Nursing Home Medicaid Eligibility: What the Rules Actually Require

To qualify for nursing home Medicaid, a person has to meet two separate tests. First, the state must find that the person needs nursing-facility-level care. Second, the person's countable assets and income must fall within that state's limits, after a review of past transfers. Federal law sets the framework, and each state applies its own rules.

Most people facing this question have just heard from a hospital discharge planner or a nursing home admissions office that a parent, husband or wife will need long-term care. Private payment can drain savings quickly. The family is now trying to work out whether Medicaid will help, what happens to the house, and what the spouse still at home keeps. This page walks through how eligibility works, using federal law and noting where the answer turns on a particular state.

What Nursing Home Medicaid Eligibility Means

Medicaid is a joint federal and state program, as the CMS eligibility policy page explains. Federal law sets the outline every state follows, and each state runs its own program under its own rules and program name. California's program, for example, is called Medi-Cal. Unless a state is named with a source, the rules on this page are federal.

Eligibility for nursing home coverage rests on two requirements, and both must be met: a medical finding that the person needs an institutional level of care, and financial eligibility.

What Medicaid pays for is "nursing facility services." In plain words, that means comprehensive care in a facility the state licenses and certifies. CMS describes institutional care as comprehensive care that includes room and board and is billed and reimbursed as a single bundled payment, on its institutional long-term care page. CMS also calls Medicaid "the primary payer across the nation for long-term care services" on its long-term services and supports page.

This page covers Medicaid for long-term care only. It does not cover Medicare, private long-term-care insurance or veterans' benefits.

The Medical Level-of-Care Requirement

Clinical eligibility means the person must need nursing-facility-level care, not simply prefer it. CMS notes that "access to Medicaid services for some individuals may be tied to need for institutional level of care."

The medical finding and the financial finding are separate decisions. A person can clearly need nursing-home care and still be found financially ineligible. A person can also meet the financial limits and still not meet the state's care standard. The criteria, the assessment process and who performs the assessment all depend on the state's current rules.

Countable Assets and the Asset Limit

A countable asset is one the state counts when deciding whether the applicant's resources are below the limit. Examples include checking and savings accounts and investments. Assets the rules exclude are often called exempt.

Federal law sets the framework, and each state sets its own asset limit within it. No single dollar figure applies everywhere. Florida's figures, for example, appear in this site's overview of Florida Medicaid planning. California's rules are covered in California Medi-Cal asset limits.

Federal spousal rules point to the federal Supplemental Security Income (SSI) exclusions when deciding what counts as a resource, under 42 U.S.C. § 1396r-5(c)(5). The home can be excluded, but only subject to the home-equity limit. Whether other items are excluded, and to what extent, depends on the state's current rules. Those items include a vehicle, personal belongings and burial funds, and the list is partial.

The home is not excluded whatever its value. Under 42 U.S.C. § 1396p(f), a person whose home equity is above the limit that applies is not eligible for coverage of nursing facility or other long-term-care services, unless a spouse, a child under 21 or a blind or disabled child lawfully lives in the home. The statute also calls for a waiver process in cases of demonstrated hardship.

Trusts need their own analysis. CMS states that a trust set up with at least some of the individual's funds "can be considered available" when deciding eligibility.

Income Rules for Nursing Home Medicaid

Income is handled differently from assets. Whether a state caps the income an applicant may have, or requires income above a threshold to go toward the cost of care, depends on that state's current rules.

Some states run a "medically needy" program. Under it, a person whose income is too high can still qualify by "spending down" income through medical expenses they have incurred, as the CMS eligibility page describes.

In California, "share of cost" concerns monthly income. It is different from spending down assets to reach the asset limit, and the two should not be confused. Asset spend-down is covered separately in this site's explainer on Medicaid spend-down.

Once a person is eligible, the resident's income, less certain protected amounts, goes toward the cost of care. One protected amount is a personal needs allowance, a monthly amount for personal expenses that CMS describes as "at least $30"; the actual amount varies by state. Where there is a community spouse, a monthly income allowance for that spouse is also deducted, to the extent the resident's income is made available to the spouse.

Types of income that typically count include Social Security, pensions, annuity payments and interest. That list is illustrative, not complete. Whether a state uses an income cap, a medically needy spend-down or a share-of-cost approach depends on its current rules.

The Look-Back Period and Transfer Penalties

Gifts made before the application are often what worry families most. The look-back period is the window of time before the application during which the state reviews transfers of assets.

Under federal law, the look-back is 60 months for any transfer made on or after February 8, 2006 (42 U.S.C. § 1396p(c)(1)(B)(i)). States do not all apply the same look-back, so California's look-back period and its start date depend on that state's current rules.

A penalty period is a stretch of time during which Medicaid will not pay for nursing facility services because of transfers made for less than fair market value. The statute sets the length of the penalty at "the total, cumulative uncompensated value of all assets transferred … divided by … the average monthly cost to a private patient of nursing facility services in the State." A state may not round down a partial month.

For transfers on or after February 8, 2006, the penalty starts on the later of two dates. One is the month of the transfer. The other is the date the person is eligible and would otherwise be receiving institutional-level care under an approved application (42 U.S.C. § 1396p(c)(1)(D)(ii)). This means a gift made anywhere inside the look-back is penalized the same way, however long ago it was made.

Not every transfer is penalized, because the statute lists exceptions. A transfer to the applicant's spouse carries no transfer penalty (42 U.S.C. § 1396p(c)(2)(B)(i)). Other exceptions apply under their own terms.

Under 42 U.S.C. § 1396p(c)(1)(F), the purchase of an annuity is treated as a transfer for less than fair market value unless the state is named as the remainder beneficiary in the first position, or in the second position after a community spouse or a minor or disabled child and in the first position if that spouse or the child's representative disposes of the remainder for less than fair market value. Other conditions also decide how an annuity is treated. No planning tool is a way around the look-back. Planning works within these rules.

Spousal Impoverishment Protections

A community spouse is the husband or wife who stays living at home while the other spouse is in a nursing facility. Under 42 U.S.C. § 1396r-5, federal law sets a floor of protection so that this spouse is not left without resources. The CMS spousal impoverishment page states that "a certain amount of the couple's combined resources is protected" for the community spouse.

When one spouse applies, all resources held by either spouse are treated as available to the institutionalized spouse at first. The exception is the community spouse resource allowance (CSRA), which is the portion of the couple's countable assets the community spouse may keep. Under 42 U.S.C. § 1396r-5(f)(2), the amount protected for the community spouse is generally the greatest of a federal minimum, an amount the state sets in its plan (no higher than the federal maximum), the spousal share (half of the couple's combined resources at the start of the first continuous period of institutionalization, up to that maximum), and any amount set at a fair hearing or by a court order. Either spouse can ask the state to assess the couple's total resources. That assessment comes with notice of the right to a fair hearing. After eligibility is established, the community spouse's resources are no longer counted against the institutionalized spouse.

The minimum monthly maintenance needs allowance (MMMNA) is the monthly income level to which the community spouse's own income can be raised, using part of the institutionalized spouse's income if needed. The CMCS bulletin of April 27, 2026 explains the timing of federal adjustments. The MMMNA adjusts each July 1. The maximum income allowance and the resource allowances adjust each January.

The current CSRA and MMMNA figures depend on each state's rules and the year involved. A state's own figure applies from the date that state's official page gives.

Spousal refusal means a community spouse declines to make assets available for the other spouse's care. It is not available in every state, and whether a state allows it depends on that state's rules.

Estate Recovery: What Happens After Death

Estate recovery is the process by which a state seeks repayment from a Medicaid recipient's estate for the cost of long-term-care services it paid. Federal law requires states to run an estate recovery program (42 U.S.C. § 1396p(b)).

The CMS estate recovery page states that, "for individuals age 55 or older, states are required to seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related hospital and prescription drug services." Those categories are:

• nursing facility services
• home and community-based services
• related hospital and prescription drug services

For a person the state determines cannot reasonably be expected to be discharged from the institution and return home, federal law also requires the state to seek recovery of medical assistance correctly paid, including for people of any age (42 U.S.C. § 1396p(b)(1)(A)). States must also set up procedures for waiving recovery when it would cause undue hardship.

The family members who matter for the home-equity limit also matter here, but for a different question. Federal law delays recovery, rather than cancelling it, while a surviving spouse, a child under 21 or a blind or disabled child survives (42 U.S.C. § 1396p(b)(2)).

During the recipient's lifetime, a state may also place a lien on the home of a recipient who is an inpatient in a nursing facility or other medical institution, if the state determines, after notice and an opportunity for a hearing, that the recipient cannot reasonably be expected to be discharged and return home. It may not do so while a spouse, a child under 21, a blind or disabled child, or a sibling lawfully lives in the home, and the sibling must have an equity interest in the home and have lived there for at least one year immediately before the admission. The lien dissolves if the person is discharged and returns home.

What a state recovers from depends on its rules. States differ on whether recovery reaches only probate assets or other assets as well. California's recovery scope depends on that state's current rules and the date of death. No plan can be counted on to avoid recovery. The outcome depends on the rules in effect and on the family's facts.

How the Application Process Works

Applications are filed with the state Medicaid agency, and the agency's name, process and required documents vary by state.

The state reviews both the financial and the medical parts of the application, and approval requires meeting both. Federal law requires each state plan to offer a fair hearing to anyone whose claim is denied or not acted on with reasonable promptness (42 U.S.C. § 1396a(a)(3)). Appeal deadlines and steps depend on the state.

Medicaid planning is a separate step. It means arranging assets and income within what the rules allow, and it typically happens before or during the application. When care is needed right away, this is often called Medicaid crisis planning. The rules involved are complex, and this site explains what a Medicaid planning attorney does.

If You'd Like to Talk Through Your Situation

Nursing home eligibility rarely turns on one rule. It turns on how the asset count, past gifts, income, the home and a spouse's allowance all fit together under one state's current figures. The facts that matter include the accounts and property involved, the dates and amounts of any transfers, the care setting, and whether there is a spouse or a child under 21 or with a disability. This page is general information and does not cover Medicare, private insurance or veterans' benefits.

You can request a consultation about your family's Medicaid and long-term-care options through Medicaid Asset Protection Group, which is not a law firm; a request may be passed to attorneys who decide for themselves whether to respond.