Common Myths About Medicaid and Long-Term Care

Most states set a countable asset limit of around $2,000 for a single applicant, which sounds severe. However, many assets do not count toward that limit. Your primary home (under certain conditions), one vehicle, personal belongings, and prepaid burial arrangements are typically exempt. If your spouse remains in the community, federal law through the Medicare Catastrophic Coverage Act requires states to allow a Community Spouse Resource Allowance (CSRA), which in 2024 can range from roughly $29,724 to $148,620 depending on your state. The full picture is more complex than a single dollar threshold suggests.

The home is often exempt during the Medicaid recipient's lifetime. However, states are required by federal law to operate Medicaid Estate Recovery Programs (MERP), which can seek reimbursement from the recipient's estate after death. This means the state may file a claim against the home after both spouses have passed. Some states limit recovery to assets that go through probate; others use an expanded definition. The rules vary considerably, so reviewing your state's specific policy is worth doing before assuming nothing will happen to the property.

When you apply for Medicaid long-term care benefits, the program reviews financial records going back five years (60 months) for most applicants. Transfers of assets for less than fair market value during that period can result in a penalty period, a span of time during which Medicaid will not pay for care even if you otherwise qualify. The length of the penalty is calculated by dividing the transferred amount by the average monthly cost of nursing home care in your state. There is no minimum dollar amount that escapes scrutiny. Some transfers are exempt, such as those to a spouse or a disabled child, but the rules are technical and mistakes are costly.

Medicare covers up to 100 days in a skilled nursing facility after a qualifying three-day inpatient hospital stay, and only when skilled care (such as physical therapy or wound care) is still needed. Once a person no longer requires skilled care or exhausts those 100 days, Medicare stops paying. Medicaid, by contrast, can cover indefinite custodial care in a nursing home for those who meet financial and functional eligibility requirements. Many middle-income families are surprised to find themselves spending down assets to Medicaid levels after a prolonged care need. Learn more about Medicaid eligibility rules to understand where you or a family member may stand.

The Minimum Monthly Maintenance Needs Allowance (MMMNA) guarantees the community spouse a minimum monthly income, and if their own income falls short, they may receive a portion of the institutionalized spouse's income to make up the difference. Combined with the CSRA for assets, these federal floors mean the at-home spouse is not left entirely without resources. States may set their allowances above the federal minimums. An elder law attorney familiar with your state's rules can help identify how these protections apply to a specific situation.

Through Home and Community-Based Services (HCBS) waivers authorized under Section 1915(c) of the Social Security Act, states can extend Medicaid coverage beyond institutional settings. Services may include personal care assistance, homemaker help, skilled nursing visits, respite care, and home modifications such as grab bars or ramp installation. Eligibility and available services differ by state, and many waivers have waiting lists. Comparing in-home care and assisted living can help families think through which setting fits best before exploring funding options.