Getting into a nursing home on Medicaid requires meeting both financial and medical eligibility rules, then navigating an application process that typically takes 45 to 90 days. The process involves proving your income and assets fall below state limits, demonstrating you need a nursing-home level of care, and in many cases, legally restructuring your finances to qualify. Here’s how each piece works.
Income and Asset Limits
Medicaid uses strict financial thresholds for nursing home coverage. In 2025, most states cap countable income at $2,901 per month for a single person, which is 300% of the federal SSI benefit. Countable assets are limited to $2,000 in most states. Assets include bank accounts, investments, and cash value life insurance. Your primary home is generally exempt while you’re living in the nursing home, as long as your equity falls below your state’s limit and you intend to return home (or a qualifying family member lives there).
Not everything you own counts. One vehicle, personal belongings, household furnishings, and a small amount of life insurance are typically excluded. But the $2,000 asset cap is tight, and most people need to reduce their countable assets before they can qualify.
Spending Down Assets Without Penalties
If your assets exceed the limit, you can spend them down on specific things without triggering a Medicaid penalty. Allowable expenses include paying off a mortgage, credit card balances, or car loans. You can purchase medical devices not covered by insurance, such as dentures, hearing aids, or eyeglasses. Home modifications like adding a first-floor bathroom or improving accessibility are permitted. Vehicle repairs or purchasing a replacement car at fair market value also count. You can even set up a formal personal care agreement with a family member who provides caregiving, though these contracts need to be structured carefully to avoid being flagged as a gift.
What you cannot do is simply give money away. Medicaid looks back through five years (60 months) of financial transactions before your application date. Any gifts, transfers to family members, or assets sold below fair market value during that window will trigger a penalty period during which Medicaid won’t pay for your nursing home care. The penalty length is calculated by dividing the total transferred amount by your state’s average monthly nursing home cost. If you gave away $80,000 and your state’s average monthly cost is $8,000, you’d face a 10-month penalty.
What If Your Income Is Too High
In many states, earning even slightly more than $2,901 per month disqualifies you entirely. These “income cap” states offer a workaround called a Qualified Income Trust, sometimes called a Miller Trust. This is a special irrevocable trust that holds your income (Social Security, pension, and similar payments) so it’s no longer counted for eligibility purposes. The trust pays for your care, a small personal needs allowance, and support for your spouse if applicable. When you pass away, any remaining funds in the trust go back to the state to reimburse Medicaid for the care it provided.
Setting up a Qualified Income Trust usually requires an attorney familiar with Medicaid planning. The trust must follow specific rules: only income can go into it (not savings or other resources), it must be irrevocable, and it must include a clause requiring repayment to the state after death.
Proving You Need Nursing Home Care
Financial eligibility is only half the equation. You also need to demonstrate that you require a “nursing facility level of care,” which means you can’t safely manage daily life without continuous skilled support. States assess this through your ability to perform activities of daily living: bathing, dressing, eating, toileting, transferring in and out of bed, and mobility. Cognitive function and behavioral patterns also factor in.
Generally, you’ll qualify if you’re dependent in multiple daily activities and also have significant limitations in areas like mobility, orientation, or medication management. Someone who can’t bathe, dress, or eat independently and also needs help moving around or managing medications will typically meet the threshold. Someone who needs help with just one activity but is otherwise independent likely won’t, unless they also require daily nursing care that can’t be handled through outpatient visits.
Every applicant to a Medicaid-certified nursing facility also goes through a federal screening process called PASRR (Preadmission Screening and Resident Review). The Level I screen checks whether you may have a serious mental illness or intellectual disability. If you screen positive, a more detailed Level II evaluation determines the right care setting and what services you need. This process exists to make sure nursing home placement is genuinely appropriate rather than a default when community-based care might work better.
Protections for Spouses
If you’re married and one spouse needs nursing home care, Medicaid doesn’t require the other spouse to become impoverished. Federal spousal impoverishment rules let the spouse remaining at home (the “community spouse”) keep a portion of the couple’s combined assets. In 2025, the community spouse can retain between $31,584 and $157,920 in assets, depending on the state and the couple’s total resources. The community spouse is also entitled to a minimum monthly income allowance of $2,643.75 (higher in Alaska and Hawaii). If the community spouse’s own income falls below that amount, a portion of the nursing home spouse’s income can be redirected to make up the difference.
The family home is also protected from Medicaid liens as long as the community spouse lives there. The same protection applies if a child under 21, or a blind or disabled child of any age, resides in the home.
How to Apply
You apply for Medicaid nursing home coverage through your state’s Medicaid agency, which may operate through a county social services office. Most people apply while already in a nursing home or during a hospital stay that will lead to nursing home admission. The facility’s social worker or admissions coordinator can often help start the process.
You’ll need to gather financial documentation: bank statements, tax returns, proof of income (Social Security award letters, pension statements), property deeds, insurance policies, and records of any financial transfers made in the past five years. The more organized your paperwork, the faster the process moves.
States are required to process Medicaid applications within 45 days. If eligibility depends on establishing a disability, the deadline extends to 90 days. In practice, delays beyond these windows happen, but the state must document the reason, and the total processing time can’t exceed three months from the application date. Medicaid coverage can be applied retroactively to cover up to three months before your application date, as long as you were eligible during that period.
What Happens After Approval
Once approved, Medicaid pays the nursing home directly. You’ll still owe a monthly “patient liability” or “cost of care” payment, which is essentially all of your income minus a small personal needs allowance (typically $30 to $90 per month, depending on the state) and any allowable deductions like health insurance premiums or spousal maintenance.
Medicaid coverage continues as long as you remain in the nursing home and continue to meet both financial and medical criteria. States review eligibility periodically, usually annually. If your financial situation changes, such as receiving an inheritance, you’ll need to report it promptly, as it could affect your eligibility.
Estate Recovery After Death
Medicaid is required by federal law to seek repayment from the estates of deceased beneficiaries for nursing home costs it covered. This means the state can file a claim against your estate, including your home, after you die. However, states cannot recover from your estate if you’re survived by a spouse, a child under 21, or a blind or disabled child of any age. States must also waive recovery when it would cause undue hardship, though the definition of hardship varies. A sibling with an equity interest in the home who was living there before your admission may also be protected.
Planning for estate recovery is one of the main reasons families work with elder law attorneys before or during the Medicaid application process. The five-year look-back period means that any asset protection strategies need to be implemented well in advance of needing nursing home care to be effective.