How to Pay for a Nursing Home With No Money

Needing nursing home care often brings significant financial apprehension. Many believe that without substantial personal savings, such care is out of reach. However, various programs and strategies exist to help cover these costs, even with limited financial resources. This article explores primary avenues and programs designed to assist in funding nursing home care.

Understanding Nursing Home Care Costs

Nursing home care requires a substantial financial commitment. Average costs for a semi-private room in the U.S. can range from approximately $8,669 per month, translating to over $100,000 annually. This sum often exceeds an individual’s ability to pay out-of-pocket for extended periods.

Traditional health insurance plans, including Medicare, generally do not cover long-term custodial care in a nursing home. Medicare primarily covers short-term skilled nursing care or rehabilitation following a hospital stay, not ongoing assistance with daily activities. This distinction often leaves many unprepared for the financial burden of extended nursing home stays.

Medicaid Eligibility Requirements

Medicaid is a primary payer for long-term nursing home care for those with limited income and assets. Eligibility for Medicaid long-term care is determined by income limits, asset limits, and medical necessity.

Income limits for Medicaid vary. In “income cap” states, an individual’s gross monthly income must be below a specific threshold, generally $2,901 for 2025. If income exceeds this cap, some states offer “medically needy” programs or allow Qualified Income Trusts to reduce countable income. Most of an applicant’s income, beyond a small personal needs allowance, is expected to contribute to the cost of care.

Asset limits also apply, with individuals typically allowed to retain up to $2,000 in “countable assets” in most states. Countable assets generally include cash, bank accounts, investments, and certain real estate beyond the primary residence. Non-countable assets often include a primary residence (under certain equity limits), one vehicle, personal belongings, and burial plots. The home equity limit for Medicaid coverage of nursing facility services can be up to $1,071,000 in some states.

Medicaid also employs a “look-back period,” typically 60 months (five years) in most states, to review financial transactions preceding the application date. Any uncompensated transfers of assets during this period, such as gifts or sales below fair market value, can result in a penalty period of ineligibility for Medicaid benefits. This rule aims to prevent individuals from divesting assets solely to qualify for assistance.

For married couples where one spouse requires nursing home care and the other remains in the community, “spousal impoverishment” rules protect the community spouse from financial hardship. The Community Spouse Resource Allowance (CSRA) allows the community spouse to retain a portion of the couple’s combined countable assets, which for 2024 can be up to $154,140 in many states. The Minimum Monthly Maintenance Needs Allowance (MMMNA) allows the community spouse to keep a certain amount of the couple’s income, with the minimum for 2024 set at $2,465 and a maximum of $3,853.50. This ensures the community spouse has sufficient resources to live independently.

Beyond financial criteria, a medical necessity requirement exists for nursing home Medicaid. A physician must certify that the applicant requires a nursing home level of care, meaning they need assistance with activities of daily living or have specific medical conditions necessitating skilled nursing services. This medical assessment, combined with financial eligibility, determines whether an individual can receive Medicaid-funded long-term care.

Applying for Medicaid Benefits

After understanding Medicaid eligibility, the next step is the formal application process. Applications for nursing home care can be submitted online, by mail, or in-person at a local Medicaid office. The chosen method may depend on state-specific options and the applicant’s preference.

The application must be accompanied by documents to verify eligibility. These typically include:
Identification
Proof of citizenship or legal residency
Detailed financial statements for bank accounts, investments, and real estate
Income verification documents, such as pension statements or Social Security award letters
Medical records supporting the need for nursing home level of care
Relevant legal documents, like a Power of Attorney if an agent applies on behalf of the individual

All documents should be prepared and organized before submission to facilitate a smoother review.

After the application and supporting documents are submitted, an interview may be required by the Medicaid agency to clarify information or address discrepancies. This interview provides an opportunity for the applicant or their representative to explain their financial and medical situation. Following the review, the agency will render a decision regarding eligibility.

The timeline for a decision can vary, but applicants are generally notified in writing. If the application is denied, the notification will typically include the reason for denial and information on the appeal process. Applicants have the right to appeal a denial, which often involves submitting additional information or requesting a fair hearing. Understanding this process is important for successful Medicaid enrollment.

Veterans Aid and Attendance Program

The Veterans Aid and Attendance program offers an alternative financial resource for eligible veterans and their surviving spouses to help cover long-term care costs. This VA benefit provides a pension for those who meet specific criteria related to military service, medical need, and financial limitations. It is distinct from Medicaid and has its own rules.

To qualify for Aid and Attendance, veterans must have served at least one day during a wartime period, with a minimum of 90 days of active duty, and not received a dishonorable discharge. If active duty began after September 7, 1980, typically 24 months of active duty or completion of an entire tour of duty is required. Surviving spouses may also be eligible if they meet other program requirements.

Medical eligibility for Aid and Attendance requires a physician’s statement confirming the need for assistance with daily living activities (e.g., bathing, feeding, or dressing), or that the individual is housebound or a patient in a nursing home due to loss of mental or physical abilities. The program can help pay for various long-term care services, including in-home care, assisted living, and nursing home care.

Financial eligibility for Aid and Attendance is determined by a “net worth” test, which combines the applicant’s annual income and countable assets. The net worth limit is $155,356 for 2024 and $159,240 for 2025. This limit includes assets like checking and savings accounts, mutual funds, and stocks. A primary home and one vehicle are typically not counted towards this net worth limit. Unreimbursed medical expenses can also offset income, potentially helping an applicant meet the financial criteria.

The application process involves submitting documents to the Department of Veterans Affairs. These include:
Military discharge papers (DD-214)
Detailed medical reports from a physician
Comprehensive financial documents
Completed application forms (e.g., VA Form 21-2680 for medical information, VA Form 21-0779 if in a nursing home)

Applications can be submitted online via QuickSubmit, by mail to the Pension Intake Center, or in person at a VA regional office.

Specific Asset and Income Considerations for Medicaid

Even when individuals exceed standard Medicaid eligibility limits, specific strategies and rules exist within the Medicaid framework to help them qualify. These mechanisms focus on how certain assets or income are treated under Medicaid regulations, allowing for financial adjustments to meet program requirements.

Qualified Income Trusts

Qualified Income Trusts, often called Miller Trusts, provide a solution for individuals whose income exceeds the Medicaid income cap but is insufficient to cover nursing home costs. In income-cap states, where income must be below a set limit (e.g., $2,901 per month in 2025), excess income is deposited into this irrevocable trust. This effectively reduces countable income to meet eligibility, with funds in the trust then used to pay for care costs and a small personal needs allowance.

Medicaid Compliant Annuities

Medicaid Compliant Annuities convert countable assets into an income stream. These annuities must be irrevocable, non-assignable, actuarially sound (meaning payments do not exceed the annuitant’s life expectancy), and name the state Medicaid agency as the primary beneficiary after the annuitant or community spouse. Converting a lump sum of assets into a monthly income stream reduces countable assets below Medicaid’s limit, with the income then counted towards the income limit.

Personal Service Contracts

Personal Service Contracts, also known as caregiver agreements, can be utilized to spend down assets in a Medicaid-compliant manner. These formal, written agreements compensate a caregiver, often a family member, for services provided to the applicant. When properly structured and documented, payments are considered fair market value for services and are not treated as gifts, avoiding transfer penalties during the Medicaid look-back period. The contract details the services, payment terms, and must be in place before services are rendered.

The primary residence

The primary residence receives specific treatment under Medicaid rules, generally considered an exempt asset if the applicant intends to return home, or if a spouse or dependent relative resides there. While the home is often exempt during the applicant’s lifetime, be aware of Medicaid Estate Recovery Programs (MERP). These programs allow states to seek reimbursement from the deceased Medicaid recipient’s estate for long-term care costs paid by Medicaid. Exemptions exist, such as when a surviving spouse or a minor, blind, or disabled child lives in the home.