Assisted living facilities are residential settings that provide non-medical support and personal care services for individuals who cannot live independently but do not require the intensive medical care of a nursing home. These facilities offer help with activities of daily living, such as bathing, dressing, and medication management, alongside meals, social activities, and supervision. While assisted living facilities accept Medicaid in most states, the program does not provide direct payment for the total cost. Financial assistance is highly dependent on the resident’s state of residence, the specific Medicaid programs available, and the individual’s level of care needs.
How Medicaid Funding Works for Assisted Living
Medicaid is a joint federal and state program designed primarily to cover medical costs for low-income individuals. Historically, the program was structured as an entitlement to cover institutional long-term care, specifically in nursing facilities. This means that anyone who meets the financial and functional eligibility criteria for a nursing home receives coverage.
To avoid the expense of institutionalization and allow people to receive care in community settings, states utilize special programs known as Home and Community-Based Services (HCBS) Waivers. These waivers allow states to provide long-term services and supports outside of a nursing home, including in assisted living facilities. The use of HCBS waivers makes funding for assisted living an optional benefit for each state, rather than a federal entitlement.
HCBS waivers often have limits on the number of people who can enroll, which can result in waiting lists for services even if an applicant meets all eligibility requirements. A person must generally meet a “nursing facility level of care” to qualify for one of these waivers, meaning they require the level of support typically provided in a nursing home. The waiver allows them to receive it in the assisted living setting instead. The HCBS waiver system is the primary mechanism through which Medicaid is able to financially assist residents in assisted living, effectively diverting funds that would otherwise be spent on more expensive institutional care.
Covered Services Versus Uncovered Housing Costs
The financial assistance provided by Medicaid through HCBS waivers in assisted living is not a comprehensive payment for the entire stay. Federal law generally prohibits Medicaid from directly covering the costs associated with “room and board” in an assisted living facility. This means the resident remains financially responsible for the housing component of assisted living.
The waiver funds are directed toward the cost of services and supports that assist the resident with daily life. Services typically covered by the HCBS waiver include:
- Personal care assistance, such as help with bathing, dressing, and eating.
- Medication management.
- Case management.
- Therapeutic services.
- Transportation for non-medical needs.
The resident must cover the room and board costs, which include rent, utilities, and meals. Residents typically use their own income sources, such as Social Security benefits or Supplemental Security Income (SSI), to pay for these costs. Some states have developed programs to provide supplemental assistance for room and board, but this funding is usually state-funded, not covered directly by the federal Medicaid program.
State-Specific Eligibility and Application Steps
Eligibility for Medicaid-funded assisted living services is determined by two main criteria: a functional assessment and strict financial limits. The functional assessment confirms the individual requires a nursing facility level of care, which validates the need for the services provided by the waiver program. This assessment is conducted by the state’s designated agency, such as the Area Agency on Aging.
The financial criteria require applicants to have limited income and assets. For HCBS waivers, income limits are often set at 300% of the Federal Benefit Rate (FBR), while asset limits are typically capped at $2,000 for an individual. Some states offer a “Medically Needy” or “spend-down” program, which allows individuals with income exceeding the limit to qualify after incurring out-of-pocket medical expenses that reduce their countable income.
Application Process
The application process requires two steps: applying for general Medicaid eligibility and applying for the specific HCBS waiver. Applicants should contact their State Medicaid Agency or local Area Agency on Aging (AAA) to begin the process and obtain the correct application forms. Because waiver programs can have waiting lists, applying as soon as the need is identified is beneficial.
Locating a Facility
To locate a facility, applicants must search for assisted living communities that are “Medicaid-certified” or “HCBS-compliant.” These facilities are licensed by the state and certified to accept the state’s specific waiver program. The names of these programs differ significantly between states—for example, “Indiana PathWays for Aging” or the “HCBS Waiver for Persons who are Elderly”—so using the state-specific program name in the search is necessary. The facility must be certified to receive reimbursement for the covered services provided to the resident.