How Medicaid Can Help Seniors Cover the Cost of Assisted Living

Does Medicaid Pay for Assisted Living?

Yes, Medicaid will help to cover the cost of assisted living including memory care (Alzheimer’s care units). To be clear, long-term care services, such as personal care and homemaker assistance, are covered by Medicaid for those who meet the eligibility requirements. Medicaid may also cover the cost of emergency response systems and skilled nursing. However, Medicaid will not pay for the cost of room and board.

Since Medicaid is a federal and state program, the eligibility requirements, available programs, and benefits vary based on the state in which one resides. This is because each state has a degree of flexibility on how it would like to operate its program within the parameters set by the federal government. In addition, within each state there are multiple Medicaid programs with varying pathways towards eligibility. Therefore, the subject of whether Medicaid covers assisted living is not as straightforward as one might originally think.

For purposes of further explanation, it is important to understand that most states have a regular state Medicaid program in addition to Home and Community Based Services (HCBS) Medicaid Waivers. All states offer personal care assistance through Medicaid, although some states only offer it through their state plan, other states offer it only through HCBS Medicaid Waivers and in a few states offer it through both the state plan and HCBS Waiver(s). However, even though all states over personal care assistance through Medicaid, not all states cover this service in assisted living residences.

Regular State Medicaid

State Medicaid, which is an entitlement program, provides a variety of health care benefits that are mandated by the federal government. For instance, all states are required to cover the cost of nursing home care for all state residents who meet the eligibility requirements. There are also optional benefits left to the discretion of each state. One such optional benefit is state plan personal care. Since anyone who meets the eligibility requirements for state Medicaid is guaranteed to receive benefits, if a state offers personal care assistance and a resident meets the criteria for eligibility, he/she will receive services. Stated clearly, there are never waitlists for state Medicaid plan benefits.

States may also help cover the cost of assisted living services via a 1915(k) Community First Choice (CFC) program, also a state plan option, which was made possible by the Affordable Care Act. Via CFC, home and community based services are offered, which may include attendant services in assisted living residences. Another state plan option, 1915(i) Home and Community Based Services, offers supportive services for independent living. Like the regular state Medicaid plan, participant enrollment cannot be capped and geographic location cannot be limited within a state.

HCBS Medicaid Waivers

Most states offer Home and Community Based Services Medicaid Waivers, also called 1915(c) Waivers, which enable persons to continue to live at home or in the community rather than be placed in a nursing home. Waivers do this by providing care services and other benefits that aid independent living, such as personal emergency response systems, adult day care, respite care, home modifications, personal care assistance, home health aides, meal delivery, and housekeeping.

With HCBS Medicaid Waivers, elderly and disabled persons can live in a variety of settings and receive Medicaid funded services. While the specific settings will differ based on the state in which one resides and the waiver, persons may live at home, the home of a relative or friend, an adult foster care home, a residential group home, or an assisted living residence.

Waivers may not be available statewide (unlike with the state Medicaid plan) and may target specific populations. For instance, Virginia used to offer assisted living services via a HCBS Medicaid Waiver, but only for persons with Alzheimer’s disease and related dementias. (This waiver has since expired and is not being renewed).

In addition, participant enrollment in a HCBS Waiver is limited. This means that there may be waitlists for long-term care services. If there is a waitlist, the wait for benefits can be years. Some states use a “first come, first served” prioritization system, while others are based on need.

States can also offer HCBS via Section 1115 Demonstration Waivers, which also may have waitlists for benefits. Some states operate managed long-term services and supports programs via 1115 Demonstration Waivers.

Which Services Will Medicaid Cover?

Based on one’s state of residence and the specific Medicaid program in which one is enrolled, the benefits Medicaid will pay for will vary. Having said that it is typical that the following services are available for persons living in assisted living residences:

• Personal Care Assistance (help with dressing, bathing, toileting and eating)
• Homemaker Services (housecleaning, laundry, shopping for essentials such as groceries, and meal preparation)
• Transportation
• Case Management
• Personal Emergency Response Systems

Medicaid will not pay for the room and board portion of assisted living. However, many states do offer an optional SSI state supplement (OSS), which is a cash assistance program, to help cover the cost of room and board. This benefit, which may also be called state supplementary benefits, supplements federal SSI payments a person already receives. The administering agency differs based on one’s state, but in most states, it is either the Department of Human Services (DHS) or the Social Security Administration (SSA). A list of all local DHS offices should be found on each state’s Medicaid website. To find the SSA office nearest you, click here.

How Much Does Medicaid Pay?

The amount that Medicaid will pay towards the cost of long-term care services in assisted living residences depends on a variety of factors. It depends on the state in which one resides, the Medicaid program, and one’s level of care need. For instance, it is common for persons who have a greater need for assistance to be allocated a greater number of caregiver hours each month. The number of hours that Medicaid will cover is usually based on a needs assessment. Remember, Medicaid will not cover the room and board portion of assisted living costs, which as a rule-of-thumb accounts for approximately half the cost of assisted living.

Eligibility Requirements for Medicaid Assisted Living

In addition to being a resident in the state in which one is applying for Medicaid, one must be residing in an assisted living facility that is licensed by the state and accepts Medicaid. These residences are often called “Medicaid certified”. Persons must also meet financial (income and assets) and functional requirements for the Medicaid program for which they are applying. The criteria below are specific to seniors who are aged 65 and over.

Financial Criteria

Generally speaking, income and asset limits for eligibility purposes vary based on if a person is applying for the state Medicaid program versus a HCBS Medicaid Waiver. In most states, the income limit is more restrictive for regular state plan services than for HCBS Medicaid Waivers. As a general rule of thumb, state Medicaid plans limit one’s income to 100% of the Federal Poverty Level ($1,063 / month in 2020) or 100% of the Federal Benefit Rate ($783 in 2020). For HCBS Waiver programs, an applicant generally must have income no greater than 300% of the Federal Benefit Rate (FBR). As of 2020, this means an applicant cannot have income in excess of $2,349 / month. Assets are usually limited to $2,000 for both state plans and HCBS Medicaid waivers. See state specific eligibility criteria here.

It is important to note that being over the income and/or asset limit(s) is not automatic cause for Medicaid disqualification. Professional Medicaid planners are available to assist persons in restructuring finances to meet financial eligibility requirements without jeopardizing Medicaid eligibility. For instance, improperly restructuring finances, such as gifting assets to family members, is a violation of Medicaid’s look back period, which can cause a delay of benefits. Therefore, it is recommended persons in this situation seek the counsel of a Medicaid planner, as they are very familiar with planning techniques for Medicaid eligibility. Find a professional Medicaid planner here.

Functional Need

Applicants must also meet functional need for Medicaid assisted living, which often means one must require a nursing home level of care and/or be at risk of institutionalization if not for the program’s benefits. The definition of what constitutes a level of care consistent to that which is provided in a nursing home varies by state. For some states, this might mean that persons require personal assistance with two activities of daily living, such as removing and putting on their clothes, cutting up their food and getting the food in their mouths, using the toilet and cleaning up after themselves, and transitioning from their bed to a chair. Some programs require a physician statement indicating that personal care services are required. While one might think a diagnosis of Alzheimer’s disease automatically qualifies one functionally for long-term care Medicaid, this is not always the case.

*Please note that for the state plan option, 1915(i) Home and Community Based Services, applicants must not require a nursing home level of care. Instead, the functional need of applicants must be less than that which is provided in a nursing home.

Which States Cover Assisted Living

Some states cover care services, such as personal care assistance, through their state plan, others via HCBS Waivers, while others utilize both the state plan and waivers. However, not all assisted living residences in all states accept Medicaid for payment of care services. In fact, in some states, assisted living residences may not accept Medicaid at all. For example, Illinois Medicaid will not make payments towards the cost of benefits in assisted living. However Medicaid will pay towards the cost of care in supported living facilities.

State Medicaid Plan / Community First Choice

The following states offer personal care assistance through their state Medicaid plans. Please note that this does not automatically mean the state will cover personal care assistance in assisted living facilities. Nor does it mean the assisted living residence in which one resides will automatically allow outside assistance to enter the residence and provide care.

• Alaska
• Arkansas
• California
• Delaware
• District of Columbia
• Florida
• Idaho
• Kansas
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Oklahoma
• Oregon
• Rhode Island
• South Dakota
• Texas
• Utah
• Vermont
• Washington
• West Virginia
• Wisconsin

HCBS Medicaid Waivers / Managed Long-Term Care

The states named below offer care services and benefits in assisted living residences via HCBS Medicaid Waivers or Managed Long-Term Care Programs. Remember, waitlists may exist.

• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Georgia
• Hawaii
• Idaho
• Illinois (not for assisted living, but for supportive living facilities)
• Indiana
• Iowa
• Kansas
• Maryland
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Mexico
• New Jersey
• New York
• Ohio
• Oklahoma
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Washington
• Washington D.C.
• Wisconsin
• Wyoming

Which Assisted Living Residences Accept Medicaid?

Again, not all assisted living residences accept Medicaid. Therefore, when considering a residence make sure to ask if it is “Medicaid certified”. In some cases, even if the residence does not accept Medicaid, the facility may allow third party caregivers to come in and provide assistance for their residents. In this situation, Medicaid would pay the third party caregiver who does not work for the assisted living residence. Therefore, in this case, it isn’t important if Medicaid is accepted by the facility. If considering this option, make sure to ask the assisted living residence if they accept outside caregivers.
Unfortunately, there is no nationwide searchable database for assisted living residences that accept Medicaid. To find an assisted living residence in your area that accepts Medicaid, contact your local Area Agency on Aging (AAA) office. Most AAA’s keep a list of facilities in their area that accept Medicaid, and if they don’t, they often can direct you to a searchable state database.

It is important to note that the assisted living residences that do accept Medicaid limit the number of beds for Medicaid-funded residents. This means only a certain number of beds in the residence are available for persons on Medicaid. Often, the best approach is to make a list of residences in your area and call them to confirm they accept Medicaid-funded residents (and have an available bed), and if not, if they allow outside caregivers to provide care for their residents.

Next Steps

• Take a Medicaid Pre-Screen Test to determine if the candidate might be automatically eligible for Medicaid.
• Discuss the feasibility of using Medicaid as a payment source with a Medicaid planning professional. While many Medicaid beneficiaries do receive help in assisted living, many others encounter obstacles that prevent them from doing so.
• Contact current or potential assisted living residences and inquire if they 1) accept Medicaid and have Medicaid “beds” available or 2) allow outside (third party) caregivers to come in and provide assistance.