Medicaid for seniors: long-term care, eligibility, and costs

Last verified: June 2026

Medicaid for seniors is the main funding source for long-term care in the United States. Private insurance and Medicare cover only a slice of what older adults actually need — Medicaid fills the gap. For the roughly 70% of people who will need long-term services and supports after age 65 (per KFF research on LTSS utilization), understanding Medicaid's rules before a crisis hits can save a family from financial ruin.

This page covers who qualifies, what the program covers, how asset limits and spousal protections work, and what Medicare does not cover. Ohio Medicaid and other state programs follow federal minimums but set their own income and asset thresholds, so some figures here will vary by state.

What Medicare does not cover — and why Medicaid matters

Medicare's coverage of long-term care is narrow by design. Post-acute nursing facility stays are covered for up to 100 days following a qualifying hospital admission, per CMS program guidelines. Day 21 through day 100 carry a daily copayment (around $200 in 2025). After day 100, Medicare pays nothing. Personal care services — help with bathing, dressing, or meal preparation — are not covered by Medicare at all.

Home health under Medicare requires the patient to be homebound and to need skilled nursing or therapy. Custodial care, which describes most of what a senior with dementia or frailty actually needs day to day, falls outside that definition. Medicaid fills this gap. It is, per CMS data, the primary payer nationwide for both institutional and community-based long-term services and supports.

About 10 million Americans are enrolled in both programs simultaneously — called dual eligibles. Medicaid covers most of their long-term care costs, while Medicare handles acute hospital and physician services, per KFF analysis of 2011 enrollment data. That dual-enrollment arrangement is central to how long-term care financing actually functions in practice.

Nursing facility coverage and financial eligibility

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. States may set that allowance higher.

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. Life insurance cash value above $1,500, prepaid funeral trusts above state limits, and term life policies may or may not be counted depending on the state.

The five-year look-back period applies to nursing facility applicants. Any asset transferred below fair market value within five years before the Medicaid application date can trigger a penalty period of ineligibility. The length of the penalty equals the value of transferred assets divided by the average monthly nursing facility cost in the state. 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 536,000 individuals in 39 states were on Section 1915(c) waiver waiting lists as of 2013 — partly because nursing facility placement, which has no federal waiting list requirement, remained the default path to Medicaid-funded care.

Spousal protections: CSRA and MMNA

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. The wife keeps $90,000. The remaining $90,000 must be spent down before Medicaid pays. The husband's Social Security and pension — after the MMNA is covered — go to the facility as patient pay. This scenario is illustrative and not specific to any individual case.

Home and community-based services under 1915(c) waivers

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. These waivers let states serve people in their homes or in smaller community settings rather than institutions.

By 2013, spending on HCBS accounted for 46% of total Medicaid LTSS spending, or about $56.6 billion, up from 32% in 2002, per KFF. That shift reflects 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 from 2013, more than 536,000 people were on such waiting lists across 39 states. State-level waiver wait times have lengthened since the COVID-19 pandemic disrupted both 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. Check with your state Medicaid agency, because the rules vary.

Spend-down: qualifying when income or assets are above the limit

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 — often monthly or every six months.

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; as of 2025, around 30 states and DC do.

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 estate planning attorney who specializes in Medicaid planning can advise on compliant strategies — irrevocable trusts, caregiver child exceptions, and similar tools — but timing and state rules vary significantly.

Medicaid estate recovery (MERP)

Federal law requires states to seek repayment from the estates of deceased Medicaid recipients who were 55 or older when they received services. This is called 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. California expanded its estate recovery in 2016 before scaling it back in 2022 after community pushback; state laws change, 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. The burden of proving hardship typically falls on the applicant.

Medicaid eligibility for seniors: the full picture

Standard Medicaid eligibility under ACA expansion — at 138% of the federal poverty level — generally does not apply to long-term care. LTC 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 LTC Medicaid and do not require meeting the $2,000 asset test in most states. They are worth exploring before LTC becomes necessary.

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. SHIP counselors do not sell products and are not Medicaid attorneys, but they can clarify what applies in a specific state and refer to legal aid when needed.

What Medicaid covers beyond nursing facilities

Standard Medicaid benefits for seniors include physician visits, hospital care, prescription drugs (through Medicaid or a dual-eligible plan), lab work, and mental health services. Dental coverage varies widely — a minority of states cover comprehensive adult dental, while others cover only emergency extractions. States that expanded Medicaid under the ACA must cover essential health benefits, which include a broader dental and vision package in some programs.

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. PACE bundles medical, social, and long-term services through a single provider.

• Skilled nursing facility (SNF) care — mandatory in all states
• Home health aide services
• Personal care services under 1915(c) waivers (availability varies)
• Adult day health programs
• PACE for eligible dual-eligible enrollees
• Respite care for family caregivers (varies by state waiver)
• Assistive technology and home modification under some waivers
• Prescription drugs (via Medicaid or dual-eligible Special Needs Plans)

Planning ahead: what families should know before a crisis

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. Hybrid life insurance products with long-term care riders have grown as a planning alternative. 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 CMS data, total Medicaid spending exceeded $597 billion in 2020, with over 30% allocated to long-term services and supports. The program does not appear to be shrinking its role in this area — but 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.

State variation and where to get state-specific information

Ohio Medicaid, California's Medi-Cal, Texas Medicaid, and every other state program operate within the same federal framework but differ on key parameters: the CSRA amount, the exact asset limit, which HCBS waivers exist and how long the wait lists are, the estate recovery scope, and the medically needy spend-down rules. No national page can substitute for checking your state's rules.

Each state Medicaid agency publishes eligibility manuals, and most now offer online eligibility screening tools. Medicaid.gov maintains a directory of state agency contacts. Your local Area Agency on Aging (AAA) can also connect you to local resources, benefits counselors, and elder law legal aid.

Browse state-specific information using the state pages on this site, or visit the official Medicaid agency website for your state.