Medicaid is a joint federal and state program that provides health coverage to eligible individuals, including the elderly and people with disabilities. In truth, Medicaid is not a single program but rather a collection of different programs administered under one umbrella. Each program has its own eligibility criteria, which differ from the others.
No eligibility criteria are as complex or as confusing as those for Long-Term Care (LTC) Medicaid. Long-Term Care Medicaid is the program that pays for nursing home care for individuals who need assistance with daily living activities.
Eligibility for Medicaid long-term care benefits varies by state, since each state administers its own Medicaid program within federal guidelines. However, there are some general criteria that apply across most states:
1. Non-Financial Eligibility
To qualify for Medicaid payment of LTC, an individual must:
- Be a U.S. citizen or lawful permanent resident.
- Be a resident of the state in which they are applying.
- Demonstrate a physical or medical need for long-term care services.
This need is typically determined through an assessment of the person’s ability to perform Activities of Daily Living (ADLs). ADLs include basic self-care tasks such as bathing, dressing, eating, transferring (e.g., from bed to chair), and toileting. An individual generally must need substantial assistance with at least two ADLs to be considered functionally eligible for Medicaid LTC.
2. Financial Eligibility
Medicaid is a means-tested program, which means applicants must meet both non-financial and financial criteria. The financial criteria fall into three categories: income, assets, and gifts.
Income Limits
The income limit for Medicaid LTC varies by state but in most cases, so long as the individual’s income is less than the monthly private pay rate of the facility, then the person will be eligible for benefits.
Some states are “income cap” states, meaning if an applicant’s income exceeds the limit, they are ineligible for Medicaid. However, many of these states allow the use of Qualified Income Trusts (also called Miller Trusts) to help applicants qualify.
Other states use a “medically needy” or “spend-down” program, where applicants can deduct medical expenses from their income to meet eligibility thresholds. For example, in both North Carolina and Virginia, if the applicant’s guaranteed monthly income is less than the private pay rate of the nursing facility, they may still be eligible.
Asset Limits
Medicaid also limits the amount of countable assets an applicant may own. For 2025, the countable asset limit is $2,000 for an individual. A spousal allowance permits the spouse remaining in the community to retain significantly more than $2,000 in countable assets.
There is no limit on certain non-countable assets. While these vary by state, they generally include:
- The applicant’s primary residence (up to a state-specific equity value).
- One vehicle.
- Personal belongings and household items.
- Burial plots and certain burial funds.
- Life insurance policies with a face value under a set amount.
For married couples where only one spouse requires long-term care (the “institutional spouse”), the spouse remaining at home (the “community spouse”) is often allowed to keep a higher amount of assets under the Community Spouse Resource Allowance (CSRA). In 2025, this can be up to $157,920.
3. Look-Back Period and Transfer Penalties
To prevent applicants from giving away assets to qualify, Medicaid enforces a five-year “look-back” period. All financial transactions made within five years before applying for Medicaid are reviewed. Transfers of assets for less than fair market value may result in a penalty period of ineligibility.
4. Estate Recovery
After a Medicaid recipient’s death, the state may seek to recover the cost of benefits paid on their behalf from their estate. This typically applies to probate assets, though some states attempt to recover from non-probate assets as well. For many families, planning to minimize or avoid estate recovery is as important as qualifying for benefits in the first place.
The Role of an Elder Law Attorney
An elder law attorney helps both individuals and families qualify for Medicaid benefits while protecting assets. Preserved assets can support a spouse remaining in the community or supplement the care of a nursing facility resident. Importantly, asset protection planning does not always require five years of advance preparation.
That said, the rules are complex. The right strategy depends on factors such as age, type of assets, family circumstances, and long-term planning goals. For this reason, it is critical to seek personalized advice from a specialist who can help navigate these complicated requirements.
Get Assistance with McDowell Law Group
If you or a loved one is considering applying for Long-Term Care Medicaid, the process can feel overwhelming. At McDowell, we guide families through every step, from determining eligibility to protecting assets and planning for the future. Our team understands the complex rules and state-specific requirements, and we work closely with you to create a plan that meets your unique needs.
Contact McDowell Law Group today to schedule a consultation and learn how we can help you navigate Medicaid with confidence and peace of mind.