Understanding Illinois Medicaid Eligibility for Long-Term Care

When a loved one needs nursing home care, the financial reality can feel overwhelming. In Illinois, the cost of a semi-private room in a nursing facility often exceeds $7,000 to $10,000 per month. This expense can deplete a family’s life savings in a matter of years. We understand the fear that comes with seeing hard-earned assets vanish to cover medical bills.

Protecting your financial legacy while ensuring high-quality care requires a clear strategy. Our team specializes in elder law and Medicaid planning to help families utilize Medicaid regulations to their advantage.

What Is Illinois Medicaid for Long-Term Care?

Medicaid is a joint state and federal program designed to cover healthcare costs for those with limited resources. In our state, the Department of Healthcare and Family Services (HFS) administers this program. Unlike Medicare, which typically covers only up to 100 days of rehabilitative care, Medicaid pays for long-term custodial care in a nursing home indefinitely.

This coverage is not automatic. The program is strictly needs-based. Applicants must meet specific financial criteria regarding both income and assets to gain approval through the Application for Benefits Eligibility (ABE) system.

Illinois Medicaid Asset Limits

Strict limits govern how much an applicant can own while still qualifying for coverage. As of 2025, a single person applying for nursing home Medicaid in Illinois can retain no more than $17,500 in total assets, but only $2,000 of that can be in non-exempt, countable resources. The rules change significantly for married couples.

Distinguishing Between Countable and Exempt Assets

Confusion often arises regarding which assets the state counts toward this limit. We categorize resources into two distinct buckets to help you understand your standing.

Countable Assets (Must be spent down):

• Checking and savings accounts.
• Stocks, bonds, and mutual funds.
• Vacation homes or investment properties.
• Cash value of life insurance policies exceeding $10,000 in face value.
• Non-qualified annuities.

Exempt Assets (You keep these):

• Primary Residence: The applicant’s home is exempt if their equity interest is under $713,000 (2024 standard) and they intend to return, or if a spouse lives there.
• One Vehicle: Regardless of value, one car is exempt for transport to medical appointments.
• Personal Effects: Household goods, furniture, and jewelry.
• Prepaid Burial Plans: Irrevocable funeral contracts are generally exempt.

The Community Spouse Resource Allowance

Regulations prevent the healthy spouse from becoming destitute to pay for their partner’s care. This protection is known as the Community Spouse Resource Allowance (CSRA).

In Illinois, the “community spouse” (the one remaining at home) can retain a significant portion of the couple’s combined assets. For 2025, federal standards allow the community spouse to keep up to a maximum of $154,140 in countable assets. This figure ensures the healthy spouse can maintain their standard of living.

Income Protections for the Community Spouse

Assets are not the only protected resource. We also look at the Monthly Maintenance Needs Allowance (MMMNA). This rule allows the community spouse to keep part of the institutionalized spouse’s monthly income if their own income falls below a certain threshold.

Comparison of Spousal Protections:

Category	Institutionalized Spouse Limit	Community Spouse Limit
Asset Limit	$2,000	Up to $154,140 (Federal Max)
Income Usage	Must pay to nursing home (minus $30 allowance)	Keeps own income + potential allowance from spouse
Home Ownership	Exempt (with equity limits)	Protected occupancy

The Five-Year Look-Back Period

HFS performs a rigorous financial audit known as the “look-back period” when you apply for Medicaid. Caseworkers review all financial transactions from the 60 months (five years) immediately preceding your application date.

Any asset transfers, gifts, or sales below fair market value during this window trigger scrutiny. We see many families face unexpected denials because they casually helped a grandchild with tuition or transferred a car title three years ago.

Calculating the Penalty Period

A violation of the look-back rule results in a penalty period. This is a specific timeframe during which Medicaid refuses to pay for nursing home care.

The state calculates this penalty by taking the total amount of uncompensated transfers and dividing it by the average daily private pay rate for nursing care. For example:

1. You gifted $70,000 to family members within the last five years.
2. The state divides this by the current divisor.
3. The result is the number of days or months you must pay out-of-pocket before Medicaid kicks in.

Strategic timing is essential here. Transfers made even one day outside the five-year window do not trigger a penalty.

Crisis Medicaid Planning Options

Families often contact us after a sudden medical event necessitates immediate nursing home placement. Even if you have not planned five years in advance, all is not lost.

Specific legal strategies exist for these “crisis” scenarios. Our team utilizes tools that can still save a significant portion of your estate.

• Medicaid Compliant Annuities: Converting cash assets into a specialized income stream for the community spouse.
• Spousal Refusal: A legal declaration where the community spouse refuses to support the institutionalized spouse, forcing Medicaid to evaluate the applicant individually.
• Caregiver Agreements: Formal contracts that pay a child for care services provided, legally reducing assets.
• “Half-Loaf” Strategy: A gifting strategy involving intentional penalties and compliant loans to preserve roughly half of the assets.

These methods require precise execution. A single error in the paperwork can lead to a denial or an extended penalty period.

Common Misconceptions About Medicaid

”The state will take my house.”

This is the most common fear we encounter. While the state may place a lien on the property to recoup costs after the beneficiary passes away (Estate Recovery), they generally cannot force the sale of a home while the applicant or their spouse lives there. Exceptions also exist for disabled children or caregiver children who have lived in the home for two years.

”I have too much income to qualify.”

Illinois is an “income cap” state for some waivers, but for nursing homes, the rules differ. If your monthly income is lower than the private cost of the nursing home, you can usually qualify. You will pay your income to the facility as a “patient liability” amount, and Medicaid covers the rest.

”I can just sign my house over to my kids.”

Transferring a deed is a gift. If done within the five-year look-back period, it triggers a massive penalty based on the home’s full market value.

How an Elder Law Attorney Can Help

Medicaid rules are buried in thousands of pages of state and federal statutes. We interpret these changing regulations to build a plan that maximizes what your family keeps.

Professional guidance provides several key advantages:

• Asset Analysis: Identifying which assets are exempt and which must be restructured.
• Application Management: Handling the rigorous documentation required by the ABE system and responding to caseworker inquiries.
• Appeals Representation: Fighting incorrect denials or calculation errors made by the state.
• Estate Recovery Avoidance: Structuring assets to minimize what the state can claim after death.

At Skokie Probate Lawyer, we approach every case with the understanding that these are family homes and hard-earned savings at stake.

Next Steps

Waiting until your savings are gone is not necessary. If you face rising care costs or a sudden diagnosis, take action now to secure your financial future.

We invite you to contact our office to discuss your specific eligibility. Our team will review your financial picture, explain the relevant look-back rules, and outline a path to benefits.

Call (847) 410-9131 to schedule your consultation. We also offer house and hospital visits for families dealing with immediate care needs.