Everything You Need To Know About Medicaid

Medicaid is a health insurance program that predominantly helps low-income, disabled, and elderly Americans. This complex program is crucial for millions, covering many different avenues, including but not limited to traditional healthcare, prescriptions, necessary procedures, and nursing homes. 

However, relying solely on Medicaid comes with its fair share of problems, especially when it comes to long-term care coverage. In this article, we'll discuss what Medicaid is, what it covers, how to qualify, and why you may be better off planning with Long-Term Care Insurance instead. 

(Please note: This article is periodically updated but may not reflect the most recent information. It is possible for specific Medicaid information, policies, and requirements to change at any point. Many of the requirements mentioned in this article also vary by state. It’s vital to speak with a qualified Medicaid professional to verify the information before starting care with the Medicaid program.)

What Is Medicaid?

Medicaid is a joint federal and state health care assistance program for low-income individuals. This program helps pay for all types of care, including health, skilled, and long-term care. Medicaid is available to individuals of all ages who meet need-based criteria.  

Medicaid is the largest payer of healthcare services in the United States. In 2023, total Medicaid spending was around $880 billion. About  37% of that budget went toward long-term care.  

As of 2025, around 71 million people are enrolled in Medicaid. That’s about 20.8% of the United States population. However, not all of these enrollees received long-term care. 

Medicaid vs. Medicare: Key Differences for Seniors

Medicaid is a need-based program to help low-income and disabled individuals access health care. 

Medicare is an entitlement-based health insurance program for individuals aged 65 years or older.

Each program serves a different demographic and purpose. In addition, they also cover different types of care. 

Medicaid covers both healthcare and personal care, like help in a nursing home. Medicare, on the other hand, only covers healthcare, meaning it won’t cover the cost of a nursing home or other custodial care services. 

What Long-Term Care Services Does Medicaid Cover?

Medicaid covers all long-term care services, but there are different programs for staying in a nursing home vs. assisted living. 

Medicaid offers several sub-programs to help cover long-term care. Some of these are entitlement programs, which means that once you qualify for Medicaid, you're entitled to receive care through those programs whenever you need it.

Other sub-programs are capped and may have waitlists. These don’t guarantee benefits and often require separate applications.

Each Medicaid program targets a different demographic of people and offers care for various needs. These programs for long-term care are:

• Institutional Medicaid (Nursing Home Medicaid)

• Home & Community-Based Services Waivers (HCBS)

• Aged, Blind, & Disabled Medicaid (ABD)

• Program of All-Inclusive Care For The Elderly (PACE)

Generally, Medicaid coverage starts on the day your application is approved or the first day of the month you applied. This coverage extends until the last day of the month when you no longer meet Medicaid requirements.

Coverage can be retroactively applied up to three months after the fact if you can prove that you met the requirements during that time.

Institutional or Nursing Home Medicaid

Institutional Long-Term Care Medicaid is an entitlement program that covers residential long-term care facilities. Many people refer to this program as "Nursing Home Medicaid." 

Institutional Medicaid covers the full cost of skilled and custodial care, including activities of daily living. It also covers the full cost of room and board. 

This program is designed for those who need high levels of skilled and custodial care. It works best for those who cannot receive a lower level of care and need round-the-clock supervision for their needs. 

Anyone who meets Medicaid requirements is entitled to receive long-term care through this program if a nursing home level of care is needed. However, you can only receive care in Medicaid-certified residential long-term care facilities.

While Medicaid covers the cost of care in nursing homes, the level of care coordination may not be as extensive as in PACE. We'll explain PACE later in this section.  

Home & Community-Based Services (HCBS) Waivers

Home and Community-Based Services is a Medicaid waiver program that allows you to receive care outside of traditional nursing home settings, such as at home or in an assisted living facility.

HCBS waivers are not an entitlement program, meaning they are limited in availability. You must fill out a waiver and be approved before using Medicaid benefits for in-home care or other alternative care facility options.

Availability and requirements vary by state, but most states offer coverage for:

• Custodial and personal care services

• Home care

• Assisted living facilities

• Adult day care centers

• Case management services

• Pay an informal caregiver for the care they provide

As stated earlier, HCBS waivers are available on a limited basis. Many states have waitlists or quotas that they cannot go over for HCBS waivers, meaning availability may be limited.

Aged, Blind, & Disabled (ABD) Medicaid

Aged, Blind, and Disabled (ABD) Medicaid (sometimes known as regular Medicaid) is an entitlement program for individuals who are blind, elderly, or disabled.

Specific requirements may vary by state; some states may include more people than others. To qualify, you must:

• Be a resident of the state where you're applying for Medicaid benefits.

• Be 65 years of age or older, permanently disabled, or blind.

• Have monthly income and countable assets under a specified level (this varies by state, but general levels are provided below)

• Have a functional need for long-term care.

This program does not offer the same range of options as other long-term care programs; it mostly focuses on home health care and personal care assistance. Coverage may not be as extensive as with Nursing Home Medicaid or Home and Community-Based Services. 

Program of All-Inclusive Care for the Elderly (PACE)

Program of All-Inclusive Care for the Elderly (PACE) is a joint Medicare and Medicaid program that utilizes a team of healthcare professionals who create and manage personalized care plans for participants. These teams coordinate all aspects of the participant's healthcare and long-term care needs.

PACE is designed to provide comprehensive healthcare and long-term care services to older adults in their communities or homes. It emphasizes community-based care and allows participants to live at home while receiving the necessary services.

PACE programs enable seniors to age in place, allowing them to stay in their homes or communities while receiving necessary care and support.

Eligibility for PACE typically includes being 55 years or older, needing nursing home-level care as determined by a state assessment, and residing within a PACE service area. 

PACE is only available in limited geographic areas and has a small overall enrollment. It’s important to check with a qualified Medicaid expert to determine if the program is available in your area.

How To Qualify for Medicaid Long-Term Care Services

You must meet strict income and asset requirements to qualify for Medicaid. This often includes a process called "spend down," where you must eliminate income or assets to qualify. 

In addition, Medicaid is a federal program administered by states. This means that each state has free reign on what their income and asset requirements are. Some states have stricter requirements than others.

For example, as of January 1st, 2024, California no longer has asset limits for most Medi-Cal programs. The state still has income requirements.

For more information on Medicaid eligibility, please review your state's Medicaid information page and consider reaching out to a qualified Medicaid professional.

This section explains how Medicaid spend down and estate recovery works, as well as how your marital status could impact your asset and income requirements. 

Medicaid Spend Down: What it Means for Your Assets and Income

The Medicaid spend down is a process where you must "spend down" assets and income to meet Medicaid financial requirements. 

This involves paying off debt, paying for health care, and legally restructuring assets to qualify in a specified time frame.

You cannot simply give away assets or income, as this would trigger a 60-month look-back period. A look-back period is a period of time where your financial transactions are reviewed to ensure you haven't gifted assets or income to qualify for benefits. 

Any transactions made during this time, including cash, property, or investments, must be sold at market price. Otherwise, you may face Medicaid penalties, such as being ineligible for coverage. 

It's often best to work with a Medicaid caseworker to properly restructure your income and assets to meet the requirements sooner rather than later. 

Once Medicaid spend down rules and requirements have been met and the application approved, you will start receiving Medicaid coverage.

Medicaid Spousal Rules: Protecting Assets for Couples

Medicaid has different rules for single and spousal applicants, even if only one spouse is applying for coverage. 

Rules vary to provide extra protections for couples where only one spouse applies for Medicaid, protecting the non-applicant spouse (also known as the community spouse) from losing everything to spend down requirements.

For example, a non-applicant spouse is generally allowed to keep their income. Non-applicant spouses are also entitled to a Minimum Monthly Maintenance Needs Allowance. 

An applicant spouse can transfer some of their monthly income to their non-applicant spouse through the Spousal Income Allowance.  

However, all married couples are considered to have joint assets. This means non-applicant spouses may be at risk of losing some of their countable assets to Medicaid spend down. 

However, not all assets are considered countable. There are non-countable assets such as a primary home, motor vehicles, household furnishing, and valuable personal items like a wedding ring. 

Protect Your Income and Assets with Long-Term Care Insurance 

If you're concerned about your future health needs, you may want to consider Long-Term Care Insurance.

Instead of waiting until it's too late and putting your assets, income, and family at risk of the effects of Medicaid, you can plan ahead with an LTC Insurance policy.

Long-Term Care Insurance provides coverage for all types of long-term care, including, but not limited to:

• Home care

• Nursing home care

• Assisted living facilities

• Adult day care centers

• Memory care facilities

However, you can't get Long-Term Care Insurance if you already need consistent care. The key is to plan ahead while you're in good health. The best time to buy LTC Insurance is in your 40s, 50s, and 60s when your health is still good and you're at a financially stable time in your life.

Not only does LTC Insurance cover your care costs, but it also protects your family from shouldering the burden of caring for someone they love.

Instead of worrying about spend downs or out-of-pocket medical expenses, you can rest easy knowing your assets, income, and family are protected from the often unseen costs of long-term care and aging. 

There are plenty of companies that offer Long-Term Care Insurance. Each provider has its own prices and benefits. 

For the best chance of getting a policy that works for you or your loved one, reach out to a Long-Term Care Insurance Specialist. Specialists will work with you to meet all of your care needs and help you get reliable quotes from multiple insurers. 

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Specialists can then help you through the application process and help you file any claims in the future. Specialists are not tied to any particular company and truly care for the well-being of those they help.

What Is The Long-Term Care Insurance Partnership Program?

The Long-Term Care Insurance Partnership Program provides additional protection for individuals with qualified LTC Insurance policies.

The way the partnership program works is simple. If you used all the benefits within your LTC Insurance policy, the partnership program would allow you to qualify for Medicaid coverage without spending down your income and assets. It also protects you from estate recovery and repaying the cost of long-term care after death.

This essentially protects you from the dangers of not planning for long-term care. You're guaranteed benefits without having to meet Medicaid requirements.

Not every state participates in the Partnership Program, so it's important to check with a Long-Term Care Insurance Specialist if this program is something that interests you.

The Big Beautiful Bill Explained

(Note: This article was published on June 23rd, 2025. Information is subject to change at any time as this bill changes throughout its review in the Senate.)

The Big Beautiful Bill is a large piece of legislation tackling various issues, including border control, tax cuts, social security, and Medicaid. This article is about Medicaid, so we'll exclusively cover any updates to Medicaid from this bill.

The Big Beautiful Bill passed the House on May 22nd, 2025. As of writing this article, the bill is currently being reviewed in the Senate, with a proposed deadline to pass or not pass the legislation by July 4th, 2025.

If this bill passes, several changes to Medicaid would occur, some of the most notable being a reduction in the budget and new requirements for qualifying for coverage.

Here are some of the proposed Medicaid changes:

• New work requirements. The bill proposes adding a work requirement of 80 hours per month starting in December 2026 for non-disabled adults without dependents.

• Re-enrollment changes. The bill proposes that re-enrollment occur every six months instead of once every year.

• Additional income and residency requirements. Individuals may be asked for additional information to prove their residency and income.

• Shifting responsibilities and costs to states. Medicaid is a federal program administered by the states, meaning each state offers slightly different rules and coverage. This bill could offer states more flexibility on what they should and shouldn't offer and may shift more of the financial burden to individual states as the federal Medicaid budget shrinks.

Overall, these changes to Medicaid could lead to greater difficulty qualifying for the program and greater disparity in the program across states.

Medicaid Is a Safety Net, Not a Strategy

Medicaid was never intended to be a primary payer of healthcare in the United States. With budget cuts and uncertainty in the air, now is a more important time than ever to plan for future care needs with Long-Term Care Insurance.

Long-Term Care Insurance covers all custodial and personal care needs, including in-home care, memory care, assisted living, and nursing homes. While Medicaid does cover long-term care, you must meet stringent requirements to qualify, and you and your family may be on the hook to repay the cost of care after you pass. 

Most Americans are unaware of just how expensive long-term care can be, especially when the yearly cost is compounded by inflation and an unknown amount of time spent aging with care needs, often upwards of a decade. 

LTC News has several resources to help you plan for retirement and create a viable, stable future for yourself and your family. 

• Long-Term Care Insurance Cost: Factors, Considerations and Price Ranges – Long-Term Care Insurance is a great option for covering the cost of long-term care. Many people assume LTC Insurance is only for the wealthy, but it's more affordable than you may think.

• Can You Get Long-Term Care Insurance With Pre-Existing Conditions? – To qualify for Long-Term Care Insurance, individuals must be in relatively good health, but good doesn't mean perfect. This article explores how pre-existing conditions can impact your ability to qualify and how to work around it.