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Yes, Medicaid will pay for the fixed rate costs of a nursing home in a Medicaid-certified nursing home. However, there are some factors that determine whether a senior is eligible for Medicaid and what aspects of their care are actually covered. Paying for a nursing home is often one of the largest expenses that older adults and their families encounter. While the majority of nursing home costs are paid through private funds, or a combination of private funds and insurance, there are other options for those who need them. Understanding how Medicaid for nursing homes works and if your parent is eligible is important.

Key Takeaways

Medicaid will cover the cost of nursing home care. However, there are specific eligibility requirements that must be met to qualify for coverage.
Medicaid is separate from Medicare. Medicaid is typically only for those with low income and limited assets.
Medicaid nursing home coverage must be provided in Medicaid-certified nursing homes. Room and board, medical care, and other necessary services are included in this coverage.
If your parent is not eligible for Medicaid, there are other payment options. Talking to a financial advisor can give you both a better idea of what may be available.

What is Medicaid?

While Medicare and Medicaid often get confused, they are separate programs. Medicaid is a government health insurance program for those with low incomes or who are otherwise in need of financial assistance, as well as some people with disabilities. Medicaid is a program run jointly through both the federal and state governments. Because of the state-run aspect, Medicaid benefits and eligibility may differ state-by-state. It’s important to familiarize yourself with the specific eligibility criteria and coverage details in your parent’s state.

What are the Medicaid nursing home eligibility requirements?

Medicaid eligibility requirements are based on a few different factors. Applying for Medicaid specifically for long-term care, such as for home care or for a nursing home, is often referred to as nursing home Medicaid. While the application process is similar to applying for regular Medicaid, there is an additional level of care requirement involved.

Income and assets

For those over age 65, income eligibility is usually determined by the same methods as those used for Supplemental Security Income (SSI).^[01] In most states, the monthly income limit is $2,742.^[02] However, this does vary by state.

Income levels do differ if an applicant is married. Typically, if only one spouse is applying then only their income will be counted towards the limit. If both spouses need nursing home care, then both of them are usually allowed to have individual incomes up to the maximum amount. So if they are in a state where the income limit is $2,742, then both spouses can individually make up to that amount.^[03]

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In most states, countable asset levels must be $2,000 or less. For couples where both spouses are applying for Medicaid for nursing home care, this amount is typically $3,000 or less. Assets that are usually excluded from this total include your parent’s primary residence, their vehicle, personal items and household appliances, and term life insurance plans.^[04]

Spending down assets

Because assets and income need to be below these levels, many seniors must spend down their assets to qualify for Medicaid. However, it is crucial to note that Medicaid reviews applicants’ financial information in the years immediately prior to applying. This is known as the Medicaid look-backperiod. Medicaid looks for financial transactions (usually gifted assets) that render an applicant ineligible for coverage. This period of time is 60 months (or five years) in most states, but some have shorter periods of time. For example, California has a look-back period of only 30 months.^[05]

However, there are certain transactions that are permitted for spending down assets. Some of the following examples may have specific rules attached, so it’s important to check the requirements in your loved one’s state.

Paying off accrued debt, such as from loans
Purchasing medical equipment, such as items that aren’t typically covered by insurance
Making vehicle repairs, such as replacing tires or doing needed maintenance
Creating an irrevocable funeral trust, which sets aside money for funeral arrangements
Making home modifications, such as those that improve safety or accessibility
Purchasing an annuity
Setting up a life care agreement, which is an agreement that essentially sets aside money to pay a loved one or caregiver ^[06]

Consulting a Certified Financial Planner or elder law attorney about how and when to spend down funds can help ensure that no mistakes are made.

Residence

Applicants must reside in the state where they are applying for Medicaid coverage. They must also be a citizen of the United States or be a qualified noncitizen.^[01]

Level of care

For those applying to Medicaid for long-term care coverage, such as for nursing home care, there are medical and functional eligibility requirements. These criteria differ depending on the state your parent plans to receive nursing home care in. At a minimum, they will need to prove that they require significant assistance with activities of daily living (ADLs). This typically involves having a doctor formally document this need. Documentation pertaining to medically necessary care or cognitive impairment may also be required to demonstrate their need for a nursing home level of care.^[07]

What is the nursing home Medicaid application process?

You can help your parent apply for nursing home Medicaid coverage by mail, phone, in person, or, in some states, even online. The application forms can be picked up in person at your loved one’s state Medicaid office, or downloaded and printed off of the office’s website.

What documents are needed to apply for Medicaid?

Your parent will need to prove that they meet Medicaid eligibility requirements. Documents that may be asked for include:

Income tax returns
Benefit letters from the Social Security Administration, the Department of Veterans Affairs, or other sources
Insurance papers
Bank records
Deeds or appraisals for all real estate
Information about any owned stocks or bonds
Retirement account information, if applicable ^[04]

Medicaid nursing home coverage

Once you have determined whether your senior loved one is eligible for Medicaid, the next step is determining what parts of their nursing home care are actually covered by Medicaid.

What is covered?

While Medicaid will cover nursing home expenses, the care must be provided in a Medicaid-certified nursing facility.

Coverage usually includes:

Room and board, including dietary services to meet an individual’s needs
Nursing care
Specialized rehabilitative services
Medication or other pharmaceutical services
Emergency dental services (as well as some routine dental services covered under specific state plans)
Hygiene products
Enrichment activities ^[07]

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What isn’t covered?

While many of the services Medicaid covers are considered necessities for nursing home care, there are other services and amenities that are less likely to be covered. These may vary by state, or by an individual’s needs.

Medicaid does not cover the following aspects of nursing home care:

A private room, unless it is deemed medically necessary
Telephone, television, or internet services
Personal clothing or unnecessary grooming items, such as makeup
Activities beyond what is normally provided by the nursing home
Special care services beyond what is covered in the facility’s Medicaid payment
Personal entertainment, such as books or games
Individual room decorations, such as plants or figurines ^[08]

Other ways to pay for a nursing home

If your parent does not meet the eligibility requirements for Medicaid coverage of long-term care, then there are still other ways to cover the cost. In addition to private funds, such as savings or retirement accounts, other options include:

Veterans benefits
Long-term care insurance
Cashing in a life insurance policy
A reverse mortgage
Selling your parent’s home

In addition, factors such as location and even sharing a room can lower the cost of nursing home care. Finally, seeking outside guidance from a certified financial planner and a reputable attorney can help you and your parent create a plan to pay for their care.

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References

Centers for Medicare & Medicaid Services. Medicaid Eligibility.
Centers for Medicare & Medicaid Services. (2023, May 11). 2023
SSI and Spousal Impoverishment Standards.
American Council on Aging. (2023, February 7). What Counts as Income for Medicaid Long Term Care? Definitions, Exceptions & Limits.
American Council on Aging. (2023, February 28). The Documentation Required to Verify Financial Eligibility for Long-Term Care Medicaid.
California Advocates for Nursing Home Reform. (2023, April 11). Overview of Medi-Cal for Long Term Care.
American Council on Aging. (2022, December 14). Spending Down Assets to Become Medicaid Eligible for Nursing Home / Long Term Care.
American Council on Aging. (2022, March 15). What Is Nursing Home Level of Care & Its Importance to Medicaid Eligibility.
Centers for Medicare & Medicaid Services. Nursing Facilities.

Meet the Author

Chloe Clark

Chloe Clark is a copywriter for OurParents. She has an MFA in Creative Writing, with a background in education and publishing. She has over a decade’s experience in writing for print publications and websites.

Edited byDanny Szlauderbach

Reviewed bySaul Chapnick

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom (of which OurParents is a trademark) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

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