Medicaid Spend-Down and Look-Back Rules for Long-Term Care

Here's the short version. Medicaid pays for long-term care only for people with low income and limited assets. Spend-down means lowering your countable assets to your state's Medicaid limit before coverage starts. The look-back is the state's review of your past financial records when you apply: giving away money or property to qualify faster can trigger a penalty — a waiting period before Medicaid pays. Every state sets its own limits and applies these rules differently, so the details below are the framework, not your state's exact numbers.

Why These Rules Exist

Medicare does not cover long-term custodial care — ongoing help with bathing, dressing, or eating. Medicaid is the main program that pays for that care, in nursing facilities or at home. Because Medicaid is meant for people with limited means, states check both income and assets before they pay. Our guide on whether Medicare covers nursing home care explains that first piece of the puzzle.

What Counts as an Asset — and What Doesn't

Assets (also called resources) are things you own: bank accounts, investments, vehicles, and property. Most financial resources count toward your state's asset limit. But some items are exempt (they don't count). Exempt items typically include:

• Your primary home, up to a value your state sets — and it usually doesn't count at all if a spouse or dependent child lives there.
• One vehicle.
• Some personal items.

Each state defines its own limits and exemptions, and they change yearly. Find your state's agency in our State Medicaid Directory.

How Spend-Down Works

If your countable assets are above your state's limit, you may need to spend down — lower them — before Medicaid long-term care coverage begins. Money spent on medical bills, burial costs, and personal expenses generally counts as legitimate spend-down. Once you reach your state's limit, Medicaid covers the full cost of qualifying nursing facility care. Most private insurance does not.

The Look-Back and Transfer Penalties

Spending your money on your own care and expenses is allowed. Giving assets away is different. When you apply, the state looks back at your financial history. Improper transfers or gifts — like signing the house over to your children to qualify faster — can cause a waiting period (a "look-back" penalty) before Medicaid will pay.

How far back states look, and how penalties are calculated, is set by federal and state rules and differs by program and state. Because the stakes are high, check the current rules with your state Medicaid office or Medicaid.gov before moving any assets — not after.

Estate Recovery: The After-Death Rule

There's one more rule families should know. When Medicaid pays for long-term care for someone age 55 or older, the state may seek repayment from their estate after death — usually through the sale of the home. Recovery may not happen if a surviving spouse, minor child, disabled child, or a sibling who lives in the home and helped maintain it is still there. Like everything else here, the rules differ by state. Full guide: Medicaid estate recovery — can Medicaid take my house?

Planning Ahead

Spend-down and look-back rules are complex, high-stakes, and different in each state. Many families consult an elder law attorney or financial advisor before applying — especially when a home, a spouse remaining in the community, or planned gifts are involved. If a spouse is staying at home, see Medicare for Couples for how coverage decisions interact for two people.

If you may qualify for both Medicare and Medicaid, you're potentially dual eligible — see Dual Eligible: Medicare and Medicaid, and try our Getting Help Paying questionnaire.

Common Questions