Medicaid is the largest payer of long-term care in America, but the rules are notoriously complex and vary by state. This guide breaks down the three eligibility tests every senior must meet.
What are the three tests for Medicaid long-term care eligibility?
Medicaid long-term care eligibility rests on three tests, and you must pass all three. First is the income test: in 2026 a single applicant generally must have monthly income at or below roughly $2,982 (300% of the SSI federal benefit rate), though limits differ by state and program. Second is the asset test: countable assets must usually fall at or below $2,000 for an individual. Third is the functional or medical test, meaning a doctor or state assessor confirms you need a nursing-home level of care or hands-on help with daily activities. Each state administers Medicaid differently, so the exact thresholds and the name of the program vary. Call 1-800-MEDIGAP to confirm your state's rules.
What counts as income and assets for Medicaid?
Countable income includes Social Security, pensions, annuities, and most other regular money you receive. Countable assets include cash, bank accounts, stocks, bonds, and second properties. Some assets are exempt and do not count: your primary home (up to an equity limit, often if a spouse lives there), one vehicle, personal belongings, and prepaid irrevocable burial plans. Retirement accounts may or may not count depending on your state and whether they are in payout status. Because the line between countable and exempt assets is where most families make costly mistakes, it is worth a free call to 1-800-MEDIGAP (1-800-633-4427) before you spend down or transfer anything.
Does Medicaid have a look-back period?
Yes. Medicaid uses a 5-year (60-month) look-back period for long-term care in nearly every state. When you apply, the agency reviews all financial transactions for the prior five years. Any assets you gifted or sold for less than fair market value can trigger a penalty period of Medicaid ineligibility. The penalty length is calculated by dividing the gifted amount by your state's penalty divisor (the average monthly cost of nursing home care, which ranges from roughly $7,900 to over $14,000 depending on the state). Importantly, the IRS $19,000 annual gift exclusion does not protect you from Medicaid penalties. Plan early.
How does Medicaid protect the healthy spouse?
Medicaid includes spousal impoverishment protections so the healthy spouse (the community spouse) is not left destitute. In 2026, the community spouse can keep a Community Spouse Resource Allowance between $32,532 (minimum) and $162,660 (maximum), in addition to the exempt home and car. The community spouse may also keep a Minimum Monthly Maintenance Needs Allowance of income, set between $2,643.75 and $4,066.50 per month in 2026. These figures change yearly and several states apply more generous limits. Married couples should never assume both spouses must spend down to $2,000. Call 1-800-MEDIGAP to understand exactly what your household can protect.
How do I apply, and where can I get free help?
You apply for Medicaid long-term care through your state Medicaid agency, your local Area Agency on Aging, or the federal portal at Medicaid.gov. You will need proof of income, five years of bank statements, asset documentation, and a medical assessment confirming your level of care need. The application is detailed and a single error can delay coverage for months. Many seniors also qualify for both Medicare and Medicaid (dual eligibility), which changes how benefits coordinate. The fastest, no-cost way to get it right is to call 1-800-MEDIGAP (1-800-633-4427) and let a licensed specialist walk you through your state's process.