Medicaid, established by federal law, is administered by each state individually. Medicaid is considered a long term care payer of last resort for frail seniors, people with health problems, mental retardation or mental illness and those with both physical and developmental disabilities.

Each state determines coverage of the costs of long term care and services. The amount paid by Medicaid fluctuates based on the amount of financing available by each state. If money is scarce within a state, coverage of services may be cut. Because the program is under-funded and over-burdened, states continue to make decisions that can affect the amount of long term care assistance available.

The Deficit Reduction Act of 2005

Signed by President George W. Bush in 2006, this law allows for nationwide expansion of the Long-Term Care Partnership program.  This law also tightens the eligibility rules for Medicaid and allows for proper planning for future long term care needs. There is a new partnership program allowing for the sale of Qualified State Long-Term Care Insurance Policies.

Changes to Medicaid eligibility make it harder for individuals to qualify. Changes include the extension of look-back period from three years to five years for the transfer of assets prior to applying for coverage. Applicants will also need to meet a spend-down limit prior to the start of their penalty period, if they have one. Lastly, legislation will deny Medicaid coverage for nursing home care to applicants with home equity valued above $500,000. This amount is subject to inflation with the 2013 value for Ohio residents being $536,000.