← Caregiver glossary · Insurance
Joint federal-state program covering health care for low-income people, including many people with disabilities and many older adults who have spent down their assets. Unlike Medicare, Medicaid covers long-term care in nursing homes and many home- and community-based services. Eligibility rules vary widely by state.
Medicaid is the only US public payer that covers long-term custodial care — the round-the-clock nursing-home stays that can run $9,000-$15,000/month out-of-pocket. Medicare's SNF benefit ends after 100 days; private long-term care insurance has small market share and is increasingly expensive. For most US families, Medicaid is the answer when at-home care is no longer feasible and private funds are running out.
Eligibility has three legs: medical/functional need (typically 3+ ADL deficits or substantial cognitive impairment), income (varies by state and program — typically capped at 300% of SSI, with income above that going to "cost of care" via "income trust" workarounds in some states), and assets (typically $2,000 in countable assets for an individual, $3,000 for a couple in 2026). The home is usually excluded as a countable asset while one spouse remains in it; one car is excluded; prepaid funeral expenses are excluded.
The 5-year look-back is what catches most families off-guard. Medicaid reviews 60 months of asset transfers before the application date; any uncompensated transfer (gift to children, transfer to a non-qualified trust, sale for less than fair value) triggers a penalty period of Medicaid ineligibility equal to the transferred value divided by the state's average monthly nursing-home cost. Gifting $100,000 to children 3 years before needing nursing care can create a 12-18 month ineligibility window — exactly when Medicaid is needed. Elder-law attorneys handle this; DIY Medicaid planning is risky.
Medicaid Home and Community-Based Services (HCBS) waivers are the alternative to nursing-home Medicaid — they pay for in-home aide, adult day care, home modifications, and sometimes assisted living, letting the patient stay home. HCBS waivers have waitlists in many states (sometimes years long). Dual-eligible patients (on both Medicare and Medicaid) often have access to special Medicare Advantage D-SNP plans that coordinate the two programs.
When out-of-pocket long-term care costs become unsustainable. Many families discover Medicaid eligibility planning (often involving spend-down strategies, trust planning, and 5-year lookback rules) only when crisis hits — elder-law attorneys advise starting much earlier.
Terms families frequently confuse with medicaid.
Medicare is federal, age/disability-based, with no income test, covers acute medical care. Medicaid is joint federal-state, income/asset-tested, covers long-term custodial care that Medicare doesn't. Many low-income older adults have both — they're "dually eligible."
LTC insurance is private insurance that pays for nursing-home, assisted-living, and home-care costs. Medicaid is the public safety net for the same costs when private funds run out. Families with LTC insurance use it first; Medicaid takes over when the LTC benefit is exhausted or asset rules are met.
Spend-down is the process of depleting assets to qualify for Medicaid. Medicaid is what spend-down qualifies for. They're not synonyms — spend-down is the pathway, Medicaid is the destination.
See also: all glossary terms · conditions by name · step-by-step playbooks