Medicaid is the primary payer for long term nursing home care in the United States. For seniors who require extended care in a nursing facility and have limited financial resources Medicaid can cover the cost of that care — but eligibility rules are strict and vary significantly from state to state.
What Medicaid covers in a nursing home
When a person qualifies for Medicaid nursing home coverage the program typically pays for:
- Room and board in a Medicaid-certified nursing facility
- Nursing care and assistance with daily activities such as bathing, dressing, and eating
- Meals and nutrition services
- Social services and activities
- Personal care services
- Some medical supplies and equipment used in the facility
- Prescription drugs through the state Medicaid program
Medicaid pays the nursing home directly. The resident is typically required to contribute most of their monthly income toward the cost of care — called the patient pay amount — and Medicaid covers the remainder up to the facility’s Medicaid rate.
What Medicaid does not cover in a nursing home
While Medicaid covers the basic costs of nursing home care there are some things it does not cover including:
- Private room upgrades unless medically necessary
- Personal comfort items such as a television, telephone, or personal clothing beyond basic necessities
- Certain non-covered medications
- Care in a facility that is not Medicaid certified
How Medicaid nursing home eligibility works
To qualify for Medicaid nursing home coverage a person must meet both a medical necessity requirement and a financial eligibility requirement.
Medical necessity means that a doctor or assessment team has determined that the person requires the level of care provided in a skilled nursing facility. This is typically established through a formal needs assessment.
Financial eligibility is based on both income and assets. The specific limits vary by state but generally:
- Income limits — most states require that a person’s monthly income be below a certain threshold. In some states all income must be applied toward the cost of care with Medicaid covering the balance.
- Asset limits — most states limit countable assets to $2,000 for a single individual, though this varies by state.
What assets are counted and what are exempt
Not all assets are counted toward Medicaid eligibility. Assets that are typically exempt include:
- A primary residence — subject to certain conditions including that the applicant intends to return home or a spouse or dependent relative lives there
- One vehicle
- Personal belongings and household furnishings
- Prepaid funeral and burial arrangements up to certain limits
- Term life insurance with no cash value
Assets that are typically counted include:
- Bank and investment accounts
- Retirement accounts in some states
- Additional real estate beyond the primary home
- Cash value of life insurance above certain limits
The Medicaid look-back period
Medicaid has a look-back period — in most states five years — during which it reviews all asset transfers made by the applicant. If assets were transferred for less than fair market value during this period Medicaid may impose a penalty period during which the applicant is ineligible for coverage.
This rule exists to prevent people from simply giving away assets to qualify for Medicaid. However there are legal strategies that can be used in advance planning to structure finances appropriately. Because the rules are complex and the stakes are high many families work with an elder law attorney when planning for potential nursing home care.
Spousal protection rules
When one spouse enters a nursing home and the other remains at home — called the community spouse — Medicaid has special rules designed to prevent the at-home spouse from being left financially destitute. These rules are called spousal impoverishment protections.
Under these rules the community spouse is allowed to keep:
- A portion of the couple’s combined assets called the community spouse resource allowance
- A minimum monthly income allowance to cover living expenses
- The family home in most circumstances
The specific amounts allowed vary by state and are updated periodically.
How to apply for Medicaid nursing home coverage
Applications for Medicaid nursing home coverage are submitted through your state’s Medicaid agency. The process typically involves:
- Completing a detailed application including financial documentation
- Providing proof of identity, residency, and citizenship
- Documenting all income sources and assets
- Submitting to a medical needs assessment
- Providing five years of financial records for the look-back review
The application process can be complex and time consuming. Many families work with an elder law attorney or a Medicaid planning specialist to navigate it successfully.
How long does Medicaid approval take
Processing times vary by state but Medicaid applications for nursing home care typically take 45 to 90 days to process once all required documentation has been submitted. Some states may take longer during periods of high volume.
Finding a Medicaid-certified nursing home
Not all nursing homes accept Medicaid. Some facilities only accept private pay residents or Medicare patients. It is important to confirm that a facility is Medicaid certified before admission if you anticipate needing Medicaid coverage. Medicare’s Nursing Home Compare tool at medicare.gov allows you to search for and compare Medicaid-certified nursing homes in your area.
Key terms to know
- Patient pay amount — the portion of a nursing home resident’s income that must be applied toward the cost of care
- Look-back period — the five year period during which Medicaid reviews asset transfers
- Community spouse — the spouse who remains at home while the other spouse receives nursing home care
- Community spouse resource allowance — the amount of assets the community spouse is allowed to keep
- Spousal impoverishment protections — federal rules designed to protect the financial wellbeing of the spouse remaining at home
- Elder law attorney — an attorney who specializes in legal issues affecting older adults including Medicaid planning
- Medicaid certified — a nursing home that has been approved to accept Medicaid payment
Sources
- Medicaid.gov — Official U.S. Government Medicaid Information
- Centers for Medicare and Medicaid Services
- Medicare.gov — Nursing Home Compare
- USA.gov
For state-specific Medicaid eligibility limits and resources visit our State Elder Care and Estate Planning Resources page.
This article is for general informational purposes only and does not constitute legal, financial, or medical advice. Laws and program details vary by state and are subject to change. Consult a licensed elder law attorney or Medicaid planning specialist for guidance specific to your situation.