Indiana’s long-term care Medicaid rules are really two sets of rules with a hinge in the middle, and the hinge is the date of death. Before it, the questions are about eligibility, hours and who can be paid. After it, they are about what the state may claim from the estate and what the family keeps. Advice that mixes the two is where families get hurt — a move that looks smart while a parent is living can be the move that exposes the house afterward.
Indiana restructured this in 2024. The Aged and Disabled waiver, the program most families had heard of, was absorbed into Indiana PathWays for Aging, a managed long-term services and supports program for Hoosiers aged 60 and over, launched July 1, 2024 and delivered by contracted managed care organizations. The Family and Social Services Administration is the state agency; its Division of Aging oversees the program; sixteen Area Agencies on Aging provide options counseling.
Figures are stated as of 2026 and should be confirmed with FSSA before you rely on them.
In This Article
- BEFORE: What PathWays for Aging actually is, and what changed in 2024
- BEFORE: Structured Family Caregiving — Indiana’s distinctive answer on paying relatives
- BEFORE: Indiana’s Long Term Care Insurance Partnership — asset protection that survives the hinge
- AFTER: What Indiana’s estate recovery program can claim
- ACROSS THE HINGE: the life insurance policy is a different asset on each side
- Frequently Asked Questions
BEFORE: What PathWays for Aging actually is, and what changed in 2024
Before July 2024, Indiana served most older adults at home through a 1915(c) Aged and Disabled waiver with Area Agency on Aging case management. Since then, members aged 60 and over receive both their medical coverage and their long-term services and supports through a PathWays managed care organization, with a service coordinator assigned by the plan.
Practically, that changed who you call. The Area Agencies on Aging still perform options counseling and remain a good first call for a family that does not know what it needs. But authorizations, hours, provider networks, grievances and appeals now run through the health plan. Families still calling the AAA about a denied service are calling the wrong office.
Covered services generally include attendant care and personal care, homemaker services, adult day services, respite for the family caregiver, home-delivered meals, a personal emergency response system, home modifications such as ramps and grab bars, transportation, assisted living services in participating settings, and nursing facility care. Because facility and home services sit inside the same benefit, changing setting is a care-plan decision rather than a new application.
The functional gate is a nursing-facility level of care, determined through an assessment; the financial gate is the standard $2,000 countable-asset limit for a single applicant with an income cap at roughly three times the federal SSI benefit rate — in the low-$2,900s per month as of 2026 — requiring a qualified income trust above it. Confirm both with FSSA.
BEFORE: Structured Family Caregiving — Indiana’s distinctive answer on paying relatives
Most states answer the “can I be paid” question with an hourly attendant model. Indiana has a second answer that is genuinely unusual: Structured Family Caregiving, a benefit that pays a daily stipend to a caregiver who lives with the member and provides the day-to-day care, supported and supervised by a contracted agency with a care coach.
The stipend is tiered by the member’s level of need and has run in a range of roughly $60 to $100 per day as of 2026, depending on tier and agency. Treat that as a range to verify with FSSA or the PathWays plan rather than a quoted figure, because rates are set by contract and change. The caregiver is generally not a W-2 employee of an agency in the usual attendant sense; the payment is structured as a stipend, which has its own tax treatment — a question for your CPA, not for a website.
Who can serve: an adult child, sibling, grandchild, niece, nephew or friend who lives in the home with the member. A spouse generally cannot be the paid caregiver, and Indiana follows the national exclusion of legally responsible relatives. Ask the plan service coordinator whether Structured Family Caregiving or an attendant-care model fits your household better, and ask what happens to the benefit if the caregiver moves out.
Cost context: private-pay home care in Indiana runs in the mid-$20s to low-$30s per hour as of 2026 in Genworth-style state cost-of-care surveys, so a daily stipend and an hourly authorization are worth comparing carefully — see how families price and fund home-care hours.
| Question | Before Death | After Death |
|---|---|---|
| Who is in charge | PathWays managed care plan service coordinator | FSSA estate recovery, through the probate court |
| The home | Generally excluded while lived in, within the equity ceiling | Reachable if it passes through probate |
| Life insurance | Cash surrender value countable above the small-policy threshold | Death benefit follows the beneficiary designation, not the will |
| Partnership LTC policy | Asset disregard at application; Indiana offers total protection | Protected assets also shielded from recovery |
| Paid family caregiver | Structured Family Caregiving stipend; spouse generally excluded | Not applicable |
| Who to call | The health plan; Area Agency on Aging for counseling | An Indiana elder law attorney, before death ideally |
BEFORE: Indiana’s Long Term Care Insurance Partnership — asset protection that survives the hinge
Here is the Indiana rule that reaches across the date of death, and it is one of only two of its kind in the country. Indiana operates a Long Term Care Insurance Partnership program in which a qualifying partnership policy provides dollar-for-dollar asset disregard — and Indiana, along with New York, offers policies that can provide total asset protection rather than protection capped at the benefits paid. That protection applies both to eligibility during life and to estate recovery after death.
What that means concretely: a Hoosier who bought a qualifying Indiana partnership policy years ago may be able to keep assets that would otherwise have to be spent down, and shield those same assets from a post-death recovery claim. Most states offer only the dollar-for-dollar version.
Why it matters even if you never bought one: check. Families frequently do not know what a parent purchased in the 1990s or 2000s. Pull every insurance policy in the file and ask whether any of them is an Indiana partnership-qualified long-term care policy. If one is, the entire spend-down conversation changes, and an Indiana elder law attorney should be told immediately.
Confirm the current partnership rules and total-asset-protection availability with the Indiana Department of Insurance and FSSA, since program terms have been amended over the years.
AFTER: What Indiana’s estate recovery program can claim
The hinge. Federal law requires states to recover from the estates of Medicaid recipients aged 55 and older for long-term care services received, and Indiana operates an estate recovery program within FSSA, administered with contractor support.
Indiana recovers against the probate estate. That means the mechanism is a creditor claim filed in the probate proceeding, subject to the deadlines that govern claims against a decedent’s estate in Indiana, and the personal representative has notice obligations to the state. Recovery is deferred while a surviving spouse is living and while a minor child or a child with a disability survives. Hardship waivers exist and are worth asking about rather than assuming.
What this means for the family: the practical question after death is what passes through probate and what does not, and how the house is titled at the moment of death is usually the whole ballgame. That is a question for an Indiana elder law attorney and it should be asked before death, not after. Our Indiana estate recovery page covers the claim mechanics and the deferral rules.
Where Indiana departs from the baseline: the 2024 shift to PathWays managed long-term services and supports; Structured Family Caregiving as a daily-stipend alternative to hourly attendant care; and the total-asset-protection partnership policy, shared only with New York. Where Indiana follows federal law: the 60-month look-back and penalty divisor, the community spouse resource and income allowances, the home equity ceiling, and estate recovery for recipients 55 and older.
ACROSS THE HINGE: the life insurance policy is a different asset on each side
Life insurance is the clearest example of why the two sides need separate thinking, because the same policy behaves differently before and after death.
Before death, it is an asset. When the combined face value of all life insurance on the applicant exceeds Indiana’s small-policy threshold, the cash surrender value of every policy is countable against the $2,000 limit for a single applicant. Face amounts aggregate, so two modest policies can jointly break an exclusion either alone would fit inside; term insurance with no cash value generally is not counted. The aggregation rule is explained here.
After death, it is a death benefit — and where it goes depends entirely on the beneficiary designation. A policy payable to a named living beneficiary generally passes outside probate and is therefore generally outside the reach of a probate-based estate recovery claim. A policy payable to the estate lands in probate, where the claim lives. Families sometimes discover, too late, that the beneficiary designation was never updated after a spouse died and the proceeds default to the estate. Check every designation now.
The options before death, in order: reduced paid-up converts a whole life policy to a smaller fully-paid death benefit with no further premiums, cutting countable cash value while keeping a benefit for the family; an irrevocable funeral trust converts a countable dollar into an excluded one with no gift and no transfer penalty; surrender takes the cash value, ends coverage and may create taxable income above premiums paid; a life settlement sells the policy to a licensed buyer in Indiana’s regulated secondary market and can exceed surrender value for an older insured in declining health, though the proceeds are countable, must be spent on care, and any gifted portion falls inside the 60-month look-back.
And on either side of the hinge, keeping the policy is frequently correct — a burial-sized policy inside the exclusion, a policy the surviving spouse will need, or a policy on a relatively healthy insured that the market would price poorly. Pine Lake Legacy does not purchase policies; the free policy review exists so families know the actual number before acting. This is education, not legal, tax or Medicaid-eligibility advice — take it to an Indiana elder law attorney, your CPA, FSSA, or Indiana’s State Health Insurance Assistance Program.
Frequently Asked Questions
What happened to Indiana’s Aged and Disabled waiver?
It was absorbed into Indiana PathWays for Aging, a managed long-term services and supports program for Hoosiers aged 60 and over that launched July 1, 2024. Members now receive medical coverage and long-term services through a contracted managed care organization with an assigned service coordinator. Area Agencies on Aging still provide options counseling, but authorizations and appeals run through the plan.
How much does Structured Family Caregiving pay in Indiana?
It is a daily stipend tiered by the member’s level of need, running in a range of roughly $60 to $100 per day as of 2026 depending on tier and agency. Treat that as a range to verify with FSSA or your PathWays plan rather than a fixed figure. The caregiver must live with the member, and the stipend has its own tax treatment – ask your CPA.
Can my husband be paid to care for me in Indiana?
Generally no. Indiana follows the national rule excluding legally responsible relatives, so a spouse cannot be the paid caregiver under Structured Family Caregiving or attendant care. An adult child, sibling, grandchild, niece or friend generally can be, and for Structured Family Caregiving they must live in the home with the member. Confirm with your plan service coordinator.
What is Indiana’s long-term care insurance partnership?
It is a program pairing qualifying private long-term care insurance with Medicaid asset protection. Indiana and New York are the only states offering policies that can provide total asset protection rather than protection limited to benefits paid. Protected assets are disregarded at application and shielded from estate recovery. Check whether a parent bought one, and confirm current terms with FSSA and the Department of Insurance.
Does Indiana take the house after a Medicaid recipient dies?
Indiana operates an estate recovery program that files claims against the probate estates of recipients aged 55 and older who received long-term care services. Recovery is deferred while a surviving spouse lives and while a minor or disabled child survives, and hardship waivers exist. How the property is titled at death drives the outcome – a question for an Indiana elder law attorney before death.
Will my mother’s life insurance be taken by estate recovery?
It depends entirely on the beneficiary designation. Proceeds payable to a named living beneficiary generally pass outside probate and are therefore generally outside a probate-based recovery claim. Proceeds payable to the estate land in probate, where the claim lives. Check every designation now, especially on policies where a named beneficiary died years ago.
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Related Reading
- Indiana Medicaid Asset Income Limits
- Medicaid Estate Recovery Indiana
- Indiana Insurance Department Consumer Help
- Life Insurance Guaranty Association Indiana
- Life Insurance Counts Medicaid Asset
- Home Care Hourly Cost Funding
- What Is Medicaid Estate Recovery
- Nursing Home Medicaid Spend Down
Pine Lake Legacy does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.