period of Medicaid ineligibility will be calculated. There is no Look-Back Period for Regular Medicaid.
The U.S. Federal Gift Tax Rule does not extend to Medicaid eligibility. In 2024, this rule allows individuals to gift up to $18,000 per recipient without filing a Gift Tax Return. Gifting under this rule violates Medicaid’s Look-Back Period.
For home exemption, the Medicaid applicant or their spouse must live in their home. If there is no spouse in the home, there is a home equity interest limit of $713,000 (in 2024). Home equity is the value of the home, minus any outstanding debt against it. Equity interest is the amount of the home’s equity that is owned by the applicant. Furthermore, if there is no spouse in the home, and the Medicaid applicant does not live in it, the applicant must have Intent to Return. For Regular Medicaid, there is no home equity interest limit. Other exemptions exist.
While one’s home is usually exempt from Medicaid’s asset limit, it is not exempt from Medicaid’s Estate Recovery Program. Following a long-term care Medicaid beneficiary’s death, Alabama’s Medicaid agency attempts reimbursement of care costs through whatever estate of the deceased still remains. This is often the home. Without proper planning strategies in place, the home will be used to reimburse Medicaid for providing care rather than going to family as inheritance.
An applicant must have a functional need for long-term care Medicaid. For Nursing Home Medicaid and Medicaid Waivers, a Nursing Facility Level of Care (NFLOC) is required. Furthermore, certain benefits may have additional eligibility requirements specific to the particular benefit. For example, for a Waiver to pay for home modifications, an inability to safely live at home without modifications may be required. For long-term care services via the Regular Medicaid program, a functional need with the Activities of Daily Living (ADLs) is required, but a NFLOC is not necessarily required.
For Alabama elderly residents (aged 65 and over), who do not meet the financial eligibility requirements above, there are other ways to qualify for Medicaid.
1) Qualified Income Trusts (QIT’s) – Also called Miller Trusts or Qualifying Income Trusts, QITs are for Nursing Home Medicaid and Medicaid Waiver applicants who are over the income limit, but still cannot afford to pay their cost of long-term care. This type of trust allows Alabama residents to become income-eligible, as money deposited into this type of irreversible trust does not count towards Medicaid’s income limit. Irreversible means that the terms of the trust cannot be changed or canceled. Overly simplified, income over the Medicaid limit is deposited into the trust in which a trustee has legal control. Trust funds can only be used for very specific purposes, such as paying long-term care services / medical expenses accrued by the Medicaid enrollee. Furthermore, the state of Alabama Medicaid authorities must be listed as the remainder beneficiary. This allows the state to receive the remaining funds in the account, up to the amount the state paid for care, after the death of the Medicaid recipient.
2) Asset Spend Down – Seniors who have assets over Medicaid’s limit can “spend down” assets and become asset-eligible. Essentially, excess assets can be spent on non-countable ones. Examples include making home modifications (addition of a first floor bedroom, wheelchair ramps, roll-in showers, pedestal sinks, and stair lifts), vehicle modifications (wheelchair lifts, adaptive control devices, and floor modifications to allow one to drive from a wheelchair), prepaying funeral and burial expenses, and paying off debt. Remember, Medicaid has a Look-Back Period in which asset transfers are reviewed for a period of 60-months preceding one’s Medicaid application date. Violating this rule by gifting assets or selling them under fair market value results in a period of Medicaid ineligibility. It is recommended one keep documentation of how assets were spent as proof this rule was not violated.
Our Spend Down Calculator can assist persons in determining if they might have a spend down, and if so, provide an estimate of the amount.
3) Medicaid Planning – The majority of persons considering Medicaid are “over-income” and / or “over-asset”, but they still cannot afford their cost of care. For these persons, Medicaid planning exists. By working with a Medicaid Planning Professional, families can employ a variety of strategies to help them become Medicaid eligible, as well as to protect their home from Medicaid’s Estate Recovery Program. Connect with a Medicaid Planner.
In addition to paying for nursing home care, Alabama Medicaid offers the following programs relevant to the elderly that helps them to live at home and in the community.
1) Alabama Elderly and Disabled Waiver (E&D) – Assists seniors in living in the community by providing benefits that promote independent living, such as meal delivery, homemaker services, personal care assistance, and adult day health. Program participants have the option to self-direct their own care services via the Personal Choices Program. Participants are able to hire, train, manage, and even fire, their own caregivers, including family members. A waiting list for services via the E&D Waiver may exist.
2) Alabama Community Transition Waiver (ACT) – Assists nursing home residents with transitioning back to living in their home, the home of a family member, or an adult foster care home that serves only that individual. Program participants must require a level of care consistent to that which is provided in a nursing home residence. Benefits include home modifications, respite care, personal emergency response systems, companionship services, and adult day care.
3) Program of All-Inclusive Care for the Elderly (PACE) – The benefits of Medicaid, including long-term care services, and Medicare are combined into one program. Additional benefits, such as dental and eye care, may be available.
4) Money Follows the Person (MFP) – Also called Gateway to Community Living in Alabama. This federal program helps institutionalized persons who are eligible for Medicaid to transition back home or into the community.
For more information about Medicaid or to apply for benefits, be that Regular Medicaid, Nursing Home Medicaid, or a Medicaid Waiver, one can call Alabama Medicaid at 1-800-362-1504. One can contact their local district Medicaid office for assistance. One’s local Area Agency on Aging office may also be helpful. Unfortunately, there is not an option for elderly and disabled AL residents to apply online. Instead, an application should be submitted to one’s district Medicaid office. The application process may vary based on the program for which one is applying.
It is vital that Alabama Medicaid applicants be certain that all eligibility requirements are met prior to applying for benefits. Elderly AL residents who are over the income and / or asset limit(s), or are unsure if they are, should strongly consider Medicaid planning for the best chance of acceptance into a Medicaid program. Familiarizing oneself with general information about the long-term care Medicaid application process can be helpful.