How Medicaid Pays for Nursing Home Care After 65

Long-term care is expensive, and here’s the surprise that hits families hardest: Medicare won’t pay for a long nursing home stay. The only government program that does is Medicaid, and qualifying for it means following some complicated rules about your income and assets. Elder law attorneys hear this same problem over and over, so what follows pulls together the facts that come up most, with the 2026 dollar amounts where they exist. One caution: these rules vary a lot by state and the numbers change every year, so treat this as a map, not the final word, and confirm your own situation with your state Medicaid office or a licensed elder law attorney.

Why Medicare leaves you paying for long stays

Perhaps the biggest shock that families experience is how little Medicare covers once an individual’s stay in a nursing home is no longer a short term recovery from illness. Medicare will cover a skilled nursing facility (“SNF”) stay only after the individual has experienced a qualifying hospital stay. Even then, Medicare only pays for the SNF stay for a limited number of days. Specifically, Medicare covers 100% of the cost of an SNF stay for the first 20 days of a “benefit period.” From Day 21 to Day 100, Medicare requires the patient to pay its share of the SNF cost per day, which is $217/day in 2026. Beyond Day 100, Medicare will pay nothing towards the cost of the SNF stay.

There’s a second gap that matters even more: Medicare doesn’t cover custodial care, the help with daily tasks like bathing, dressing, and eating, when that’s the only care you need. As most long-term nursing home stays fall into this category, the responsibility for paying for ongoing care falls on the family member or on Medicaid (if Medicaid eligibility is achieved). That’s when Medicaid comes into the picture, with a set of rules worth understanding before you need them.

The income and asset limits you have to fit under

As mentioned previously, Medicaid is a need-based program that examines both an individual’s monthly income and countable assets. For most States, in 2026, the monthly income cap for nursing home Medicaid eligibility is about $2,982/month for a single person (an increase from $2,901 in 2025). Similarly, most states establish an asset limit for a single applicant of $2,000 (although some states have established a higher asset limit. For example, Mississippi establishes a limit of $4,000).

However, as noted previously, not all assets are subject to assessment. Generally your home up to an equity limit, one car, personal belongings, and certain prepaid burial funds are exempt. Some states let people with higher income use a qualified income trust, also called a Miller trust, to qualify anyway. Due to variation among states’ rules and regulations, we strongly recommend verifying specific details about your own eligibility with your state Medicaid office before attempting to determine whether you exceed or meet income and asset limits.

The five-year look-back, and why last-minute gifts backfire

With the income and asset limitations now understood, it becomes clear that another strategy families commonly employ is to transfer assets to reduce countable resources. However, Medicaid anticipated this very approach. Upon application for Medicaid benefits, the applicant’s financial history for the preceding five years (60 months) will be reviewed. During this five year look-back period, if assets were gifted or sold below fair market value, Medicaid may impose a penalty.

The penalty is a stretch of time when you’d otherwise be eligible but Medicaid won’t pay. To calculate the duration of the penalty period, the amount of assets transferred is divided by the State’s average monthly nursing home cost. Handing your home to a child the year before you apply doesn’t protect it, and it can leave you needing care with neither coverage nor the asset you gave away. This is the most common mistake attorneys see, and it’s almost always made with good intentions.

How the healthy spouse is kept from going broke

When one spouse needs nursing home care and the other stays home, the rules shift in the family’s favor. Federal spousal impoverishment protections keep the at-home spouse, called the community spouse, from being drained by the cost of the other’s care. Instead, the community spouse is entitled to retain a portion of the couple’s combined assets – referred to as the Community Spouse Resource Allowance (“CSRA”). For calendar year 2026, CSRA limits range from $32,532 to $162,660.

Also, federal law provides income protection for the community spouse. The at-home spouse is allowed to retain an income allowance based on their housing expenses. For calendar year 2026, these monthly income allowances range from $2,643.75 to $4,066.50 depending upon the state and housing expenses. While federal law sets minimums for protecting community spouses’ income and assets; however, State-specific laws and regulations govern how these protections are applied. Also, how assets are titled and counted also impacts how much will remain for the community spouse’s benefit. So, obtaining legal guidance before submitting an application for Medicaid benefits is recommended.

What the state can recover after death

Medicaid long-term care funding isn’t considered a gift; so, Medicaid seeks reimbursement for costs incurred from recipients’ estates upon death. The Medicaid Estate Recovery Program (“MERP”) applies to recipients who were 55 or older when they received covered long-term care services. The most frequently encountered concern is the potential loss of homeownership rights through MERP.

States can’t pursue estate recovery until a surviving spouse passes away; nor can they pursue recovery should there be children under twenty-one years old or any child who’s blind or disabled. States may also waive recovery efforts in certain hardship cases. Each state determines what constitutes an estate and how aggressively MERP will pursue recovery efforts.

What early planning can protect

This is where an elder law attorney earns the fee, by advising on ways to limit what MERP can recover. Potential strategies include using an irrevocable trust (meaning an irrevocable trust created that can’t be modified or terminated at your discretion); certain types of annuities; transferring assets directly to children or other relatives; and spending down exempt resources (such as performing necessary home repairs or purchasing a reliable vehicle).

As explained earlier, using these strategies effectively depends upon timing; specifically, they must be executed well before entry into a long-term care setting triggers MERP recovery efforts. Should you attempt to execute these strategies too close to entering a long-term care setting, you risk triggering MERP penalties rather than providing protection. If properly implemented and timed according to your State’s rules, however, they can help preserve your family home or save a sizable portion of your savings.

Talk to a licensed elder law attorney before a long-term care crisis, not during one, and sooner is better. Be prepared to discuss your actual financial circumstances and verify specific details about applicable state rules about each of the issues addressed above via direct contact with your state Medicaid office as well as www.medicare.gov.

Sources

• Spousal Impoverishment | Medicaid.gov
• Estate Recovery | Medicaid.gov
• Skilled nursing facility (SNF) care | Medicare.gov
• 2026 SSI and Spousal Impoverishment Standards | Medicaid.gov

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