The prospect of needing nursing home care without the financial resources to pay for it is a serious concern for many seniors and their families. Without sufficient savings, private insurance, or other means, an individual may face potential eviction from a facility. However, a lack of funds does not automatically mean a person will be left without care. The primary safety net is Medicaid, with other programs and strategies also providing crucial support.
The Role of Medicaid in Covering Nursing Home Costs
Unlike Medicare, which only covers short-term skilled nursing care for up to 100 days, Medicaid is the largest payer for long-term nursing home care in the United States. It is a needs-based program, meaning eligibility is determined by strict income and asset limits that vary by state.
Medicaid eligibility requirements
To qualify for Medicaid to cover nursing home costs, an individual must generally meet both medical and financial criteria:
- Medical Need: An applicant must be medically assessed and determined to require a Nursing Facility Level of Care (NFLOC). This typically involves needing significant assistance with activities of daily living (ADLs) like bathing, dressing, and eating.
- Financial Requirements: The applicant must meet state-specific income and asset limits. For a single person in most states for 2025, this means having less than a certain monthly income and less than $2,000 in countable assets. For married couples, there are special protections for the non-applying spouse to prevent spousal impoverishment.
Understanding the Medicaid Spend-Down Process
If a senior's income or assets are over the state-mandated limits, they can often 'spend down' their excess resources to become eligible. This is a critical strategy when a person runs out of money while already in a nursing home. During a spend-down, funds are used for approved expenses to reduce countable assets.
How to legally spend down excess assets
Allowable expenses to help qualify for Medicaid may include:
- Paying off accrued debts, such as a mortgage or credit cards.
- Making home repairs or modifications for accessibility, such as installing a wheelchair ramp.
- Purchasing exempt assets, like a new primary vehicle or an irrevocable funeral trust.
- Paying for medical expenses not covered by Medicare, such as glasses or hearing aids.
- Buying new clothing, furniture, or other personal items.
The five-year look-back period
Medicaid enforces a 60-month (five-year) 'look-back' period to review financial transactions made before applying for long-term care. Any uncompensated transfers of assets, such as large gifts to family members, during this period can result in a penalty period of ineligibility. This is why careful planning with an elder law attorney is crucial to avoid missteps.
Options Beyond Medicaid
While Medicaid is the most common path for those without resources, other programs and assets can provide support.
Veterans' benefits
Eligible veterans and their surviving spouses may qualify for assistance through VA benefits. The Aid and Attendance benefit is a pension supplement designed to help pay for long-term care costs. Eligibility depends on service during a period of conflict and meeting certain clinical and financial needs. Veterans may also be eligible for care in Community Living Centers (VA nursing centers).
Utilizing life insurance and other assets
- Life Settlement: A senior with a life insurance policy may be able to sell it to a third party for its current value, providing a lump sum of cash.
- Accelerated Death Benefit: Some policies allow the policyholder to receive a tax-free cash advance from their death benefit while still alive, typically for a terminal illness or long-term care needs.
- Reverse Mortgage: Homeowners aged 62 and older can convert home equity into cash. The loan amount can be used to fund care, but it is repaid when the house is sold or the borrower passes away.
Non-Nursing Home Alternatives
For those with limited funds, other forms of care may be more financially feasible than a traditional nursing home.
- Medicaid Waivers: Many states offer Home and Community-Based Services (HCBS) waivers through Medicaid. These programs allow eligible individuals to receive care at home or in assisted living facilities, which can be less expensive.
- Adult Day Care: These programs provide social activities and supervision during the day, offering a lower-cost option for caregiving relief.
- Group Homes: Also known as adult family homes, these are smaller residences in residential areas that often provide care at a lower cost than larger facilities.
Comparison of Major Nursing Home Payment Methods
| Payment Method | Covers Long-Term? | Covers Short-Term? | Eligibility | Key Features |
|---|---|---|---|---|
| Medicaid | Yes | Yes (if eligible) | Needs-based (low income/assets), varies by state. | Largest payer for long-term care; requires spend-down for many. |
| Medicare | No | Yes (up to 100 days) | 65+, certain disabilities. | Only covers skilled nursing following a hospital stay; not a long-term solution. |
| Private Pay | Yes | Yes | Personal savings, investments, or income. | Offers immediate access and more facility choice but can deplete savings quickly. |
| VA Benefits | Yes | Yes | War-time veteran or spouse, requires financial/clinical needs. | Pensions and Aid and Attendance can supplement costs but may not cover full amount. |
Final options for those with no funds
When all other resources have been exhausted and a person is ineligible for Medicaid, a nursing home can legally discharge or evict them for non-payment, but they must follow strict legal procedures. In such cases, options may include:
- Hardship Waivers: In a nursing home, a resident may file a hardship waiver with their state's Department of Health and Human Services.
- Benevolent Funds: Some faith-based or non-profit facilities have benevolent funds to help cover costs for residents who can no longer pay.
- Local Resources: Social services, Area Agencies on Aging, and a Long-Term Care Ombudsman can help find a new facility, negotiate payment, or find local aid.
Ultimately, the situation of having no money for a nursing home is best addressed through proactive planning, but even in a crisis, a person is not without options. The journey often involves navigating complex government programs like Medicaid, exploring veterans' benefits, and understanding all available local resources with the help of qualified professionals like an elder law attorney or Certified Medicaid Planner.
For more information on federal Medicaid guidelines, you can visit Medicaid.gov.
