Medicaid Nursing Home Eligibility: A State-by-State Guide

Why Medicaid (not Medicare) covers most long-term care

Medicare covers post-hospital rehabilitation — up to 100 days in a skilled nursing facility under specific conditions. After that, or for residents who never qualified for Medicare SNF coverage in the first place, the only federal program designed for ongoing nursing home care is Medicaid.

Medicaid is jointly funded by federal and state governments and administered at the state level. Each state runs its own program with its own eligibility rules, application process, and provider network — within federal guardrails. See does Medicare cover nursing home care for the full Medicare/Medicaid distinction.

The three eligibility tests

To qualify for Medicaid long-term care coverage, an applicant must pass all three tests:

1. Income test — the applicant's monthly income must be at or below the state's limit (or qualify via a Miller Trust workaround in income-cap states).
2. Asset test — countable assets must be at or below the state limit, typically $2,000 for an individual.
3. Medical-need test — the applicant must require a "nursing facility level of care" as defined by the state.

Failing any one of these means denial. The most common stumbling blocks, in order, are the asset test, the look-back, and the income test.

The income test

Income limits vary by state but a typical 2026 threshold is around $2,829/month (300% of the federal SSI rate). States fall into two categories on how they handle income:

• Income-cap states deny coverage outright if income exceeds the limit, even by $1. About 25 states use this rule. The workaround is a Qualified Income Trust (also called a "Miller Trust"), which siphons excess income into a special account that doesn't count toward eligibility.
• Medically needy states let applicants "spend down" excess income on medical expenses to qualify. Roughly half of states allow this option.

Almost all of the resident's income (Social Security, pension, etc.) is then redirected to pay the nursing home — Medicaid covers only the remainder. The resident typically keeps a "personal needs allowance" of $30–$140/month depending on state.

The asset test

The asset test is where most families get stuck. Countable assets must be below the state limit — almost always $2,000 for an individual applicant. That includes bank accounts, investments, cash value of life insurance, and most other liquid wealth.

Some assets are exempt from counting:

• The applicant's primary home (up to a state equity limit, typically $713,000–$1,071,000 for 2026)
• One vehicle
• Personal belongings, furniture, household goods
• Burial plot and prepaid funeral arrangements
• An irrevocable burial trust up to a state limit

Retirement accounts (IRAs, 401(k)s) are countable in most states if accessible, even if liquidating them triggers taxes. The way retirement accounts are treated varies by state and is one of the topics worth consulting an elder-law attorney about before applying.

The medical-need test

Most states require the applicant to need help with a specified number of "activities of daily living" (ADLs) or to have a medical condition requiring nursing-level care. The exact threshold varies — typically 2–3 ADLs needed for nursing-home Medicaid coverage.

A state nurse or social worker performs the assessment. The result is binary: either the applicant qualifies medically or they don't. Denials are usually for cases that fall short of nursing-level need but could fit assisted living instead — which Medicaid covers in some states through waiver programs but not through the standard nursing-home benefit.

The 5-year look-back period

This is the rule that catches families most off-guard. When applying for Medicaid long-term care, the state reviews the applicant's financial transactions for the prior 60 months. Any gift, sale-below-market, or transfer of assets during that period triggers a penalty period — a number of months during which Medicaid will not pay for nursing-home care, calculated as the transferred amount divided by the state's average monthly nursing-home cost.

For example: if a parent gifted a grandchild $100,000 three years before applying, and the state's monthly cost figure is $10,000, that creates a 10-month penalty period. The parent is eligible but must private-pay (or family must cover) the first 10 months of nursing-home care.

California is currently the only state with a different look-back rule (30 months, soon eliminating it entirely as part of California's 2024 Medi-Cal expansion). Every other state uses 60 months.

Spousal protections

When one spouse needs nursing-home care and the other doesn't, federal law (the Spousal Impoverishment provisions) protects the community spouse from being driven into poverty. For 2026, the community spouse can typically keep:

• The full primary home (in most states)
• Their own income — no obligation to contribute to the institutionalized spouse's care
• A Community Spouse Resource Allowance (CSRA) of up to roughly $157,920 in countable assets (state-dependent)
• A Minimum Monthly Maintenance Needs Allowance (MMMNA) — minimum monthly income, currently around $2,555 — drawn from the institutionalized spouse's income if needed

These protections are real but require careful application. Families who don't know about them sometimes spend down both spouses' assets unnecessarily.

How to apply (and when to bring in a professional)

Each state has its own Medicaid agency and application process. The starting point is usually the state Department of Health and Human Services (or equivalent) website — search "[your state] Medicaid long-term care application." The application requires documentation of income, assets, and medical need going back five years.

Applications take 30–90 days to process. Approval is generally retroactive to the application date or earlier, but the gap between applying and approval is usually private-pay or family coverage. Plan for that bridge financing.

Bring in an elder-law attorney when:

• There's a non-resident spouse with their own income or assets
• Real estate is involved (other than a primary home)
• Retirement accounts are significant
• Gifts or asset transfers happened in the past 5 years
• The applicant owns a small business
• You're trying to do "Medicaid planning" — restructuring assets to qualify sooner

Elder-law fees typically run $3,000–$10,000 for a complete Medicaid planning engagement. That's expensive but small relative to the $100,000+ per year of nursing-home cost at stake.