Medicaid for Long-Term Care: Nursing Homes, Home Care, and the Look-Back

When long-term care costs outrun savings, Medicaid is where most families end up. It is the main public program that pays for nursing home care and, in many states, for help at home. The rules are detailed and they vary by state, but the basic structure is the same everywhere. Understanding it early can protect a spouse, avoid penalties, and spare you a stressful scramble later.

Medicaid is not the same as Medicare. Medicare is health insurance for people 65 and older and does not cover long-term custodial care. Medicaid is a joint federal-state program for people with limited income and assets, and it does cover long-term care for those who qualify. Many older adults have both.

What Medicaid long-term care covers

• Nursing home care. Every state's Medicaid program covers nursing facility care for people who meet both the financial rules and a medical need for that level of care.
• Home and community-based services (HCBS). Personal care aides, adult day programs, home-delivered meals, respite for family caregivers, home modifications, and in some states care in assisted living. These are often offered through "waivers."
• Self-directed care. In many programs, your loved one can hire and manage their own caregiver, sometimes including a family member. See paying family caregivers.

About HCBS waivers

Section 1915(c) waivers let states pay for home and community care for people who would otherwise need a nursing home. According to Medicaid.gov, 47 states and Washington, D.C. run one or more of these waivers. States can also offer home care through other options, such as Community First Choice. Unlike nursing home coverage, waiver programs can cap enrollment, so many states have waiting lists. If home care is the goal, apply early and ask to be placed on any waiting list right away.

How eligibility works

To qualify for long-term care Medicaid, your loved one typically must meet three tests:

1. Medical need. A state assessment shows a need for a nursing-home level of care (for nursing home or most waiver services). States define this differently.
2. Income. Many states set an income limit tied to Supplemental Security Income (SSI). Some states let people with higher income qualify by spending income down on care or by placing excess income in a special trust.
3. Assets. Countable assets must fall below the state limit. For many single applicants this is about $2,000, the SSI resource standard, but some states use different limits.

Assets that are usually not counted, subject to state rules, include the primary home (within an equity limit), one vehicle, personal belongings, and certain burial funds. For 2026, the federal home equity limits range from $752,000 to $1,130,000, depending on the state, and the limit does not apply if a spouse or certain children live in the home.

Once on Medicaid in a nursing home, most of a resident's income goes toward the cost of care, minus a small personal needs allowance and certain deductions, such as an allowance for a spouse at home.

The 60-month look-back

When someone applies for long-term care Medicaid, the state reviews any assets given away or sold for less than fair market value during the 60 months (five years) before the application. This rule has applied to transfers since the Deficit Reduction Act of 2005.

If the state finds an improper transfer, it imposes a penalty: a period of time when Medicaid will not pay for long-term care. The penalty does not start when the gift was made. It starts when your loved one has applied, is otherwise eligible, and is receiving the level of care Medicaid would cover. That timing is what makes a penalty so painful: the person is already in care and cannot pay.

Some transfers are allowed without penalty, such as transfers between spouses and certain transfers to a disabled child. Annuities have their own detailed rules. These exceptions are exactly where professional advice pays off.

Protections for a spouse who stays at home

Federal "spousal impoverishment" rules keep a husband or wife at home from losing everything when their spouse needs nursing home care. The 2026 federal standards from CMS:

In plain English: if the at-home spouse's own income is below the allowance, part of the nursing home spouse's income can be shifted to them. These rules apply to nursing home Medicaid and, in many states, to home and community-based waiver services too. Ask your state Medicaid office how they apply in your case.

Estate recovery

After a Medicaid enrollee dies, federal law requires states to seek repayment from the estate for long-term care costs paid on behalf of people who were 55 or older. This covers nursing facility care, home and community-based services, and related hospital and prescription costs.

States cannot recover while the enrollee is survived by a spouse, a child under 21, or a blind or disabled child of any age. States must also have a process to waive recovery when it would cause undue hardship. How broadly a state defines "estate" varies, so this is another area to ask about locally.

Changes coming from the 2025 federal budget law

The 2025 federal reconciliation law changes some Medicaid rules on a delayed schedule. Two matter most for long-term care, according to Justice in Aging's summary:

• Shorter retroactive coverage starting January 1, 2027. Medicaid can currently cover bills from up to three months before the application month. That window shrinks to two months for older adults and people with disabilities (one month for expansion adults). Applying promptly will matter even more.
• Home equity cap starting January 1, 2028. The maximum home equity limit will be capped at $1 million.

States may also adjust optional home and community services as budgets tighten. Watch for notices from your state Medicaid agency.

Every state is different

Medicaid program names, asset limits, income rules, waiver services, and waiting lists all differ by state. Some states run long-term care through managed care plans. Always confirm the rules with your state Medicaid agency, which you can find at Medicaid.gov, or with your local Area Agency on Aging through our local help page.

When to call an elder law attorney

You may be able to handle a simple application yourself, especially for a single person with modest savings. Call an elder law attorney when:

• One spouse needs care and the other will stay at home.
• There have been gifts, property transfers, or loans to family in the last five years.
• Your loved one owns a home, a business, rental property, or an annuity.
• A family member has been paid, or wants to be paid, for providing care.
• No one has power of attorney and your loved one can no longer sign documents.

Look for an attorney who focuses on elder law and Medicaid in your parent's state. Many offer a flat-fee first consultation. Legal aid programs may help at no cost if your loved one has a low income; your Area Agency on Aging can point you to them.

Your next steps

1. Gather five years of financial statements, plus deeds, insurance policies, and income records.
2. Contact your state Medicaid agency or Area Agency on Aging to learn the local limits and application process.
3. Get advice before moving any money, especially if a spouse is involved.
4. Apply as soon as your loved one is likely eligible, and keep copies of everything you submit.

If your loved one is a veteran or surviving spouse, also look at VA Aid and Attendance, which can help pay for care at home or in assisted living.

Last reviewed October 19, 2026. General information only, not medical, legal, or financial advice. Benefit rules and amounts change, so confirm with the agency before you decide. See our disclaimer.