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

Yes, Medicaid pays for nursing home care — but not from the moment you arrive. Medicaid is a joint federal and state program that covers long-term care in a nursing home once your assets fall below your state's resource limit. Most states set that limit between $2,000 and $3,000 in countable assets for a single person, though the exact amount varies by state and changes year to year. Your home, one vehicle, and some personal items do not count toward that limit, but bank accounts, stocks, and other liquid savings do.

The practical result is that most people pay for their first months or years of nursing home care out of pocket — through savings, pensions, or family help — until their assets are low enough for Medicaid to take over. Once Medicaid begins, it covers the full cost of the nursing home bed, meals, basic care, and most medical services. You will be asked to contribute any remaining income (such as Social Security) toward your care, but Medicaid covers the rest.

Key Takeaways

  • Medicaid pays for nursing home care only after your countable assets drop below your state's resource limit, usually between $2,000 and $3,000.
  • Your primary home, one car, and personal items do not count as assets for Medicaid purposes, but savings accounts and investments do.
  • The time between entering a nursing home and becoming Medicaid-may be able to access varies widely depending on how much you have saved and how much the care costs.
  • Once Medicaid covers your care, you must contribute any income you receive, but Medicaid pays the nursing home directly for the remainder.
  • Each state runs its own Medicaid program with different rules, so the details depend on where you live.

How the spend-down process works

When you enter a nursing home, you and your family will need to decide how to pay. If you have savings, most nursing homes will ask you to use those funds first. As your savings decrease and reach your state's resource limit, you become Medicaid-may be able to access for long-term care. This process is called the spend-down.

The spend-down is not automatic. You will need to contact your state Medicaid office or a local Medicaid caseworker to start the process. They will ask for proof of your assets — bank statements, property deeds, investment statements — and will tell you exactly what counts and what does not. Once your assets are below the limit, Medicaid will begin paying the nursing home directly.

The length of the spend-down depends entirely on your situation. Someone with $50,000 in savings at a nursing home costing $8,000 per month might reach Medicaid may be able to access in about six months. Someone with $200,000 might take two years or more. If you have very little saved, you may already be Medicaid-may be able to access when you arrive.

What assets count and what do not

Medicaid divides your property into countable and non-countable assets. Countable assets — savings accounts, money market accounts, stocks, bonds, and cash — are what Medicaid measures against the resource limit. Non-countable assets do not affect your Medicaid status.

Your primary home is non-countable, no matter how much it is worth, as long as you or your spouse still lives there or you intend to return home. One vehicle is also non-countable. Personal items such as jewelry, furniture, and clothing do not count. A small amount of cash for when ready needs — usually $50 to $100 — is allowed.

Life insurance policies, retirement accounts (IRAs and 401(k)s), and certain prepaid funeral plans may or may not count, depending on your state and the specific terms. A Medicaid caseworker can tell you which of your assets are countable in your state. This is one reason to contact your state Medicaid office early: they can explain exactly what you will need to spend down and what you can protect.

The difference between Medicare and Medicaid for nursing homes

Many people confuse Medicare and Medicaid, but they work very differently for nursing home care. Medicare is a federal health insurance program for people 65 and older. It covers a limited stay in a skilled nursing facility — usually up to 100 days — but only if you were hospitalized first and only if you need skilled care such as physical therapy or wound care. Medicare does not cover long-term custodial care, which is the day-to-day help with bathing, dressing, and eating that most nursing home residents need.

Medicaid is a needs-based program that covers both skilled care and long-term custodial care in a nursing home, with no time limit. But Medicaid requires you to spend down your savings first. If you have Medicare and Medicaid together (sometimes called "dual may be able to access"), Medicare pays first for the skilled care portion, and Medicaid covers the rest.

What happens to your home and family finances

Your primary home is protected under Medicaid rules, meaning you do not have to sell it to pay for nursing home care. However, after you pass away, your state may try to recover some of the Medicaid costs from your estate — which can include your home. This is called estate recovery. The rules vary by state, but many states will attempt to recover costs from your home if no spouse or dependent child is living there.

Your spouse's income and assets are treated separately from yours under Medicaid's "spousal impoverishment" rules. If your spouse is still living at home, they can keep a certain amount of income and assets without affecting your Medicaid status. The exact amounts vary by state, but these rules exist to prevent the well spouse from becoming impoverished while you receive care.

If you are concerned about protecting assets for your family, you may want to speak with an elder law attorney before entering a nursing home. Some legal strategies — such as certain trusts or gifts made well in advance — can help protect assets, but these must be done carefully and before you need Medicaid. Medicaid has a five-year "look-back" period, meaning gifts or transfers made within five years of your process may be penalized.

How to start the Medicaid process for nursing home care

Contact your state Medicaid office or your county social services department. You can find your state Medicaid office through the Centers for Medicare & Medicaid Services website or by calling 211 (a free helpline that connects you to local resources). Tell them you are in or entering a nursing home and want to learn about Medicaid coverage for long-term care.

Bring or send copies of recent bank statements, property deeds, investment statements, and any other documents showing what you own. The Medicaid office will review these and tell you what counts as a countable asset in your state. They will also explain your state's resource limit and estimate when you might become Medicaid-may be able to access based on your current assets and the nursing home's cost.

Once you are Medicaid-may be able to access, the nursing home will work with your Medicaid caseworker to set up payment. You will be asked to sign an agreement to contribute your income toward your care. The nursing home cannot ask you to pay more than what Medicaid allows, and they cannot discharge you because you are on Medicaid.

State differences in Medicaid nursing home coverage

Each state runs its own Medicaid program within federal guidelines, which means the details of nursing home coverage vary. Some states have higher resource limits than others. Some states cover more services or pay nursing homes at higher rates. A few states have waiting lists for Medicaid long-term care, meaning you might become financially may be able to access but have to wait for a bed to open.

A handful of states have different rules for married couples or allow more assets to be protected. Some states offer home and community-based services as an alternative to nursing home care, which might be covered under Medicaid even if you do not meet the resource limit for institutional care. Because these differences matter, it is worth asking your state Medicaid office specifically what applies to you.

Frequently Asked Questions

Can my family help pay for nursing home care without affecting my Medicaid status?

Yes, family members can pay the nursing home directly on your behalf, and this does not count as income to you. However, if family members give you money that you then use to pay the nursing home, that money counts as your asset and delays your Medicaid may be able to access. The key difference is who writes the check to the nursing home.

What if I own a home but my spouse still lives there?

Your home is protected as long as your spouse (or a dependent child or disabled child) lives there. Your spouse can stay in the home, and Medicaid will not force a sale. After your spouse passes away or moves, your state may attempt estate recovery from the home's value, though some states have exceptions for surviving spouses.

Can I give my money to my children to avoid spending it down?

Medicaid has a five-year look-back period. Any gifts or transfers you make within five years of explore for Medicaid may trigger a penalty period during which Medicaid will not pay. The penalty is based on the amount transferred and your state's average nursing home cost. Gifts made more than five years before you explore are not penalized, but this requires planning well in advance.

Does Medicaid cover all nursing homes?

No. Medicaid only pays nursing homes that are certified to accept Medicaid residents. Most nursing homes accept Medicaid, but some do not. When choosing a nursing home, ask whether they accept Medicaid and at what point in your stay they will begin billing Medicaid. Some facilities require you to pay privately for the first few months, then switch to Medicaid once you are may be able to access.

What if I run out of money before I become Medicaid-may be able to access?

Contact your state Medicaid office when ready. You may already be may be able to access, or you may be able to begin Medicaid coverage right away even if you have not reached the exact resource limit. Nursing homes cannot discharge you for inability to pay once you have applied for Medicaid in good faith. Tell the nursing home administrator that you have applied so they understand you are working toward coverage.