Medicaid & Long-Term Care

Medicaid plays a major role in long-term care in the United States. Many families use it only when savings are gone, but understanding how it works earlier can help you plan with more choice and far less crisis.

This page uses only publicly available information — no legal advice, no financial advice, and no assumptions about your situation. The goal is clarity.

What Medicaid actually is

Medicaid is a federal-state program that helps pay for long-term care for people with limited income and assets. Unlike Medicare, which mainly covers medical care, Medicaid is the primary payer for long-term care in nursing homes and for many home-based services.

Every state runs Medicaid differently, but the core rules are similar: you must meet medical criteria and financial criteria to qualify.

What Medicaid pays for

Medicaid may cover:

• Nursing home long-term care (room, board, and basic services)
• Some in-home caregiver services under Home & Community Based Services (HCBS)
• Medical transportation in some situations
• Medical equipment and supplies
• Certain therapies depending on the state

Medicaid does not typically cover:

• Assisted living room and board
• Memory care room and board
• Private caregivers hired outside Medicaid programs
• Rent, utilities, or everyday household costs

What is “spend-down” and why does it matter?

Many families hear: “When the money runs out, Medicaid will take over.” In reality, Medicaid has strict asset and income rules. To qualify, many people must first spend their savings down to their state’s limits.

Important notes:

• The amount you must spend varies by state.
• Some assets are protected (your home, in many cases).
• Transfers to family can be penalized under 5-year look-back rules.
• Your spouse may keep more under “spousal impoverishment” protections.

Understanding these rules before a crisis helps you plan with more control.

The 5-year look-back

Medicaid reviews financial activity for the 5 years before applying to ensure assets were not given away to qualify. If they were, Medicaid applies a penalty period — a time during which Medicaid will not pay for care.

This makes early planning important. A small, thoughtful adjustment made today may avoid a crisis later.

Nursing homes vs. home-based Medicaid

Many states now offer home-based long-term care through HCBS waivers. These programs:

• aim to let people stay at home longer
• may cover caregivers, adult day programs, or respite services
• often have waitlists
• have strict eligibility rules

Nursing homes do not have waitlists for Medicaid — but they may not have open Medicaid beds, and families must call to verify availability.

Why early planning matters

Families often wait until a medical event forces a rushed decision. At that point, choices shrink and stress rises. Understanding Medicaid early lets you:

• compare nearby facilities before you need one
• plan financially for multiple care paths
• talk openly with family about expectations
• prepare documents and accounts while things are calm

What Medicaid cannot decide for you

Medicaid determines eligibility and pays providers — but it does not choose your facility, make care decisions, or guide your family through options. Those decisions still fall to you and your loved ones.

Planning ahead lets you keep more control over your future.