What is Medicaid? How is it different from Medicare?
- Medicaid: A joint federal–state program for people with limited income/resources. It covers long-term care services that Medicare generally does not.
- Medicare: Health insurance mainly for people 65+ and some with disabilities. Medicare has very limited long-term care coverage.
Who Medicaid helps with long-term care
- Older adults (65+) who need daily help or nursing care.
- People with disabilities needing ongoing support.
- Those with high medical or care costs who would otherwise be unable to pay.
Where long-term care happens
- Nursing homes: 24/7 nursing care; Medicaid is the largest payer.
- Home and Community-Based Services (HCBS): Help at home or in the community; often provided through state “waiver” programs.
- Assisted living: Covered in some states via waivers for services; room and board are usually not covered.
Medical eligibility (Level of Care)
To qualify for long-term care Medicaid, you must meet your state’s medical “level of care.”
- Nursing facility level of care: Often met if you need frequent skilled care (for example, wound care, IVs, managing complex medications, ventilator or feeding tube support, catheter care, severe diabetes management, or regular injections).
- HCBS/assisted living: Many states require the same level of care as a nursing home, while others use slightly different standards.
- A state assessor or nurse typically evaluates your needs.
Financial eligibility: Income rules
States use different paths to qualify seniors based on income.
- SSI-related rules: Some states tie income limits to Supplemental Security Income (SSI).
- Medically Needy (Spend-Down) states: If your income is above the limit, you may subtract medical and long-term care expenses to “spend down” to qualify. You may pay a share of cost (“co-pay”) each month.
- Income Cap states: If your income is above the limit, you may still qualify by placing excess income into a Qualifying Income Trust (QIT), also called a Miller Trust. Funds in the trust are used to pay care costs, and states can recover remaining funds after death.
- Personal needs allowance: Nursing home residents keep a small monthly allowance for personal items. HCBS recipients may keep more to maintain the household. Amounts vary by state.
Financial eligibility: Asset rules
You must also meet asset (resource) limits, which vary by state and change each year.
- Countable assets: Cash, savings, most investments.
- Exempt (not counted) assets typically include:
- Personal belongings and household items
- One car used for transportation
- Primary home (subject to equity and “intent to return” rules; state rules differ)
- Prepaid funeral arrangements and small life insurance policies
- Certain property used for work or producing income
- Spousal protections:
- When one spouse needs nursing home care, the state takes a “snapshot” of the couple’s assets.
- The healthy spouse at home (community spouse) can keep a protected share (Community Spouse Resource Allowance, or CSRA), up to a state-set maximum. Some states allow up to 100% of combined assets up to that cap; others allow about 50% with minimum and maximum limits.
- Income protections also allow the healthy spouse to keep a monthly income allowance.
- Spend-down: The spouse in care must reduce assets to the state limit before Medicaid pays. Spending can be on anything for the applicant or the spouse (for example, home repairs, paying debt, replacing an old vehicle, medical/dental/vision care). Keep receipts and consult a professional to avoid disqualifying transfers.
Your home and Medicaid
- Many states do not count your primary residence if you or your spouse live there, or if you state an intent to return home.
- Some states may place a lien or seek estate recovery after death. Rules vary—ask for guidance for your state.
Waiver programs and spouse protections
- Nursing home spousal protections are federal requirements.
- For HCBS waivers, some states offer the same protections; others offer fewer. This can affect how much income or assets the healthy spouse can keep.
