Medicaid for Seniors: Nursing Home Care, Eligibility, and Costs

Medicaid must cover nursing facility care in every state — it is a mandatory benefit under federal law. Eligibility for that benefit, though, requires meeting both a medical necessity threshold and a financial test that is stricter than the standard Medicaid rules used for families and working-age adults.

For an individual seeking nursing facility coverage, the countable asset limit in most states is $2,000. The resident must contribute virtually all monthly income toward the cost of care, keeping only a small personal needs allowance — typically $30 to $60 per month, though the exact amount varies by state.

Countable assets include bank accounts, investment accounts, a second vehicle, and most property that is not the primary home. The primary residence is generally exempt while the person is alive or when a community spouse, dependent child, or sibling with an equity interest resides there.

Transfers to a blind or disabled child, or to a sibling co-owner who has lived in the home, are generally exempt from the penalty. Per KFF analysis, over 600,000 individuals across roughly 39–40 states were on HCBS 1915(c) waiver waiting lists as of 2025 (up about 14% from 2024) — partly because nursing facility placement, which has no federal waiting list requirement, remained the default path to Medicaid-funded care.

When one spouse enters a nursing facility and the other remains at home, federal law requires states to protect a portion of the couple's assets and income for the community spouse. Without these protections, the spouse at home could be impoverished.

Hypothetical example: a husband enters a nursing facility in Ohio. The couple has $180,000 in countable assets. Ohio applies the CSRA at half the couple's assets up to the federal maximum, so the wife keeps $90,000. The remaining $90,000 must be spent down before Medicaid pays. This scenario is illustrative and not specific to any individual case.

Not every senior who qualifies medically for nursing facility care wants to live in one. Section 1915(c) waivers allow states to use Medicaid funds for home and community-based services (HCBS) — personal care, adult day health, respite care, home-delivered meals, assistive technology, and more.

HCBS spending has grown steadily as a share of total Medicaid long-term-services-and-supports spending over the past two decades, reflecting both policy preference and cost — home-based care is often less expensive than nursing facility placement when someone does not yet need round-the-clock skilled nursing.

The critical catch: states may cap 1915(c) waiver enrollment. Unlike nursing facility benefits, HCBS waivers are optional under federal law, so states can limit slots. A person who qualifies medically and financially may still end up on a waiting list for months or years — per KFF data, more than 600,000 people were on such waiting lists as of 2025, and wait times have lengthened since the COVID-19 pandemic disrupted enrollment and staffing.

Financial eligibility for HCBS waivers often mirrors nursing facility rules — same asset limits, same look-back period — though some states set a higher income threshold for waiver services than for facility care.

Some seniors have income or assets just above the Medicaid threshold. The spend-down pathway lets them qualify by incurring medical expenses that reduce countable income or assets to the eligibility level. Once expenses bring them below the threshold, Medicaid covers costs above that point for the rest of the benefit period.

Spend-down applies to both income and assets, though the mechanics differ. Asset spend-down means paying for legitimate care expenses — a private-pay nursing facility bill, medical equipment, home modifications — until assets fall to $2,000. Income spend-down, sometimes called a medically needy pathway, uses medical bills to offset excess monthly income. Not all states offer medically needy eligibility; roughly 34 states offer this pathway — confirm your state's current status with its Medicaid agency, since this changes periodically.

One common misconception: gifting assets to children does not accelerate Medicaid eligibility. Gifts within the five-year look-back window create penalty periods that delay coverage. An elder law attorney who specializes in Medicaid planning can advise on compliant strategies, but timing and state rules vary significantly.

Federal law requires states to seek repayment from the estates of deceased Medicaid recipients who were 55 or older when they received services — the Medicaid estate recovery program, or MERP. States must pursue recovery for nursing facility costs and may also recover for HCBS and prescription drug costs paid under certain waivers.

Recovery comes from the probate estate — assets that pass through a will or intestate succession. Some states also pursue expanded estate recovery, reaching assets that pass by beneficiary designation or joint tenancy outside probate. State laws change over time, so verify current rules with the state agency.

States must offer a hardship waiver process. If estate recovery would cause undue hardship — for instance, when the home is the sole income-producing asset of a surviving heir who depended on it — the state must have a procedure to consider waiving recovery.

Standard Medicaid eligibility under ACA expansion — at 138% of the federal poverty level — generally does not apply to long-term care. Long-term care eligibility uses the older, more restrictive income and asset rules described above. A senior who qualifies for regular Medicaid under income-based rules may not qualify for nursing facility coverage; those are evaluated separately.

Medicare Savings Programs, administered through Medicaid, help low-income Medicare beneficiaries pay their Part B premiums, deductibles, and copayments. These have higher income limits than long-term-care Medicaid and do not require meeting the $2,000 asset test in most states.

Seniors who need help navigating eligibility can contact their State Health Insurance Assistance Program (SHIP) counselor — a federally funded program in every state that provides free one-on-one guidance on both Medicare and Medicaid.

Standard Medicaid benefits for seniors include physician visits, hospital care, prescription drugs, lab work, and mental health services. Dental coverage varies widely — a minority of states cover comprehensive adult dental, while others cover only emergency extractions.

For long-term care, the covered continuum stretches from skilled nursing facilities to assisted living (where state HCBS waivers apply), adult day health centers, and in-home personal care. Program of All-Inclusive Care for the Elderly (PACE) is a Medicaid and Medicare joint program available in many states for individuals who are nursing-facility eligible but living in the community.

The five-year look-back means that Medicaid planning has to happen early. Asset transfers made the week before an application do not help — they create penalty periods. Families that consult an elder law attorney several years before anticipated need have the most options.

Long-term care insurance, when purchased at a younger age before health conditions make it prohibitively expensive or unavailable, can bridge the gap between Medicare's 100-day limit and Medicaid eligibility. Neither eliminates the need to understand Medicaid, since most families will eventually interact with the program regardless of other planning tools.

Medicaid's share of long-term care funding is not diminishing. Per KFF analysis of CMS data, total Medicaid spending reached about $919 billion in FY2024, with long-term services and supports representing a substantial share of that total. Eligibility rules, asset limits, and waiver availability change year to year at the state level — verify current limits directly with your state Medicaid agency before making any financial decisions. Note also that the 2025 federal reconciliation law's new work requirements generally exempt people receiving long-term care services, though it is worth confirming exemption status directly with your state agency.