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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 those persons who require that level of care and meet the program’s financial eligibility requirements. Readers should be aware that both the financial requirements and the level of care requirements are different in every state. Furthering the complexity is the fact that the financial requirements also change depending on the marital status of the Medicaid beneficiary / applicant. In almost all situations, Medicaid will pay for the complete cost of nursing home care including all care and room and board. Furthermore, Medicaid will pay for nursing home care for the long term; on an ongoing basis for however long the individual requires that level of care even if they require it for the remainder of their 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.
How Much Will Medicaid Pay for Nursing Home Care?
In most cases, 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.
To have Medicaid pay one’s nursing home bill, one must give up nearly all their income to Medicaid. (The nursing home resident is able to keep only a small personal needs allowance, with the exact amount differing based on the state in which one resides). As an example, the income limit for Medicaid nursing home eligibility in 2021 in Florida, as it is in most states, is $2,382 per month. The personal needs allowance for nursing home Medicaid residents in this state is $130 / month. If one’s income is $2,000 per month (and they meet Medicaid’s other requirements), they will be eligible, but they have to give their state $1,870 of their $2,000 income each month. If their income was $1,000 per month, they would have to give the state $870.
A nursing home resident may also 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..
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 applicant spouses to transfer a portion, or in some cases, all, of their monthly income to their non-applicant spouses to ensure they have sufficient income on which to live. (Up to $3,259.50 / month in 2021).There is also a Community Spouse Resource Allowance that protects a larger amount of a couple’s joint assets for non-applicant spouses. (Up to $130,380 in 2021).
Medicaid Eligibility for Nursing Home Care
To be eligible for nursing home care, all 50 states have financial eligibility criteria and level of care criteria. The financial eligibility criteria consist of income limits and countable assets limits. These limits change annually, change with marital status, and change depending on 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
|2021 Medicaid Nursing Home Care Eligibility Requirements (approximate, rules change by state)|
|Single||Married (both spouses applying)||Married (one spouse applying)|
|Income Limit||Asset Limit||Income Limit||Asset Limit||Income Limit||Asset Limit|
|$2,382 / month||$2,000 in “countable assets”||$4,764 / month (Each spouse is allowed up to $2,382 / month)||$4,000 (Each spouse is allowed up to $2,000) in “countable assets”||$2,382 / month for applicant||$2,000 for applicant & $130,380 for non-applicant in “countable assets”|
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 think about if their loved one was left alone for several hours. Is it likely they would be a danger to themselves? And if so, what are the reasons that they would be in danger? Are they medically related? For example, do they require assistance with IV drops or a ventilator? Is it because of a cognitive challenge, such as Alzheimer’s / dementia related memory issues? Is their behavior challenging to the extent where they lack self-control? Or finally, 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 does Medicaid cover nursing home care for dementia? A diagnosis of Alzheimer’s or other 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.
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 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 trust and no longer counts as income for eligibility purposes. 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.
In all states, persons can “spend down” their assets that are over Medicaid’s limit. However, one needs to exercise caution when doing so. This is because 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.
Do All Nursing Homes Accept Medicaid?
It is estimated that between 80% and 90% of nursing homes accept Medicaid depending on one’s state of residence. Search for Medicaid nursing homes here. While 80% to 90% sounds high, these percentages are very misleading. Nursing homes may accept Medicaid, but may 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) over residents for whom Medicaid pays the bill. The reason for this is because private pay residents pay approximately 25% more for nursing home care than Medicaid pays. In 2021, the nationwide average private payer pays $255 per day for nursing home care while Medicaid pays approximately $206 per day.
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. However, one should not apply unless they know already that they will be financially eligible for the program. 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 will also be required to have a medical assessment in which their need for the level of care provided in a nursing home will be confirmed.