Medicaid is a government health insurance program that covers low-income seniors aged 65 and older, paying for services that Medicare doesn’t fully cover, most notably long-term care in nursing homes or in-home settings. For many older adults, Medicaid fills critical gaps: it can cover nursing home costs, help pay Medicare premiums and copays, and fund personal care services at home. About one in five Americans over 65 is enrolled in Medicaid, making it the single largest payer of long-term care in the country.
How Medicaid Differs From Medicare
Medicare and Medicaid sound similar but work very differently. Medicare is the federal health insurance program nearly all Americans receive at 65, regardless of income. It covers hospital stays, doctor visits, and prescription drugs. What it does not cover well is long-term care. Medicare pays for short-term rehabilitation after a hospital stay (up to 100 days in a skilled nursing facility), but it does not pay for the kind of ongoing, indefinite nursing home care that many seniors eventually need.
That’s where Medicaid comes in. Medicaid is a needs-based program, meaning you must have limited income and assets to qualify. But for seniors who do qualify, it covers what Medicare leaves out: extended nursing home stays, personal care aides, and home-based support services that can cost thousands of dollars a month out of pocket.
Dual Eligibility: Having Both Programs
Many seniors qualify for both Medicare and Medicaid at the same time. These “dual eligible” individuals get a layered benefit. Medicare acts as the primary insurer, covering hospital and doctor visits, while Medicaid picks up costs that Medicare charges to the patient. The Qualified Medicare Beneficiary (QMB) program, for example, pays for Medicare Part A and Part B premiums, deductibles, coinsurance, and copayments. A more limited program called Specified Low-Income Medicare Beneficiary (SLMB) covers only Part B premiums.
These Medicare Savings Programs are available to seniors with monthly incomes up to $1,781 and financial resources below $9,660 (2025 figures for an individual). If your income is low enough to qualify, these programs can save you hundreds of dollars a month in Medicare-related costs alone.
Income and Asset Limits for 2025
Medicaid eligibility for seniors is based on both income and assets, and the limits vary depending on the type of coverage you’re applying for. The thresholds are intentionally strict for community-based coverage and somewhat more generous for people who need nursing home care.
For basic Medicaid tied to Supplemental Security Income (SSI), the 2025 income limit is $967 per month for an individual, with financial resources capped at $2,000. For seniors who need long-term institutional care, the income limit rises to $2,901 per month (300% of the SSI limit), though most states still cap countable assets at $2,000 per person.
Some assets are excluded from these calculations entirely. Your primary home typically doesn’t count toward the asset limit, nor do personal belongings, one vehicle, and certain burial funds. However, the home exemption comes with an important caveat: states are required to recover Medicaid costs from your estate after you die, and your home is often the primary asset they target.
States also offer “medically needy” pathways for seniors whose income is slightly too high. Under these programs, you can subtract your medical expenses from your income to “spend down” to the eligibility threshold. The median income limit for medically needy coverage in 2025 is just $511 per month, so this pathway primarily helps people with very high medical bills relative to their income.
What Medicaid Covers for Seniors
The most significant benefit Medicaid offers seniors is long-term care. Nursing home care in the U.S. averages well over $8,000 per month, and Medicaid is the only major insurance program that covers indefinite stays. To qualify for this coverage, you must demonstrate a medical need for institutional-level care, meaning you need help with daily activities like bathing, dressing, eating, or moving around that can’t be safely managed at home without professional support.
Beyond nursing homes, Medicaid covers a wide range of services for seniors living in the community. Standard benefits include doctor visits, hospital care, prescription drugs, lab work, and preventive screenings. Many states also cover dental care, vision, hearing aids, and medical transportation, though these benefits vary by state.
Home and Community-Based Services
One of the most valuable and underused parts of Medicaid for seniors is the Home and Community-Based Services (HCBS) waiver program. These waivers allow states to pay for care delivered in your home or community instead of in a nursing facility. Services can include personal care aides who help with bathing and meals, adult day programs, home modifications like wheelchair ramps, respite care for family caregivers, and even transportation to medical appointments.
To qualify, you generally need to meet the same medical criteria as someone entering a nursing home, meaning you require that institutional level of care. The key difference is that you’re choosing to receive it at home. States must demonstrate that home-based care won’t cost more than the equivalent institutional care, which in practice it rarely does. Each state designs its own HCBS waiver programs, so the specific services available and the number of slots open vary widely. Many states maintain waiting lists, sometimes lasting months or even years, so applying early matters.
Care under these waivers follows an individualized plan built around your specific needs, and states are required to ensure that the services protect your health and welfare. For many seniors, HCBS waivers make it possible to stay in their own home years longer than they otherwise could.
The Five-Year Look-Back Period
Medicaid has strict rules designed to prevent people from giving away their money or property to qualify for benefits. When you apply, the state reviews all financial transactions from the previous 60 months (five years). Any transfers made without receiving fair market value in return, including gifts to family members, selling a home to a child for a token amount, or moving money into certain trusts, can trigger a penalty period during which you’re ineligible for Medicaid coverage of long-term care.
The penalty is calculated by dividing the total value of transferred assets by the average monthly cost of nursing home care in your state. If you gave away $100,000 and the average monthly nursing home cost in your area is $10,000, you’d face a 10-month penalty period. During that time, you’d be responsible for paying nursing home costs out of pocket. The penalty period doesn’t start until you’ve applied for Medicaid and would otherwise be eligible, which can create a devastating gap in coverage.
This rule makes early planning essential. Seniors who anticipate needing long-term care should think about Medicaid eligibility well before the need arises. Transfers made more than five years before the application date are not scrutinized.
Estate Recovery After Death
Federal law requires every state to attempt to recover Medicaid costs from the estates of deceased enrollees. This process, known as estate recovery, means that after a Medicaid recipient dies, the state can claim reimbursement from their remaining assets, most commonly the family home.
There are important protections built into the system. States cannot recover from an estate if the deceased is survived by a spouse, a child under 21, or a blind or disabled child of any age. If a sibling with an ownership interest in the home was living there, or if the deceased returned home from a nursing facility, liens placed on the property during their lifetime must be removed. States are also required to have procedures for waiving recovery in cases of undue hardship.
For families, this means that while Medicaid covers enormous long-term care costs during a senior’s lifetime, the program may recoup some of those costs from the estate afterward. Understanding this trade-off is important when making decisions about whether and when to apply.
How to Apply
Medicaid applications for seniors go through your state’s Medicaid office, not through the federal marketplace used for other health insurance. Because eligibility rules, covered services, and income limits vary by state, your first step is contacting your state’s Medicaid agency or visiting their website. Many states allow online applications, while others require in-person or phone interviews.
You’ll need documentation of your income (Social Security statements, pension records), bank and investment account statements, property deeds, and medical records if you’re applying for long-term care coverage. The process can take 45 to 90 days, and for nursing home applications, it often takes longer due to the financial review involved. State Health Insurance Assistance Programs (SHIP) offer free counseling to help seniors navigate both Medicaid and Medicare, and local Area Agencies on Aging can connect you with application assistance.