What Happens If Someone Needs a Nursing Home but Has No Money?

Oct 13, 2025 4 min read •

senior care healthcare Financial Planning

With over 60% of U.S. nursing home residents relying on Medicaid, it's a critical lifeline. Discover what happens if someone needs a nursing home but has no money and the steps to secure care through government programs and other options.

Quick Summary

If someone needs a nursing home with no money, their primary option is Medicaid, a joint federal and state program that covers long-term care costs for eligible low-income individuals after they meet strict asset and income limits.

Key Points

Medicaid is Primary: For individuals with no money, Medicaid is the most common program that pays for long-term nursing home care.
Strict Eligibility: Qualifying for Medicaid involves meeting both medical necessity criteria and very low state-specific income and asset limits (often around $2,000 in assets).
Asset Spend Down: Individuals with assets over the limit must 'spend down' on permissible expenses, like paying off debt or pre-paying funeral costs, to become eligible.
Eviction Protections: Federal law prevents Medicaid-certified facilities from evicting residents simply because they switch from private pay to Medicaid.
Income Contribution: Once on Medicaid, most of a resident's income, including Social Security, goes to the nursing home, with a small personal needs allowance retained by the resident.
Alternatives Exist: Medicaid waivers can help pay for less intensive alternatives like in-home care or assisted living for those who don't require a nursing home.
Professional Help is Crucial: Navigating the complex rules of Medicaid and asset protection often requires guidance from an elder law attorney.

The Reality of Nursing Home Costs

Facing the need for a nursing home is a difficult reality for many families, made even more stressful by the high cost of care. With the average semi-private room costing over $8,000 per month, personal savings can be depleted quickly. This raises a critical question: what happens if someone needs a nursing home but has no money? Fortunately, several government programs, primarily Medicaid, are designed to assist in these situations.

Medicaid: The Primary Safety Net

Medicaid is the largest payer for long-term nursing home care in the United States, covering a majority of residents. It's a joint federal and state program created to help low-income individuals and families access healthcare. Unlike Medicare, which only covers short-term skilled nursing stays (up to 100 days) following a qualifying hospital visit, Medicaid can cover long-term custodial care for as long as it's needed.

Qualifying for Medicaid

Eligibility for long-term care Medicaid is complex and varies by state, but it generally revolves around two main criteria:

Medical Need: An applicant must be assessed by a healthcare professional and deemed to require a nursing home level of care. This usually means they need assistance with multiple Activities of Daily Living (ADLs) such as bathing, dressing, eating, or mobility.
Financial Limits: The applicant must meet strict income and asset limits. In most states for 2025, a single individual can only have around $2,000 in countable assets. Income limits are also in place, often around $2,901 per month, though some states have no hard limit but require nearly all of the individual's income to be paid to the nursing home.

What is a 'Medicaid Spend Down?'

Many people have assets that exceed the low threshold required to qualify for Medicaid. In this case, they must "spend down" their assets to become eligible. This doesn't mean you have to lose everything. A spend down involves using excess assets on permissible expenses until you fall below the state's limit.

Allowable Spend-Down Expenses Include:

Paying off existing debts (mortgage, car loans, credit cards).
Pre-paying for funeral and burial expenses.
Making accessibility modifications to a home (if a spouse or dependent lives there).
Purchasing a new vehicle or personal items.
Paying for medical care and equipment not covered by other insurance.

It is crucial to follow state rules carefully during a spend down. Simply giving money away to family and friends can trigger a penalty period due to Medicaid's five-year "look-back" period, which scrutinizes asset transfers.

The Role of Other Programs

While Medicaid is the most common solution, other resources can help:

Veterans (VA) Benefits: Veterans who meet certain criteria may be eligible for financial assistance for nursing home care through VA programs like Aid and Attendance.
Social Security: While Social Security income alone is rarely enough to cover nursing home costs, it is counted as income for Medicaid eligibility. Once a resident is on Medicaid, most of their Social Security check will go to the nursing home to contribute to the cost of care, with the resident allowed to keep a small Personal Needs Allowance (typically $30-$200 per month).

Can a Nursing Home Evict a Resident Who Runs Out of Money?

A common fear is that a nursing home will evict a resident once their private funds are exhausted. Federal laws provide protections. A nursing home that accepts Medicaid cannot evict a resident simply because they have transitioned from private pay to Medicaid. The facility must provide a 30-day written notice and assist in finding an appropriate alternative placement if a discharge is necessary for other valid reasons. A facility also cannot evict a resident while a Medicaid application is pending.

Alternatives to Nursing Home Care

For those who may not require 24/7 skilled nursing, several less expensive alternatives may be viable. Many of these can be paid for using Medicaid Home and Community-Based Services (HCBS) waivers, which help people receive care outside of an institutional setting.


Care Option	Typical Setting	Description & Suitability
Assisted Living	Residential Community	Offers housing, meals, and help with ADLs. Best for those who need some support but not constant medical care.
In-Home Care	Individual's Home	Aides visit the home to help with personal care, chores, and companionship. Good for those who wish to age in place.
Adult Day Care	Community Center	Provides supervision, meals, and social activities during the day for seniors living at home.
Residential Care Homes	Small Group Home	A home-like setting for a small number of residents, offering personalized care and supervision.

Conclusion: Planning is Key

Navigating the path to long-term care without significant personal funds is daunting but possible. The system is complex, with Medicaid serving as the cornerstone of support. Understanding the eligibility rules, the spend-down process, and your rights is essential. Because regulations vary by state and are subject to change, consulting with an elder law attorney or a financial planner specializing in senior care is highly recommended to protect assets legally and ensure a smooth transition to the care needed. For official information and state-specific guidelines, a valuable resource is the official Medicaid website.

Frequently Asked Questions

If you are on Medicaid, the nursing home will receive most of your Social Security income as payment toward your care. However, you are legally entitled to keep a small monthly Personal Needs Allowance, which varies by state but is typically between $30 and $200.

Medicare only covers short-term (up to 100 days) skilled nursing and rehabilitation following a qualifying hospital stay. Medicaid is the primary payer for long-term custodial care for those who meet the financial and medical eligibility requirements.

Medicaid has a five-year 'look-back' period. If you give away assets or sell them for less than fair market value within five years of applying, you will likely face a penalty period, making you ineligible for Medicaid coverage for a certain length of time.

Not necessarily. In many states, your primary residence is an exempt asset for Medicaid eligibility, especially if a spouse or dependent child lives there. However, after the Medicaid recipient passes away, the state may seek to recover costs from the estate through a process called Medicaid Estate Recovery.

While nursing homes are not required to accept Medicaid, most do. However, they may have a limited number of Medicaid-certified beds. A facility cannot, however, evict a current resident who transitions from private pay to Medicaid if the facility is Medicaid-certified.

Generally, no. Federal law prohibits nursing homes from requiring a third party, like a child, to personally guarantee payment for a resident's care. Children are not responsible for their parent's nursing home bills unless they have co-signed as a financially responsible party.

Some states have 'Medically Needy' programs or allow the use of a Qualified Income Trust (QIT), also known as a Miller Trust. These mechanisms allow you to spend down your excess income on medical expenses or place it into a trust to become eligible for Medicaid.

References

Medical Disclaimer

This content is for informational purposes only and should not replace professional medical advice. Always consult a qualified healthcare provider regarding personal health decisions.