Medicaid covers nursing home care, but only after you have spent down most of your assets and meet your state's income limits

Medicaid will pay for a nursing home stay once you may have access to — meaning your income and assets fall below your state's threshold. The catch is that Medicaid is a program of last resort for long-term care. You must first use your own money to pay the nursing home directly. Only when your savings are nearly gone does Medicaid step in and cover the remaining cost.

The amount Medicaid pays varies by state and by facility. Some nursing homes accept Medicaid; others do not. Once you are on Medicaid, the program covers room, board, and medical care, but not personal items like clothing or a phone. Your state Medicaid office and the nursing home's admissions staff can tell you whether that specific facility takes Medicaid and what the monthly rate is.

Key Takeaways

  • Medicaid covers nursing home care only after your countable assets drop below your state's limit, which ranges from roughly $2,000 to $3,000 depending on where you live.
  • You must spend your own money on nursing home costs first; Medicaid does not pay while you still have savings above the threshold.
  • Not all nursing homes accept Medicaid, so you need to confirm with the facility before admission that they take the program.
  • Your state's Medicaid program sets the daily or monthly rate it will pay the nursing home, and this amount may be lower than what the facility charges private-pay residents.
  • Medicaid rules about what counts toward your asset limit are complex and vary by state, so speaking with a Medicaid caseworker or elder law attorney before spending down is worth the time.

How the spend-down process works

When you enter a nursing home, you pay out of pocket until your assets reach your state's resource limit. This process is called a spend-down. Your state Medicaid office will tell you the exact threshold — it is usually between $2,000 and $3,000 for a single person, though some states set it higher.

Not all of your money counts toward this limit. Your home, one vehicle, and certain personal items are typically excluded. Your bank accounts, stocks, and cash do count. Medicaid also has rules about gifts: if you gave away money or assets within the past five years in order to become poor enough for Medicaid, the program may penalize you by delaying coverage.

The spend-down happens naturally as you pay the nursing home each month. Once your remaining assets fall below the limit, you contact your state Medicaid office to begin the coverage process. This usually takes two to four weeks, though timing varies by state.

What Medicaid covers in a nursing home

Medicaid pays for a semi-private room (two beds), meals, nursing care, medications, therapy, and medical equipment. It does not pay for a private room unless medically necessary, and even then only some states cover the upgrade cost. Medicaid also does not cover personal expenses like a television, phone service, haircuts, or clothing.

The daily or monthly rate Medicaid pays the nursing home is set by your state and is often lower than what a private-pay resident would owe. The nursing home cannot charge you the difference — that is illegal. If the facility's private rate is $300 a day and Medicaid pays $200, the nursing home absorbs the $100 gap for Medicaid residents.

Once you are on Medicaid, you keep a small monthly personal needs allowance — usually $30 to $50 — for items the program does not cover. The exact amount depends on your state.

Income limits and how they work

Medicaid has an income limit for nursing home coverage. In most states, your monthly income must be below a certain threshold, often around $2,000 to $2,500, though this varies. If your income is above the limit, you may still be able to use a Miller Trust (also called a may have access to Income Trust) to redirect the excess income into a trust account, which then becomes available to pay the nursing home.

A Miller Trust is a legal tool that lets you set aside income above the Medicaid limit so that Medicaid will still cover you. You work with an elder law attorney to set one up, and it costs a few hundred dollars. Your state Medicaid office can tell you whether your state allows Miller Trusts and what the rules are.

Income includes Social Security, pensions, and annuities. It does not include the value of your home or the income your home would generate if you rented it out. Your state Medicaid office can walk you through which income sources count.

Finding a nursing home that accepts Medicaid

Not every nursing home accepts Medicaid. Some facilities are private-pay only. Before you or a family member is admitted, call the nursing home and ask directly whether they take Medicaid. Ask also whether they have Medicaid beds available — some homes accept Medicaid in theory but have a waiting list.

Your state's Medicaid office maintains a list of certified nursing homes and which ones participate in Medicaid. You can also call your local Area Agency on Aging, which keeps a directory of facilities in your region and can tell you which ones accept Medicaid. The Nursing Home Compare tool on Medicare's website (Medicare.gov) lists facilities and shows whether they accept Medicaid.

If you are already in a nursing home and have not yet applied for Medicaid, the facility's social worker or admissions staff can usually help you start the process. They have experience with Medicaid applications and know what documents your state requires.

The five-year lookback and penalty period

Medicaid looks back five years before your process to see whether you gave away money or assets. If you did, the program imposes a penalty period during which it will not pay for your nursing home. The length of the penalty depends on how much you gave away and your state's calculation method.

This rule exists to prevent people from quickly transferring assets to family members and then when ready claiming Medicaid. However, some transfers are allowed without penalty — for example, giving your home to a spouse or a disabled child, or transferring a home to a child who lived there and cared for you. An elder law attorney can review your situation and tell you whether past transfers will trigger a penalty.

If you are facing a penalty period, you will need to pay the nursing home out of pocket during that time. Once the penalty period ends, Medicaid coverage begins. This is another reason to speak with an attorney before explore: understanding the penalty ahead of time lets you plan.

Medicaid coverage for spouses and protecting assets

If you are married and one spouse enters a nursing home, Medicaid has rules to protect the other spouse's assets and income. The spouse at home can keep the house, one vehicle, and a certain amount of savings — called the Community Spouse Resource Allowance — without affecting the nursing home resident's Medicaid coverage. This amount varies by state but is usually between $25,000 and $130,000.

The spouse at home also has a minimum monthly income allowance, meaning the nursing home resident's income can be redirected to support the spouse at home rather than going entirely to the nursing home. These protections exist so that the healthy spouse does not become impoverished while the other spouse receives care.

Your state Medicaid office can explain the exact amounts for your situation. An elder law attorney can also help you structure assets between spouses to maximize what the healthy spouse can keep.

How to start the Medicaid process

Contact your state Medicaid office or your local social services department and ask for a nursing home Medicaid process. You will need documents including proof of income (Social Security statements, pension letters), proof of assets (bank statements, investment statements), proof of citizenship or legal residency, and medical records showing you need nursing home care.

The nursing home's social worker can often help you gather these documents and submit the process. Some states allow you to explore before you enter the home; others require you to explore after admission. Ask your state Medicaid office which applies to you.

Once you submit the process, your state will review it and tell you whether you are approved. If you are denied, you have the right to a hearing. Your state Medicaid office will explain the appeal process if that happens.

Frequently Asked Questions

Can I keep my house if I go on Medicaid for nursing home care?

Yes. Your primary residence is not counted as an asset for Medicaid purposes, so you can keep your home. However, after you die, Medicaid may place a lien on your home to recover some of the costs it paid for your care. Your state's rules on estate recovery vary, so ask your Medicaid caseworker what applies in your state.

What happens if the nursing home charges more than Medicaid pays?

The nursing home cannot legally charge you the difference. Medicaid sets a rate, and the facility must accept that rate for Medicaid residents. If a home tells you that you will owe extra, that is a red flag — contact your state Medicaid office to report it.

If I am on Medicare, do I still need Medicaid for nursing home care?

Medicare covers nursing home care only for a short time after a hospital stay — usually up to 100 days and only for skilled care. For long-term custodial care, you need Medicaid or private funds. Many people have both Medicare and Medicaid; they work together, with Medicare covering short-term skilled care and Medicaid covering long-term stays.

Can I transfer my home to my children to protect it before explore for Medicaid?

Transferring your home within five years of a Medicaid process triggers a penalty period. However, transferring your home to a spouse or a disabled child is usually allowed without penalty. An elder law attorney can review your specific situation and tell you what transfers are safe.

How long does it take to be approved for Medicaid nursing home coverage?

Most states take two to four weeks to process an process, though some take longer. During this time, you may need to continue paying the nursing home out of pocket. Ask your state Medicaid office for an estimate and whether you can request expedited processing if you are in financial hardship.