When Medicaid Pays for Nursing Home Care

Medicare is a federal program that provides healthcare services for all older Americans regardless of their income. Medicaid, however, is a federal program administered at the state level that provides health care for low-income individuals. Medicare provides only short-term support for nursing home care, while Medicaid will provide long-term nursing home care for low-income elderly and disabled Medicare recipients who require that type of care.

Because it is possible to qualify for nursing home care through Medicaid, some people look upon it as a sort of guarantee of long-term security. The reality, however, is more complex.

Older woman in wheelchair at nursing home
Alistair Berg / Getty Images

Qualifying for Medicaid-Funded Long-Term Nursing Home Care

To qualify for Medicaid, you must meet a means test. Your income and assets must be under a certain level, as determined by your individual state. Most states use a percentage of the Federal Poverty guidelines as the measuring stick to determine eligibility.

When someone applies for Medicaid to cover the costs of nursing home care, a caseworker will investigate their financial status to help make a determination as to if the applicant meets the qualifications for coverage. Income includes wages and pension payments, and assets can include items such as savings, cars, homes, and valuables that may be owned by the applicant.

What If You Don't Meet Medicaid Guidelines?

If an applicant's assets exceed the set amount in the guidelines, he or she may have to enter the nursing home as a private pay resident and "spend-down" those assets. This may involve selling those assets for cash to pay the nursing home bill. In fact, you must spend down your assets to the point of being nearly destitute before you will qualify for funding.

Be aware that Medicaid rules do not allow you to give away your money (for instance, to your children or grandchildren) in order to qualify for Medicaid. Medicaid now implements a five-year "look-back" period, which means that Medicaid will examine all your financial dealings for at least the past five years. If you transferred or gifted money to anyone during those five years, you will be penalized with a delay in your Medicaid eligibility.

Most nursing homes that accept Medicaid payment will be able to help the patient or family with the application process.

What Happens to the Spouse of a Person in Medicaid-Funded Nursing Care?

If there is a spouse who will not be living in the nursing home, that person will not be required to become destitute in order to pay for the care (for example, selling a home to pay for care), but Medicaid can require some "payback" for care after that spouse has passed on by billing the estate.

A Word From Verywell

While many people do need Medicaid-funded nursing care, the program is not intended to replace long-term care insurance if you can afford it. In addition, qualifications for and options available through Medicaid do change. It's important to double-check federal and state policies to be sure you have up-to-the-minute information.

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