Medicaid for Nursing Home Care: Eligibility, the Look-Back, and Who Pays
Medicare doesn't pay for long-term care. Here is what Medicaid does, how the 60-month look-back works, and why timing matters.
By naveen · Updated · How we research our guides
What to know
- Medicaid pays for long-term nursing home care for people who qualify; Medicare covers only a short skilled-nursing stay of up to 100 days per benefit period.
- In Medicare's own words, "Medicare doesn't pay for long-term care."
- Qualifying runs through state income and asset limits, an assessment of care needs, and a 60-month look-back at asset transfers under federal law.
- Rules and programs vary by state, so the state Medicaid agency and an elder law attorney are the places to confirm details.
- Retirement Checklist puts the money questions in order with the legal documents that affect them.
Medicaid pays for long-term nursing home care for people who meet their state's income, asset and care-need rules, and it reviews asset transfers made in the 60 months before an application (42 U.S.C. 1396p). Medicare covers only a short skilled-nursing stay. In Medicare's own words, "Medicare doesn't pay for long-term care." The 60-month look-back is worth understanding before anyone needs it.
What does Medicare cover, and where does it stop?
Medicare Part A covers a short skilled-nursing stay and stops there. It requires "a prior medically necessary inpatient hospital stay of at least 3 days in a row," and time "under observation or in the emergency room before you're admitted doesn't count" (Medicare.gov). "Part A limits SNF coverage to 100 days in each benefit period," and the person must need daily skilled care, such as physical therapy or intravenous medications.
It doesn't cover long-term custodial care, the help with dressing, bathing and using the bathroom that most long-term care consists of, whether that care is at home, in assisted living or in a nursing home (Medicare.gov). Medicare.gov points to two other routes: Medicaid "if you meet eligibility requirements in your state," or private long-term care insurance.
| Medicare | Medicaid | |
|---|---|---|
| Short skilled nursing stay | Yes: up to 100 days per benefit period, after a 3-day inpatient stay | Nursing home services for eligible people |
| Long-term nursing home care | No | Yes, for people who qualify |
| Care at home or in the community | Not long-term custodial care | Home and community-based services; what's offered varies by state |
| Who sets the rules | Federal | Each state, within federal law |
How does Medicaid eligibility work?
To qualify, a person must fit an eligibility group the state covers, have income and assets within the state's limits, and then pass a functional assessment of care needs (ACL, Medicaid eligibility). Medicaid is a joint federal and state program, and ACL's LongTermCare.gov says states "have considerable leeway in how they operate their programs," so "eligibility rules and services that are covered vary from state to state."
For older adults, federal rules tell states to count income and assets using the methods of the most closely related cash assistance program, which is Supplemental Security Income (SSI) unless a state uses more restrictive criteria (42 C.F.R. 435.601). SSI's rules exclude the home up to a set value, household goods and personal effects, and burial spaces and certain burial funds (20 C.F.R. 416.1210). Separately, federal law bars Medicaid payment for nursing home care when a person's home equity exceeds a limit, unless a spouse or a minor, blind or disabled child lives in the home (42 U.S.C. 1396p(f)).
We don't print asset or income limits. ACL notes that "The amount of countable assets you can have and still qualify for Medicaid varies from state to state."
What is the Medicaid look-back period?
The look-back is the 60 months before an application during which the state reviews whether the person gave away assets or sold them for less than they were worth. Under 42 U.S.C. 1396p(c), the 60-month window applies "in the case of any other disposal of assets made on or after February 8, 2006," and a person who disposes of assets "for less than fair market value" inside it becomes ineligible for nursing home care and certain other long-term care services for a period of months.
The statute sets the length of that period: the uncompensated value of everything transferred, divided by "the average monthly cost to a private patient of nursing facility services in the State" (or community).
"Transfer" is broader than handing over cash. The same section treats as possible transfers putting assets into certain trusts, actions that reduce a person's ownership of a jointly held asset, buying certain annuities, lending money on terms that don't meet federal conditions, and buying a life estate in someone else's home without living there for a year.
What is spend-down?
In Medicaid's rules, spend-down is how a person whose income is above the state's limit can qualify as "medically needy": the state subtracts medical expenses the person has incurred from their income until it reaches the state's limit (42 C.F.R. 435.831). An expense counts from "the date liability for the expense arises," whether it has been paid or not. Covering the medically needy is an option for states, so not every state has this route (ACL).
Assets work differently: countable assets have to be within the state's limit, using the counting rules above. The look-back penalty applies only to assets disposed of for less than fair market value, and whether a particular payment meets that test is a question for the state agency or an elder law attorney.
Can Medicaid pay for care at home?
Yes, for people who would otherwise need nursing home care. Federal law lets states, through waivers, pay for "home or community-based services (other than room and board)" for people who would otherwise "require the level of care provided in a hospital or a nursing facility" (42 U.S.C. 1396n(c)).
ACL's LongTermCare.gov says that "In most states, Medicaid will also cover services that will help you remain in your home," such as personal care services and case management, but "Medicaid will not pay for your rent, mortgage, utilities, or food." It also notes that "some states cover assisted living services, while others do not" (ACL). Your parent's state Medicaid agency, or the local Area Agency on Aging, can say what's offered, who qualifies, and whether there's a waiting list.
What happens financially when someone goes into a nursing home?
Once someone is covered, the state reduces what it pays the nursing home by the person's income left after required deductions, so that remaining income goes toward the cost of care (42 C.F.R. 435.725). ACL calls this the person's "share of cost."
The deductions come first. They include a personal needs allowance "for clothing and other personal needs," an amount for the maintenance needs of a spouse or family at home, and health insurance premiums and other medical costs Medicaid doesn't cover. Where a spouse still lives at home, federal spousal rules let some of the nursing home resident's income go to that spouse through a "community spouse monthly income allowance" (42 U.S.C. 1396r-5). The amounts are set by each state within federal rules.
How do you apply?
You apply through the state Medicaid agency, which takes applications through local offices, and you will "Provide documentation to verify general and financial requirements" (ACL, Applying for Medicaid). A family member can apply on your parent's behalf if your parent designates them. ACL's lists of what the state checks include:
- Age, citizenship or immigration status, state residency and a Social Security number.
- Income, such as Social Security, pensions, and interest and dividends.
- Assets, such as bank accounts, stocks and bonds, and any property besides the home.
- For a homeowner, documents such as a current tax bill, an appraisal and mortgage copies.
- What happened to any assets that dropped in value: the state "will want to know whether you gave away any of your assets in the past five years."
It can help to gather these early, as part of a master list of accounts.
Why does timing matter so much?
Timing matters because the look-back reaches back 60 months, and because, as ACL puts it, "the date you become eligible is based on the date you apply for Medicaid." A gift to a child inside the window can delay eligibility at the moment care is needed. That makes it worth an early conversation with an elder law attorney in your parent's state, before money moves.
What questions are worth asking?
- Which state's Medicaid rules would apply to your parent?
- Has anything been gifted, transferred or retitled in the last five years?
- What is the home's status under the state's rules, and does a spouse still live in it?
- What home and community-based services does the state offer, and is there a waitlist?
- Is there a long-term care policy, and what would it pay first?
- Who is advising, and are they independent of anyone selling a product?
Frequently asked questions
Does Medicare pay for a nursing home?
Only for a short skilled stay. Medicare Part A covers skilled nursing facility care for up to 100 days per benefit period, after a qualifying inpatient hospital stay of at least three days in a row, when daily skilled care is needed. Medicare doesn't pay for long-term custodial care, such as help with bathing and dressing.
Does Medicaid pay for nursing home care?
Yes, for people who qualify. ACL states that "Medicaid covers nursing home services for all eligible people age 21 and older." Qualifying depends on income and asset limits each state sets within federal law, plus an assessment of care needs, so eligibility is specific to your parent's state.
What happens financially when someone goes into a nursing home on Medicaid?
Under federal rules, the state reduces its payment to the nursing home by the person's income left after deductions, so that income goes toward the cost of care. The deductions include a personal needs allowance and, where a spouse lives at home, an amount for the spouse's needs. Each state sets the amounts within federal rules.
Can Medicaid pay for care at home instead of a nursing home?
Yes, for people who would otherwise need nursing home care. Federal law lets states pay for home and community-based services through waivers, and ACL says most states also cover services such as personal care and case management. What's offered and who qualifies differ by state, so ask the state Medicaid agency.
What is the Medicaid look-back period?
It's the 60 months before an application during which the state reviews asset transfers. Under federal law, the 60-month window applies to transfers made on or after February 8, 2006. Giving away assets or selling them for less than fair market value inside the window can trigger a period of ineligibility for nursing home care.
What is a Medicaid spend-down?
It's how someone whose income is above the state's limit can qualify as medically needy: the state subtracts medical expenses the person has incurred, paid or not, from their income until it reaches the state's limit. Covering the medically needy is optional for states, so ask whether your parent's state offers it.
Where do seniors go if they can't afford assisted living?
Options to ask about include care at home through Medicaid home and community-based services where the state offers them, and programs run through the local Area Agency on Aging, such as home-delivered meals and personal care help. Medicaid coverage of assisted living depends on the state: ACL says some states cover it and others don't.
Can we just give the money to the kids?
This is what the look-back is designed to catch. Gifts inside the 60-month window can delay eligibility rather than speed it, and federal law counts more kinds of transactions as transfers than it may seem, including some loans, annuities and changes to joint ownership. Ask an elder law attorney in your parent's state before anything moves.
Getting started
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Related guides
Sources
- Medicare.gov, Long-term care coverage: Medicare's own statement that it doesn't pay for long-term care.
- Medicare.gov, Skilled nursing facility care: The 100-day skilled nursing benefit and the 3-day inpatient stay rule.
- 42 U.S.C. 1396p, Transfers of assets (U.S. Code via govinfo.gov): The 60-month look-back, the penalty period, what counts as a transfer, and the home equity limit.
- 42 U.S.C. 1396n, Home and community-based waivers (govinfo.gov): Medicaid payment for home and community-based services.
- 42 U.S.C. 1396r-5, Spousal impoverishment rules (govinfo.gov): Income protected for a spouse at home.
- 42 C.F.R. 435.725, Post-eligibility treatment of income (eCFR): How a nursing home resident's income goes toward care, and the required deductions.
- 42 C.F.R. 435.601 and 435.831 (eCFR): Financial methodologies and the medically needy spend-down.
- 20 C.F.R. 416.1210, SSI resource exclusions (eCFR): Assets SSI's rules exclude, such as the home.
- ACL LongTermCare.gov, Medicaid eligibility: Eligibility groups, counted and excluded assets, share of cost and functional requirements.
- ACL LongTermCare.gov, Applying for Medicaid: How and when to apply, and what the state asks for.
- ACL LongTermCare.gov, Medicaid long-term care services: Nursing home and home-based services Medicaid covers.
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