Medicaid Coverage of Nursing Home Care | When, Where and How Much They Pay

Last updated: December 14, 2021

Does Medicaid Pay for Nursing Homes?

Does Medicaid pay for nursing home care? In short, yes. In all 50 states and the District of Columbia, Medicaid will pay for nursing home care for persons who require that level of care and meet the program’s financial eligibility requirements. Readers should be aware that the financial requirements and the level of care requirements vary based on the state. Furthering the complexity is that the financial requirements change based on the marital status of the Medicaid beneficiary / applicant. For those who are eligible, Medicaid will pay for the complete cost of nursing home care, including room and board. Medicaid will pay for nursing home care on an ongoing, long term basis for however long that level of care is required, even if it is required for the remainder of one’s life.

Medicaid should not be confused with Medicare. Medicare will only cover part of the cost of nursing home care and only for a maximum of 100 days. Short-term nursing homes are commonly called convalescent homes and these are meant for rehabilitation, not long term care. More about Medicaid versus Medicare.

 Be aware that different states may use different names for their Medicaid programs. In California, it is called Medi-Cal. Other examples include Tennessee (TennCare), Massachusetts (MassHealth), and Connecticut (HUSKY Health).

 

How Much Will Medicaid Pay for Nursing Home Care?

Medicaid will pay 100% of the cost of nursing home care. Nursing homes, unlike assisted living communities, do not line item their billings. The cost of care, room, meals, and medical supplies are all included in the daily rate. Medicaid pays a fixed daily rate so a nursing home Medicaid beneficiary does not have to pay any part of the cost.

For Medicaid to pay one’s nursing home bill, a nursing home resident must give up nearly all their income to Medicaid. The individual can keep only a small personal needs allowance, with the exact amount dependent on one’s state of residence. For instance, in Florida (and many states), the income limit for Medicaid-funded nursing in 2022 is $2,523 / month. The personal needs allowance in FL is $130 / month. If one’s income is $2,000 / month, they will be income eligible, but they have to give the state $1,870 / month ($2,000 – $130 = $1,870). If their income was $1,000 / month, they would have to give the state $870 / month ($1,000 – $130 = $870).

A nursing home resident may deduct medical costs, including Medicare premiums, that are not covered by Medicaid from their income. This further lowers the amount of monthly income that a nursing home beneficiary gives to the state to help cover the cost of their long-term care. For a clearer understanding, one may wish to contact a Medicaid planner..

 Note for Married Couples – While a single nursing home Medicaid beneficiary must give Medicaid almost all their income for nursing home care, this is not always the case for married couples in which only one spouse needs Medicaid-funded nursing home care. There are Spousal Protection Laws, which protect income and assets for the non-applicant spouse to prevent spousal impoverishment. The Minimum Monthly Maintenance Needs Allowance permits an applicant spouse to transfer a portion, or in some cases, all of their monthly income to their non-applicant spouse to ensure they have sufficient income on which to live. In 2022, this can be up to $3,435 / month. There is also a Community Spouse Resource Allowance that protects a larger amount of a couple’s joint assets for a non-applicant spouse. In 2022, this can as much as $137,400.

 

Medicaid Eligibility for Nursing Home Care

All 50 states have financial and level of care eligibility criteria for Medicaid-funded nursing home care. The financial eligibility criteria consist of income limits and countable assets limits. These limits change annually and vary based on marital status and one’s state of residence. The criteria to meet a nursing home level of care need also varies by state. The table below is a generalized view of Medicaid eligibility for nursing home care. One can view state-specific eligibility requirements here.

 

Financial Eligibility Requirements
2022 Medicaid Nursing Home Care Eligibility Requirements (approximate, rules vary by state)
Single Married (both spouses applying) Married (one spouse applying)
Income Limit Asset Limit Income Limit Asset Limit Income Limit Asset Limit
$2,523 / month $2,000 in “countable assets $5,046 / month ($2,523 / month per spouse) $4,000 ($2,000 per spouse) in “countable assets $2,523 / month for applicant $2,000 for applicant & $137,400 for non-applicant in “countable assets
 Did You Know? This website provides a free, fast and non-binding Medicaid eligibility test for seniors. Start Here

 

Level of Care Eligibility Requirements

“Nursing Home Level of Care” may sound like an obvious care requirement, but each state defines “Nursing Home Level of Care” differently and there is considerable variation among the states. One way for a family to assess whether a loved one requires nursing home care (without a formal designation from a doctor) is to consider what would happen if their loved one was left alone for several hours. Would they be a danger to themselves? If so, what are the reasons? Are they medically related? For example, do they require assistance with IV drops or a ventilator? Are they cognitively challenged, such as having Alzheimer’s / dementia related memory issues? Does their behavior lack self-control? Do they have functional challenges, such as the inability to complete activities of daily living (dressing, eating, transferring, using the toilet, etc.)? If the individual is in danger for two of these reasons, it is likely they would qualify for nursing home level of care, and therefore, qualify for Medicaid from a “level of care” perspective.  More on nursing home level of care.

A related question is if Medicaid covers nursing home care for dementia? A diagnosis of Alzheimer’s or related dementia does not automatically make one eligible for nursing home Medicaid. This is especially true for individuals in the early stages of the disease. However, as the condition progresses, these individuals will certainly meet Medicaid’s nursing home level of care requirements.

 

Qualifying When Over Medicaid’s Financial Limits

It is common for one to have income and / or assets over Medicaid’s limit(s), but still have inadequate funds to pay for nursing home care. Fortunately, there are ways to meet these limits without jeopardizing one’s Medicaid eligibility.

Income
Some states allow one to meet the income limit via a medically needy pathway, which allows persons to spend “excess” income on medical expenses. The name of this program varies by state, but essentially it is a “spend down” program. Persons with income over the limit pay a “share of cost”, which can be thought of as a deductible, to bring their income down to the medically needy income limit. Once this has been done, they qualify for Medicaid for the remainder of the spend down period. Learn more here.

Other states allow persons to qualify by utilizing qualified income trusts, also called Miller Trusts. As an oversimplified explanation, income over Medicaid’s limit is deposited into the irrevocable trust and no longer counts as income for eligibility purposes. Irrevocable means the terms of the trust cannot be changed or canceled. A trustee is named to manage the account and funds can only be used for very specific purposes, such as contributing towards the cost of nursing home care.

Assets
In all states, persons can “spend down” their assets that are over Medicaid’s limit. However, one needs to proceed with caution. Medicaid has a 60-month look back period in which assets transferred for less than fair market value result in a penalty period of Medicaid ineligibility. Ways to spend down assets without violating this rule include purchasing an irrevocable funeral trust, paying off debt, and buying medical devices that are not covered by insurance. Additional information here.  There are also several Medicaid planning strategies not mentioned on this page that can be used to help persons meet Medicaid’s asset limit.

 An Option for Veterans?  VA Nursing Homes have different and sometimes less restrictive eligibility requirements.  Read about VA nursing homes and their eligibility criteria.  

 

Do All Nursing Homes Accept Medicaid?

It is estimated that between 80% and 90% of nursing homes accept Medicaid. While this percentage sounds high, these percentages are very misleading. Nursing homes may accept Medicaid, but often have a limited number of “Medicaid beds”. “Medicaid beds” are rooms, or more likely shared rooms, that are available to persons whose care will be paid for by Medicaid. Nursing homes prefer residents that are “private pay”, meaning the family pays the cost out-of-pocket. This is because private pay residents pay approximately 25% more for nursing home care than Medicaid pays. In 2022, the nationwide average private payer pays approximately $255 / day for nursing home care while Medicaid pays approximately $206 / day. Search for Medicaid nursing homes here.

 Being Medicaid eligible and finding a Medicaid nursing home is often not enough to move a loved one in.  Read about how to get into a nursing home.  

 

How to Apply for Medicaid Nursing Home Care

Applying for Medicaid nursing home care, assuming the individual is not already enrolled in Medicaid, is a multi-step process. First, the applicant applies for Medicaid, which they can do online or at any state Medicaid office. One should not apply unless they are certain they will be financially eligible. Candidates can take a non-binding, Medicaid eligibility test here. Persons who are not automatically eligible should read about Medicaid planning.

The application requires an extensive amount of supporting documentation. Families should be prepared to spend many hours gathering financial documents. See a list of Medicaid application supporting documents.

Applicants must participate in a medical assessment in which their need for a nursing home level of care will be confirmed.

 A much more detailed, step-by-step guide to applying for Medicaid is available here.  

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