Medicaid

What it means

Medicaid is administered by each state within federal rules, so eligibility, benefits and even the program's name differ from one state to the next.

It is the main payer for long-term nursing care in the United States. Medicare is not — Medicare covers limited skilled care, not custodial residence.

Eligibility is means-tested. Both income and countable assets matter, and transfers made before applying are examined.

Why it matters

For most families, the question of who pays for years of care is a Medicaid question, and they reach it after assuming Medicare would cover it.

Because eligibility looks backwards, decisions made years earlier — giving a house to a child, for example — can affect it. This is one of the few areas where acting without advice reliably costs money.

When you are likely to meet it

• When long-term care becomes likely.
• When savings are being spent down on care.
• When a facility asks about the source of payment.

How this varies by state

Eligibility limits, covered services, waiver programs and the program's own name are all set by each state within federal rules.

Related terms

• ABLE accountA savings account a disabled person can hold without losing means-tested benefits.
• Accelerated death benefitA payment from a life insurance policy to the insured person while they are still alive, when they are terminally or chronically ill.
• Activities of daily livingThe everyday self-care tasks — bathing, dressing, eating, using the toilet, moving from a bed to a chair, continence — that care assessments and insurance policies measure.
• Assisted livingHousing with help for daily tasks and staff on site, but without the licensed clinical care a nursing facility provides.
• Community spouse resource allowanceWhat the husband or wife still at home may keep when the other qualifies for Medicaid care.
• Custodial careHelp with everyday living rather than medical treatment — bathing, dressing, eating, moving about. It is what most long-term care actually is.
• Extra HelpA federal subsidy that pays most of the cost of Medicare prescription drug coverage.
• Funeral trustMoney set aside to pay for a funeral, held so it cannot be spent and often so it does not count for Medicaid.
• Home and community-based services waiverA Medicaid program paying for care at home instead of in a nursing facility.
• Home careNon-medical help at home — bathing, dressing, meals, housekeeping, company. Medicare does not pay for it.
• Irrevocable trustA trust that generally cannot be changed or undone once created. Giving up control is the point of it.
• Long-term care insuranceA policy that pays toward help with daily living — at home, in assisted living, or in a nursing facility — which health insurance and Medicare do not cover.
• Look-back periodThe stretch of time before a Medicaid application during which gifts and transfers are examined, and can delay eligibility.
• Medicaid estate recoveryA state's claim against the estate of somebody whose long-term care Medicaid paid for, to recover what it spent.
• MedicareThe federal health insurance program for people aged sixty-five and over, and for some younger people with disabilities. It does not pay for long-term care.
• Medicare AdvantageMedicare delivered by a private insurance plan instead of directly by the government. It is also called Part C.
• Medicare Savings ProgramA state-run program that pays Medicare premiums, and sometimes the deductibles too.
• MedigapA private policy that pays some of what Original Medicare leaves the patient to pay. It cannot be combined with a Medicare Advantage plan.
• Memory careResidential care designed for dementia — secured, higher-staffed, and more expensive than ordinary assisted living.
• Personal care agreementA written contract under which a family member is paid to provide care.
• Skilled nursing facilityA facility providing nursing and rehabilitation care that has to be delivered by licensed clinical staff — not the same thing as a nursing home in the everyday sense.
• Special needs trustA trust that holds money for a person with a disability without disqualifying them from means-tested benefits.
• Spend-downUsing up income or assets on care until they fall below the limit at which Medicaid will start paying.

Sahvelo guidance that uses this

• Housing transitions