Medicaid can pay for nursing-home care for a person with dementia. To qualify, the person must need that level of care and must also meet the financial rules. Medicaid planning for dementia means learning those rules early. These include what assets count, what a spouse at home keeps, the look-back on gifts, and what happens to the home later.
Most people facing this question are watching a parent, husband or wife lose ground to Alzheimer's or another dementia. They are hearing that memory care or a nursing home may be close, and they are trying to work out whether the savings and the house will survive it. Many are also asking whether there is still time for their loved one to sign anything at all. This page walks through the federal framework, the parts each state sets for itself, and why dementia makes timing matter more than it does in most Medicaid cases.
What Medicaid Covers for Dementia Care
Medicaid is a joint federal and state program, and the federal agency describes it as "the primary payer across the nation for long-term care services," covering care "ranging from institutional care to community-based long-term services and supports," according to Medicaid.gov's Long Term Services & Supports page. For a person with dementia, that can include care in a nursing facility once the person is eligible. Whether a particular memory-care unit accepts Medicaid depends on the facility and the state's program.
Medicaid is not Medicare. This page covers Medicaid for long-term care only and does not address Medicare coverage, private long-term-care insurance or veterans' benefits.
Eligibility has two halves, and both must be met. The first is a medical or functional standard showing the person needs that level of care. The second is a financial standard covering income and assets. Each state runs its own program under the federal framework. Which services are covered and how a state measures need therefore depend on that state's current rules. Medicaid.gov's Eligibility Policy page notes that for people 65 and older, eligibility is generally determined using the income methods of the Supplemental Security Income (SSI) program. Some states use more restrictive criteria.
Financial Eligibility: Countable Assets, Exempt Assets, and the Asset Limit
A countable asset is anything Medicaid adds up against the eligibility limit. Examples are bank accounts and investments. An exempt asset is one Medicaid does not count, so the person can own it and still qualify. For married couples, 42 U.S.C. § 1396r-5 excludes from "resources" those excluded under the SSI resource rules. In practice, the exempt list often includes the home (subject to the limit below), personal belongings, a vehicle and certain burial arrangements. That list is partial, and how each item is treated depends on the state.
The home is only conditionally exempt. Under 42 U.S.C. § 1396p(f), long-term-care Medicaid coverage is barred when home equity exceeds a limit, unless a spouse, a child under 21 or a blind or disabled child lives in the home. For 2026, the federal home-equity limits run from a minimum of $752,000 to a maximum of $1,130,000, effective January 1, 2026, per the CMS 2026 standards bulletin. Each state chooses its figure within that range.
Each state sets the asset limit for a single applicant. The SSI resource standard is $2,000 for an individual, effective January 1, 2026, but a state's own limit depends on its current rules. California, for example, has its own figures; see California Medi-Cal asset limits.
Spend-down, for assets, means reducing countable assets to the state's limit by paying for care or other permitted expenses. It is different from the "medically needy" income spend-down Medicaid.gov describes. The Medicaid spend-down process depends on state rules.
Spousal Protections: What the Community Spouse Keeps
Congress enacted the spousal-impoverishment provisions in 1988, as Medicaid.gov's Spousal Impoverishment page explains. These rules are now in 42 U.S.C. § 1396r-5. The community spouse is the husband or wife who stays at home while the other spouse receives institutional care.
At application, the statute treats all resources held by either spouse as available to the spouse in care. The exception is the amount the community spouse keeps as the Community Spouse Resource Allowance (CSRA). Income is generally kept separate. A community spouse whose own income is low may also receive part of the other spouse's income, up to the Minimum Monthly Maintenance Needs Allowance (MMMNA) and the related ceiling.
Federal 2026 figures, from the CMS bulletin of April 27, 2026:
- CSRA minimum: $32,532; maximum: $162,660 (effective January 1, 2026)
- Maximum monthly maintenance needs allowance: $4,066.50 (effective January 1, 2026)
- MMMNA: $2,705.00 in all states except Alaska ($3,381.25) and Hawaii ($3,111.25), effective July 1, 2026
The bulletin says the MMMNA changes each July 1, while the maximum income allowance and the resource figures change each January 1. A state's own figure applies from the date that state sets. Florida's are covered in Florida Medicaid planning.
A transfer of assets to one's spouse carries no transfer penalty (42 U.S.C. § 1396p(c)(2)(B)(i)). Some states allow "spousal refusal," in which the community spouse declines to make assets available. Whether it is allowed depends on each state's current rules.
The Look-Back Period and Transfer Penalties
The look-back period is the window before a Medicaid application during which the agency reviews transfers. Under 42 U.S.C. § 1396p(c)(1)(B)(i), the federal look-back is 60 months for any transfer made on or after February 8, 2006. The statute's text reads that the look-back date is "36 months (or … in the case of any other disposal of assets made on or after February 8, 2006, 60 months)" before the first date the person both is institutionalized and has applied for Medicaid. States do not all apply the same look-back in practice; it depends on each state's current rules.
A penalty period is a stretch of time when Medicaid will not pay for long-term care. It results from transfers made for less than fair market value. For a person in an institution, its length equals the total uncompensated value of the assets transferred by the person or the spouse on or after the look-back date, divided by the average monthly cost to a private patient of nursing-facility services in the state (or, at the state's option, in the community where the person is institutionalized) at the time of application. The statute bars states from rounding down partial months.
Under 42 U.S.C. § 1396p(c)(1)(D)(ii), for a transfer made on or after February 8, 2006, the penalty starts on the later of two dates, and not during another period of ineligibility. The first is the first day of a month during or after which assets were transferred. The second is the date the person is eligible for Medicaid and would otherwise be receiving institutional-level care under an approved application, but for the penalty. The same start-date rule applies to a gift made four years ago and to one made last month, as long as both fall inside the look-back.
Not every transfer is penalized. The statute lists exceptions, including a transfer to the person's spouse and a transfer of a home to the spouse. The look-back is a rule to plan within, not around. Crisis-stage timing is discussed in Medicaid crisis planning.