Medicaid covers nursing home care, but only after you have spent down your savings to a limit set by your state

Medicaid is the program that pays for most nursing home stays in the United States. Unlike Medicare, which covers a limited stay after a hospital visit, Medicaid has no time limit — it will pay for years of care if you need it. But Medicaid is a needs-based program, which means you must have very little money and income left before the program will start paying your bills.

Each state runs its own Medicaid program and sets its own rules about how much you can own and still receive coverage. The federal government sets a floor — your countable assets cannot exceed $2,000 in most states — but some states allow slightly more. Your home, one car, and certain personal items do not count toward this limit, but savings, investments, and a second property do.

The process of reducing your assets to meet Medicaid's limits is called "spending down." For many families, this means using savings to pay for care until the money runs out, then switching to Medicaid. For others, it means planning ahead with an elder law attorney to protect some assets legally while still meeting the program's rules.

Key Takeaways

  • Medicaid covers unlimited nursing home stays once you meet the asset and income limits, which vary by state but typically allow $2,000 or less in countable savings.
  • Your home, one vehicle, and personal items are protected and do not count toward the asset limit, but a second home or investment accounts do.
  • You must spend down your own money on care first; Medicaid pays only after your countable assets fall below your state's threshold.
  • Your state's Medicaid office or a local elder law attorney can tell you the exact limits and rules that explore where you live.

What Medicaid actually covers in a nursing home

Medicaid pays for room and board, meals, nursing care, medications, therapy, and medical supplies while you live in a Medicaid-certified nursing home. It covers the full cost of care — there is no copay or deductible once you are enrolled. The nursing home bills Medicaid directly, and you do not receive a bill for covered services.

What Medicaid does not cover includes personal care items like toiletries, clothing, or a phone line; cable or internet; and private-duty care beyond what the facility provides. Some states cover dental care, hearing aids, or eyeglasses through Medicaid, but others do not. You will want to ask the nursing home and your state Medicaid office what is and is not covered before you move in.

How the asset limit works and what counts

Medicaid counts money in your name: bank accounts, savings accounts, certificates of deposit, stocks, bonds, and retirement accounts you have already started to withdraw from. It also counts a second home, rental property, or investment property. A car used for transportation and your primary residence do not count, no matter how much they are worth.

Personal items like jewelry, furniture, and household goods do not count. Prepaid funeral plans up to a certain amount (which varies by state) do not count. Life insurance with a low cash value does not count. But if you own a second property or have substantial savings, those will need to be spent or transferred according to Medicaid rules before the program will pay.

Income is separate from assets. Medicaid has an income limit as well, which also varies by state. If your monthly income is above your state's limit, you may still be able to use a special trust called a Miller Trust or may have access to Income Trust to redirect some of that income and become may be able to access. Your state Medicaid office can tell you whether this option exists in your state.

The spend-down process and how long it takes

If you have more than your state's asset limit, you will need to spend that money on care or other allowed expenses before Medicaid begins to pay. The most straightforward way is to pay the nursing home directly from your savings until your assets fall below the limit. Once they do, you submit a Medicaid process, and the program takes over payment.

The time this takes depends on how much you have to spend and how much the nursing home costs. If you have $50,000 and the nursing home costs $8,000 a month, you might spend down in about six months. If you have $200,000, it could take two years or more. During this time, you are responsible for the full bill.

Some families work with an elder law attorney to use legal strategies like irrevocable trusts or gifts to protect some assets while still meeting Medicaid's rules. These strategies have strict timelines and rules — for example, gifts made within five years of explore for Medicaid may disqualify you for a period of time. An attorney in your state can explain what is and is not allowed.

Medicaid versus Medicare for nursing home care

Medicare covers a short stay in a skilled nursing facility — up to 100 days — but only if you were hospitalized for at least three days first and the stay is for recovery from that hospital stay. Medicare does not cover long-term custodial care, which is what most nursing home residents need. After Medicare's 100 days end, you pay out of pocket or switch to Medicaid if you meet the asset and income limits.

Medicaid, by contrast, covers long-term care with no time limit, but you must be poor enough to meet the program's rules. Many people use Medicare first (if they may have access to), then transition to Medicaid once Medicare ends and their savings have been spent down.

How to find out your state's specific rules

Asset and income limits, protected amounts, and what counts toward the limit all vary by state. Your state Medicaid office is the source for the exact rules where you live. You can find your state office through the Centers for Medicare & Medicaid Services website or by calling your local Area Agency on Aging.

An elder law attorney licensed in your state can also review your situation and tell you what the limits are, what you own that counts, and what options you have. Many offer a free initial consultation. If cost is a concern, your local Area Agency on Aging may be able to refer you to a legal aid organization that serves older adults.

Planning ahead if you think you might need nursing home care

If you are healthy now but worried about future care costs, you have time to plan. Some people buy long-term care insurance, which pays a daily benefit toward nursing home or home care costs. Others set up a will or trust to organize their assets. Some states allow you to protect your home and a small amount of savings through Medicaid planning strategies, but these must be done before you need care.

The earlier you talk to an elder law attorney, the more options you may have. If you wait until you are already in a nursing home and running out of money, your choices narrow. A conversation with an attorney or your state Medicaid office now can help you understand what you can do.

Frequently Asked Questions

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

Yes. Your primary residence does not count toward Medicaid's asset limit, no matter what it is worth. However, some states place a lien on your home after you die to recover what Medicaid paid for your care. Your state Medicaid office can tell you whether this applies where you live.

What happens to my spouse's income and assets if I go on Medicaid?

Medicaid protects some of your spouse's assets and income so they do not have to become poor to keep you on Medicaid. The amount protected varies by state, but typically your spouse can keep a portion of your joint savings and their own income. Ask your state Medicaid office or an elder law attorney for the exact amounts in your state.

If I give money to my children now, will that help me get on Medicaid sooner?

Gifts made within five years of explore for Medicaid may trigger a period of time during which you are not covered, even if you meet the asset and income limits. The rules are complex and vary by state. An elder law attorney can explain how this works and whether it makes sense in your situation.

Does Medicaid cover assisted living or memory care?

Medicaid covers nursing home care, but coverage for assisted living and memory care varies widely by state. Some states cover these settings under Medicaid; others do not. Contact your state Medicaid office to learn what residential options are covered where you live.

How do I explore for Medicaid to pay for nursing home care?

You explore through your state Medicaid office, usually by phone or in person. You will need to provide proof of income, assets, citizenship, and residency. The nursing home social worker can often help you gather documents and submit the process. Processing typically takes 30 to 45 days.