Indiana Long-Term Care Medicaid: Eligibility, Limits, and Look-Back

To qualify for Indiana long-term care Medicaid, you have to pass two separate tests: a medical one showing you need nursing-facility level of care, and a financial one capping a single applicant at $2,000 in countable assets and $2,982 in monthly income.¹ Married couples, people with income above the cap, and homeowners all have paths through, but each path has its own rules. Medicare does not pay for ongoing long-term care, which is why Medicaid ends up being the answer for most Indiana families once savings run thin.²

The Medical Test: Nursing Facility Level of Care

Before Indiana looks at a single bank statement, you have to show you need the kind of care a nursing home provides. This is called Nursing Facility Level of Care, or NFLOC. It applies whether you plan to live in a nursing home or stay at home on the Pathways for Aging waiver.³

As of July 2025, a Level of Care Assessment Representative (LCAR) performs the assessment, not the Area Agency on Aging. The LCAR uses a standardized tool that scores how well you handle daily activities like bathing, dressing, eating, and toileting, together with your cognitive function.³ Area Agencies on Aging still help coordinate services once you are approved; they just no longer do the assessment.

If you clear NFLOC, Indiana Medicaid can fund two settings. One is a skilled nursing facility, where staff provide round-the-clock medical supervision. The other is home or community-based care under the Pathways for Aging waiver, which pays for attendant care, adult day services, home-delivered meals, respite, home modifications, and other supports.⁴ Pathways can also cover personal care inside an assisted living facility, but it does not pay room and board. That part stays on you or your family.

The Asset Limit and What Doesn’t Count

A single applicant can hold no more than $2,000 in countable assets. A married couple applying together is capped at $3,000.¹ Countable assets include bank balances, cash, stocks, bonds, and real property other than your home.

Several meaningful assets do not count against that limit:

Your home, as long as you live there or intend to return and your equity does not exceed $752,000. The equity cap is waived entirely if your spouse, a child under 21, or a blind or disabled child of any age lives in the home.
One vehicle, regardless of value.
Prepaid burial plots or funeral contracts for you, your spouse, and immediate family.
Up to $1,500 set aside for burial expenses, plus any interest those funds earn.
Life insurance, if the combined face value of all your policies is $1,500 or less. If the combined face value exceeds $1,500, the cash surrender value becomes countable.
Personal belongings, clothing, and household goods.

The reason to understand these exemptions clearly: excess assets are one of the most common grounds for denial, and some of those denials are based on counting things that should not have been counted.

The Income Limit and the Miller Trust Workaround

Your monthly income cannot exceed $2,982, which is 300 percent of the 2026 federal SSI benefit of $994.¹⁵ Only the applicant’s income counts for this test; a spouse’s income is not added in.

Being under the limit does not mean you keep that income. Most of it goes toward the cost of your care, with Medicaid covering the gap between what you contribute and what the facility actually charges. Indiana lets you keep a personal needs allowance of at least $30 a month for incidentals.⁶

If your income is above $2,982, you are not automatically disqualified. Indiana permits a Qualified Income Trust, often called a Miller Trust, that lets you remain eligible by routing excess income through an irrevocable trust.⁷ The trust must be funded only with your income, kept in a separate account, and never mixed with other money. Each month you deposit at least the portion that exceeds the limit.

Indiana allows the trust to pay out only for specific purposes: your personal needs allowance, enough spousal maintenance to bring the community spouse up to (but not above) the state maintenance floor, out-of-pocket medical expenses, and your share of the cost of care. When you die, anything left in the trust goes to Indiana Medicaid to repay what it spent on you.⁷ You cannot use trust funds for household bills, gifts, or anything without a direct care-related purpose.

If Your Spouse Is Staying Home

When one spouse needs long-term care and the other remains at home, federal spousal-impoverishment rules keep the healthy spouse — the “community spouse” — from being wiped out by the spend-down.⁶

Assets the Community Spouse Keeps

The community spouse can retain a share of the couple’s combined countable assets through the Community Spouse Resource Allowance (CSRA). In 2026, the maximum CSRA is $162,660 and the minimum is $32,532. The exact figure depends on the couple’s combined assets when the applicant enters a facility or begins waiver services.

Income the Community Spouse Keeps

The community spouse is also entitled to a Minimum Monthly Maintenance Needs Allowance (MMMNA) to cover housing, food, and basic expenses. The floor is $2,643.75 per month, and the ceiling is $3,948.⁸ If the community spouse’s own income falls short, a portion of the applicant’s income can be redirected to make up the difference before the rest goes toward care.

The 60-Month Look-Back Period

Indiana reviews every financial transaction you and your spouse made in the 60 months before your application. Any transfer for less than fair market value — a cash gift to a relative, selling property to a family member cheaply, letting someone added to your account withdraw funds — triggers a penalty period during which Medicaid will not pay for your care.⁹

The penalty length comes from dividing the total value of disqualifying transfers by Indiana’s penalty divisor, which reflects the average monthly cost of private-pay nursing home care. In 2025 the divisor was $7,651 and typically updates each July. Give away $76,510 inside the look-back window and you face roughly a ten-month penalty.

Here is the trap: the penalty does not begin on the date of the gift. It begins on the date you would otherwise have qualified for Medicaid and are already in a facility or receiving waiver services. People who made gifts years ago sometimes discover the penalty only after they move into a nursing home and apply, at which point the money is gone and there is no good way to cover the bill during the penalty months. Any planning around the look-back needs to happen well in advance of needing care.

How to Apply

Applications go to the Indiana Family and Social Services Administration (FSSA), Division of Family Resources. You can apply four ways: online through the FSSA Benefits Portal, in person at a local DFR office, by mail using the Indiana Application for Health Coverage, or by phone through the FSSA helpline.¹⁰

Gather supporting documents before you file. You will need proof of identity and Indiana residency, Social Security and Medicare card copies, income records including bank statements and pension or Social Security award letters, and documentation for every asset — property deeds, vehicle titles, life insurance policies, and burial arrangements. Missing paperwork is the single most common reason applications stall.

Once FSSA has a complete file, an eligibility decision can take up to 90 days.¹⁰ Approved applicants may get retroactive coverage for qualifying expenses from up to three months before the application date, provided they were financially and medically eligible during that window. That retroactive window often helps clear bills that piled up while the application sat in review.

If You Are Denied

FSSA has to send a written notice explaining any denial, reduction, or termination. The notice must also tell you how to request a fair hearing, which is an administrative appeal in front of an independent reviewer.¹¹

You have up to 90 days from the date the notice is mailed to request the hearing. Do not wait if you can help it. Evidence is easier to gather and errors easier to correct in the weeks right after a denial. You can represent yourself, bring an attorney, or have another representative speak for you. Common reasons for denial are excess assets (sometimes from counting items that should have been exempt), income over the cap without a Qualified Income Trust in place, and look-back violations from past transfers.

Estate Recovery After Death

Qualifying for Indiana long-term care Medicaid is not the end of the financial story. Federal law requires Indiana to seek reimbursement from your estate after you die for benefits it paid on your behalf, including nursing facility care, waiver services, and managed care capitation payments.¹²¹³

Indiana defines the recoverable estate as all real and personal property you owned at death. Property held in joint tenancy with right of survivorship, assets held in certain trusts, and life insurance proceeds paid to a named beneficiary are not part of the recoverable estate.¹³ Personal effects, keepsakes, and ornaments are also excluded.

Recovery is postponed or blocked in several situations:

No recovery happens while a surviving spouse is alive. After the spouse dies, Indiana may pursue assets that were part of the recipient’s original probate estate.
Recovery is deferred if you leave behind a child under 21 or a child of any age who is blind or disabled.
Indiana must grant an undue hardship waiver in certain cases, such as when the only estate asset is a modest home that an heir relies on for shelter.

Estate recovery is the reason many families look at advance planning — irrevocable trusts, titling choices, partnership-qualified insurance — well before anyone needs to apply. Once a Medicaid application is on the table, most of those options have already closed.

1
Indiana Medicaid. Eligibility Guide
2
Medicare.gov. Long Term Care Coverage – Medicare
3
Indiana Family and Social Services Administration. IN Level of Care Assessment Representative
4
Indiana Medicaid. Home and Community-Based Services: Indiana PathWays for Aging Waiver
5
Social Security Administration. SSI Federal Payment Amounts for 2026
6
Medicaid.gov. Spousal Impoverishment
7
Legal Information Institute. 405 IAC 2-3-29 – Qualified Income Trust; Miller Trust
8
Medicaid.gov. CMCS Informational Bulletin: Updated 2025 SSI and Spousal Impoverishment Standards
9
Office of the Law Revision Counsel. 42 US Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
10
Indiana State Government. Apply for Coverage
11
eCFR. Subpart E Fair Hearings for Applicants and Beneficiaries
12
Medicaid.gov. Estate Recovery
13
Indiana Family and Social Services Administration. Indiana Health Coverage Program Policy Manual