Medicaid and Senior Care: What Families Need to Know

When families begin researching long-term care, Medicaid can quickly become one of the most confusing parts of the process.

You may hear about income limits, assets, nursing home coverage, home-based services, waivers, spend-downs, and other rules that can be difficult to understand.

The important thing to know is that Medicaid is different from Medicare.

Medicare is primarily health insurance for eligible older adults and certain other individuals. Medicaid is a joint federal-state program that can provide health coverage and, for eligible individuals, long-term services and supports.

For families planning long-term care, understanding Medicaid early can be extremely valuable.

Important: Medicaid eligibility and benefits depend on the individual's circumstances and the state where they live. This guide provides general educational information and is not a determination of eligibility or legal or financial advice.

Table of Contents

  • What Is Medicaid?

  • Medicaid vs. Medicare

  • How Medicaid Can Help With Long-Term Care

  • Nursing Home Medicaid

  • Home and Community-Based Services

  • Who May Qualify?

  • Why Assets and Income Matter

  • The Five-Year Look-Back

  • What Is a Medicaid Spend-Down?

  • What About a Spouse?

  • Medicaid and Assisted Living

  • PACE and Other Programs

  • What Families Should Do Before Applying

  • Frequently Asked Questions

What Is Medicaid?

Medicaid is a joint federal and state program that provides healthcare coverage to eligible individuals.

Unlike Medicare, Medicaid programs are administered by individual states within federal requirements. That means the rules aren't identical everywhere.

For families researching senior care, one of Medicaid's most important roles is helping eligible individuals access long-term services and supports.

Federal Medicaid guidance describes long-term services and supports as care that can be provided across different settings, including institutions and home- and community-based environments.

Medicaid vs. Medicare

The simplest way to think about the difference is:

Medicare

Primarily provides health insurance coverage for eligible older adults and certain other qualifying individuals.

Medicaid

Provides healthcare coverage for eligible individuals and can provide long-term services and supports to people who meet applicable requirements.

This distinction becomes especially important when someone needs ongoing assistance with daily activities rather than short-term medical treatment.

Medicare generally doesn't pay for long-term custodial care, while Medicaid may cover certain long-term services for eligible individuals.

How Medicaid Can Help With Long-Term Care

Medicaid can support long-term care in multiple ways.

Depending on the state and the person's eligibility, services may be provided in settings such as:

  • Nursing facilities

  • The individual's home

  • Community-based settings

  • Adult day programs

  • Other approved long-term services and support programs

Federal Medicaid guidance specifically recognizes both institutional long-term care and home- and community-based services.

That means needing Medicaid doesn't automatically mean someone must move into a nursing home.

Nursing Home Medicaid

Medicaid can cover certain nursing facility services for individuals who meet the program's requirements.

Federal guidance explains that Medicaid-certified nursing facilities can provide skilled nursing, rehabilitation, and long-term care services. Eligibility and specific program rules are determined under applicable federal and state requirements.

This is particularly important when someone initially enters a nursing facility using Medicare-covered skilled care and later requires longer-term care.

Medicare generally doesn't cover indefinite custodial nursing home care. If a person remains in need of long-term nursing facility care and meets Medicaid requirements, Medicaid may become an important source of coverage.

Home and Community-Based Services

One of the most important things families should know is that Medicaid can support care outside of a nursing facility.

States may offer home- and community-based services that allow eligible individuals to receive support while remaining in their homes or communities.

Depending on the program, services can include various forms of long-term support designed around the individual's needs.

Federal Medicaid programs include multiple pathways for providing home- and community-based services, and specific availability varies by state.

Who May Qualify?

This is where Medicaid becomes complicated.

Eligibility isn't determined by age alone.

Depending on the program, factors can include:

  • Income

  • Assets and resources

  • Household circumstances

  • Medical or functional needs

  • Level of care required

  • State residency

  • Marital status

  • The particular Medicaid program involved

Because states have different rules and programs, don't assume that information you find online for another state applies to your family.

Why Assets and Income Matter

Families sometimes hear:

"My parent has too many assets for Medicaid."

That may or may not be correct.

Medicaid eligibility involves detailed rules concerning income and resources, and the rules can differ depending on the type of Medicaid coverage being sought.

Certain assets may be treated differently from others, and a person's marital situation can also affect the analysis.

For that reason, families should avoid making major financial decisions based solely on a general internet article.

The Five-Year Look-Back

This is one of the most important concepts to understand before making financial decisions related to Medicaid.

For certain Medicaid long-term services and supports, federal rules address transfers of assets for less than fair market value during the five-year period before an application. Such transfers can affect eligibility.

This is why families should be extremely cautious about giving away assets, transferring property, or making other major financial moves simply to try to qualify for Medicaid.

Before taking action, consider speaking with an appropriately qualified professional who understands Medicaid planning in your state.

What Is a Medicaid Spend-Down?

You may hear the term "spend-down" when researching Medicaid.

Generally, it refers to situations where an individual must reduce countable resources or incur allowable medical expenses in accordance with applicable Medicaid rules to meet financial eligibility requirements.

The exact rules are complicated and state-specific.

A family should not assume that simply spending money or giving assets away will make someone eligible.

What About a Spouse?

Medicaid rules can be particularly complicated when one spouse needs long-term care and the other spouse remains in the community.

Federal Medicaid policy includes protections intended to help prevent the spouse remaining in the community from becoming impoverished in certain long-term-care situations.

This is an area where individualized professional guidance can be extremely important.

Medicaid and Assisted Living

This is another area where families need to be careful.

Medicaid programs vary by state, and Medicaid coverage for assisted living-related services isn't necessarily the same as Medicaid coverage for nursing facility care.

Some states offer programs that help eligible individuals receive services in community settings, while the specific benefits and eligibility requirements depend on the state and program.

Don't assume that Medicaid will simply pay the entire cost of an assisted living community.

PACE: An Option Some Families May Encounter

The Program of All-Inclusive Care for the Elderly (PACE) is another program worth knowing about.

PACE provides comprehensive medical and social services to certain older adults who meet specific eligibility requirements and live within a PACE service area.

Federal guidance says PACE generally serves people age 55 or older who are eligible for nursing-home-level care but can live safely in the community at enrollment.

PACE can combine Medicare and Medicaid services into a coordinated care model for eligible participants.

Availability is limited to areas served by PACE organizations.

What Families Should Do Before Applying

If you believe Medicaid may eventually be important for your loved one's care, don't wait until you're in a crisis to start learning about it.

Consider:

1. Understand the care that's actually needed

Determine whether your loved one needs:

  • Occasional assistance

  • Home-based support

  • Assisted living

  • Skilled rehabilitation

  • Nursing facility care

  • Other long-term services

2. Gather financial information

Start organizing:

  • Bank statements

  • Retirement accounts

  • Income information

  • Insurance policies

  • Property information

  • Medical expenses

3. Understand your state's rules

Don't rely on a generic national eligibility number.

Medicaid is administered through individual states, so the rules and available programs can vary.

4. Don't transfer assets without understanding the consequences

The five-year transfer rules make this especially important.

5. Get professional guidance when appropriate

For complicated situations involving substantial assets, property, trusts, a spouse, or long-term-care planning, consider speaking with a qualified elder-law attorney or other professional familiar with your state's Medicaid rules.

Medicare + Medicaid: Can Someone Have Both?

Yes.

Some individuals qualify for both Medicare and Medicaid.

When that happens, the programs can work together, with each program covering different categories of services depending on the individual's circumstances.

This is sometimes referred to as dual eligibility.

PACE, for example, specifically serves many individuals who are eligible for both Medicare and Medicaid.

Don't Wait Until a Crisis

One of the biggest mistakes families can make is waiting until they desperately need care before understanding how they're going to pay for it.

You don't need to have every answer today.

Start by understanding:

What care does my loved one need?

Then:

What will that care cost?

Then:

Which resources might help pay for it?

That's the foundation of a good long-term-care plan.

Build Your Care Plan With CareFlow

Medicaid is only one part of the senior care puzzle.

Before thinking about payment, families should understand what type of care their loved one actually needs.

The CareFlow Care Navigator™ can help you organize the situation and identify care options worth exploring.

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Take the CareFlow Care Navigator™

And as CareFlow's Financial Navigator™ develops, we'll eventually be able to help families work through the financial side of this process in a much more personalized way.

Frequently Asked Questions

Does Medicaid pay for nursing home care?

Medicaid can cover nursing facility services for eligible individuals when applicable requirements are met.

Does Medicaid pay for home care?

Some Medicaid programs provide home- and community-based long-term services and supports, but availability and eligibility vary by state.

Can someone have Medicare and Medicaid?

Yes. Some people qualify for both programs.

Does owning a home automatically disqualify someone from Medicaid?

Not necessarily. Medicaid resource rules are complicated and depend on the person's circumstances and the particular program. Families should obtain state-specific guidance before making decisions about property.

Should I give away my parent's assets so they can qualify?

Don't do this based on general internet advice. Transfers for less than fair market value can affect Medicaid eligibility under applicable rules, including the five-year look-back for certain long-term-care services.

Does Medicaid pay for assisted living?

It depends on the state, program, and individual's eligibility. Medicaid coverage for services in community settings isn't necessarily the same as coverage for nursing facility care.