How to Pay for Assisted Living with Medicaid
Assisted living can cost $4,000 to $7,000 or more per month — a price tag that's out of reach for many families. What most people don't realize is that Medicaid can help pay for assisted living in most states, though the process for qualifying and finding a covered facility is more complicated than it is for nursing home care. This guide explains how Medicaid coverage for assisted living works, how to determine if you or your loved one qualifies, and how to navigate the application process.
Does Medicaid Cover Assisted Living?
The short answer is yes, in most states — but not through standard Medicaid. Traditional Medicaid (sometimes called "regular" or "institutional" Medicaid) is required by federal law to cover nursing home care for eligible individuals, but assisted living coverage is optional. States that choose to cover assisted living do so through Medicaid Home and Community-Based Services (HCBS) waiver programs.
As of now, the vast majority of states offer some form of Medicaid-funded assisted living coverage through HCBS waivers. However, coverage varies enormously from state to state in terms of how much Medicaid will pay per month, what services are covered, how many people can be enrolled (waiver slots are limited), what types of facilities are eligible to participate, and whether there are waiting lists for waiver slots.
The important distinction is that Medicaid covers the care and services provided in assisted living — not the room and board. In practice, this means Medicaid pays for help with activities of daily living, medication management, and other personal care services, while the resident is expected to contribute toward room and board, typically from their Social Security or pension income. Some states supplement this with a state-funded room and board payment, making the arrangement financially viable for both the resident and the facility.
Medicaid Eligibility for Assisted Living
Qualifying for Medicaid-funded assisted living requires meeting both financial and functional criteria.
Financial Requirements
Medicaid financial eligibility for long-term care services has two components: income limits and asset limits.
Income limits for Medicaid long-term care vary by state. Many states set the limit at 300% of the Supplemental Security Income (SSI) federal benefit rate, which is sometimes called the "special income level." Some states use different income methodologies. If your income exceeds the limit, some states allow the use of a Qualified Income Trust (also called a Miller Trust) to redirect excess income into a trust, bringing countable income below the threshold.
Asset limits are generally $2,000 for a single individual in most states. Not all assets count — your primary home (up to a certain equity value), one vehicle, personal belongings, prepaid funeral plans, and certain other assets are typically exempt. For married couples where one spouse needs care and the other remains in the community, special rules protect a portion of the couple's combined assets for the community spouse through the Community Spouse Resource Allowance (CSRA).
Functional (Medical) Requirements
In addition to financial criteria, applicants must demonstrate a need for the level of care provided in an assisted living setting. This is typically assessed through a functional evaluation that measures the applicant's ability to perform activities of daily living (bathing, dressing, eating, toileting, transferring, continence) and may also consider cognitive impairment, behavioral health needs, and the need for supervision.
Each state defines its own criteria for what level of functional impairment qualifies for HCBS waiver services. Generally, the standard is similar to what would qualify someone for nursing home level of care — meaning the individual's needs are significant enough that without the waiver services, they would likely need to be in a nursing home.
The Application Process
Step 1: Determine Your State's Program
Start by identifying the specific HCBS waiver program in your state that covers assisted living. States may have multiple waiver programs serving different populations (elderly, physically disabled, intellectually disabled), and the program that covers assisted living may have a specific name. Your state's Medicaid office, Area Agency on Aging, or a local elder law attorney can help identify the right program.
Step 2: Apply for Medicaid
If the individual is not already enrolled in Medicaid, you'll need to submit a Medicaid application through your state's Medicaid agency. This involves providing detailed financial documentation including bank statements (typically 3-5 years of statements due to the look-back period), income documentation such as Social Security statements, pension information, and investment income records, proof of assets including real estate, vehicles, life insurance policies, and retirement accounts, identification and citizenship verification, and medical records supporting the need for care.
The look-back period is a critical consideration. Medicaid reviews financial transactions for a period of 60 months (5 years) prior to the application date in most states. Any assets transferred for less than fair market value during this period can result in a penalty period during which Medicaid will not pay for care. This is designed to prevent people from giving away assets to qualify for Medicaid. Planning ahead with an elder law attorney is strongly recommended to navigate these rules legally and effectively.
Step 3: Request the HCBS Waiver
Once Medicaid eligibility is established, you'll need to apply separately for the HCBS waiver program that covers assisted living. This typically involves a functional assessment conducted by a state assessor who evaluates the individual's care needs, a determination that the individual meets the state's criteria for nursing-home-level-of-care, and development of a person-centered care plan outlining the services to be provided.
Step 4: Find a Participating Facility
Not all assisted living facilities accept Medicaid. Facilities must be enrolled as Medicaid providers in the HCBS waiver program, and the Medicaid reimbursement rate is almost always lower than what the facility charges private-pay residents. This means fewer facilities participate, and those that do may have limited Medicaid beds.
Start your search early. Ask your state Medicaid office for a list of participating facilities, contact facilities directly to ask about Medicaid acceptance and current availability, work with your local Area Agency on Aging for referrals, and consider facilities slightly outside your preferred area if local options are limited.
Dealing with Waiting Lists
One of the biggest challenges with HCBS waivers is that enrollment is limited. Unlike nursing home Medicaid, which is an entitlement (anyone who qualifies must be served), HCBS waivers have a capped number of slots. When all slots are filled, eligible individuals are placed on a waiting list.
Wait times vary dramatically by state and by waiver program. Some states have minimal waits; others have lists stretching several years. While waiting, individuals may need to use private savings to pay for care, rely on family caregiving, use other community-based services, or in some cases, enter a nursing home under Medicaid (since nursing home care is an entitlement) and later transition to assisted living when a waiver slot opens.
If the need is urgent, communicate this to the waiver program. Some states have expedited processes for individuals in crisis situations, such as those being discharged from a hospital with no safe living arrangement.
What Medicaid Covers vs. What You Pay
Understanding the division of costs is essential for financial planning. Medicaid generally covers personal care services (help with bathing, dressing, grooming, etc.), medication management, nursing services and health monitoring, therapeutic services, case management, and some activities and social programming.
The resident is typically responsible for room and board costs, which may be offset by the resident's Social Security or pension income. Most states require the resident to contribute nearly all of their income toward the cost of care, retaining only a small personal needs allowance (typically $30 to $90 per month, varying by state). This personal needs allowance is meant to cover personal expenses like toiletries, clothing, and entertainment.
For married couples, income and asset protections exist for the community spouse (the spouse who does not need care). The community spouse is entitled to keep a certain amount of the couple's combined income (the Minimum Monthly Maintenance Needs Allowance) and assets (the Community Spouse Resource Allowance) to prevent impoverishment.
Planning Ahead
The complexity of Medicaid eligibility rules for assisted living makes advance planning extremely valuable. Families should consider consulting an elder law attorney who specializes in Medicaid planning — ideally several years before care is needed. These attorneys can help structure assets and income in ways that comply with Medicaid rules while preserving as much of the family's resources as legally possible.
Key planning strategies include understanding the look-back period and avoiding transfers that could trigger penalties, evaluating whether a Qualified Income Trust is needed in your state, protecting the home and other exempt assets, ensuring the community spouse retains adequate resources, and reviewing life insurance policies, retirement accounts, and other financial instruments for Medicaid planning implications.
Early planning provides the most options. Waiting until a crisis occurs limits what can be done within Medicaid's rules and timelines.
AssistanceFinder.org is an independent informational resource and is not affiliated with any government agency. Medicaid rules vary by state and change frequently. This guide provides general information and should not be considered legal or financial advice. Consult with an elder law attorney and your state Medicaid office for guidance specific to your situation.