Paying for Nursing Home Care with Medicaid

The rules and requirements for Medicaid eligibility for nursing home care are complicated and will vary according to the state your parent lives in. With that said, here is a simplified overview of the key requirements for qualifying.

Medicaid Eligibility

Medicaid, a joint federal and state program that provides healthcare for low-income individuals, is also the largest single payer of nursing home bills in the country. Some states have different names for their Medicaid program.

Most people who enter nursing homes do not qualify for Medicaid and, instead, pay for their care through long-term care insurance or out-of-pocket. Once an individual's insurance benefits end, or their savings become exhausted, they may become eligible for Medicaid.

To qualify for Medicaid, your parent's income and assets will need to be under a certain level that is determined by your state. Most states, with the exception of California and New York, require that a single person have no more than about $2,000 in countable assets and $3,000 for married couples when both spouses apply. The assets would include cash, savings, investments or other financial resources that can be turned into cash. New York allows for $31,175, while California eliminated its asset limit starting in 2024.

Assets excluded from eligibility include your parent's home provided its equity interest is within $713,000 or up to $1,071,000 in some states. Other non-countable assets include personal possessions and household goods, one vehicle, prepaid funeral plans and a small amount of life insurance.

Be aware that an applicant's home is not considered a countable asset to determine eligibility if a non-applicant spouse lives in the home, if the applicant lives in the home, or has an intent to return to the home. If the home is not exempt, an applicant may be required to sell it to use the proceeds to reimburse the nursing home costs.

After qualifying, all sources of your parent's income such as Social Security and pension checks must be turned over to Medicaid to pay for their care, except for a Personal Needs Allowance (PNA) which varies by state but is usually between $30 and $200 per month. The PNA is intended to cover the nursing home resident's personal expenses not covered by Medicaid.

You also need to be aware that your parent cannot give away assets to qualify for Medicaid. Medicaid officials will look at their financial records going back five years (except in California which has a 30-month look-back rule) to root out asset transfers. If they find one, any Medicaid coverage will be delayed a certain length of time, according to a formula that divides the transfer amount by the average monthly cost of nursing home care in their state.

Spousal Protection

Medicaid also has the Medicaid Community Spouse Resource Allowance for married couples when one spouse enters a nursing home, and the other spouse remains at home. In these cases, the non-applicant spouse can keep one half of the couple's assets up to $154,140 (this amount varies by state), the family home, the furniture and household goods and one automobile. The non-applicant spouse is also entitled to keep a portion of the couple's monthly income - between $2,465 and $3,854. Any income above that goes toward the cost of the nursing home recipient's care.

What about Medicare?

Medicare, the federal health insurance program for individuals 65 years and older, and younger individuals with disabilities, will not pay for long-term care. It only helps pay up to 100 days of skilled nursing facility care, which must occur after a hospital stay that lasts at least three consecutive days, not counting the day of discharge.

For more information, contact your state Medicaid office. You can also get help from your State Health Insurance Assistance Program (see ShipHelp.org), which provides free counseling on Medicare and Medicaid issues.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of "The Savvy Living" book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization's official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.