Medicaid explained — the safety net when Medicare isn't enough

This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.

When your parent's Medicare bill arrives, it might feel like everything's covered. Then your mom needs six months of nursing home care, or your dad requires ongoing help with meals and bathing at home. Suddenly you realize Medicare stops paying. That moment—that sinking realization that insurance you thought covered healthcare actually doesn't cover what matters most—is when most adult children first hear about Medicaid.

The word itself can feel overwhelming. It sounds bureaucratic, complicated, possibly shameful. You might worry it means your parent is being downgraded or losing control. You might fear it's only for people with nothing. You might assume you already know what it is because you've heard the name your whole life.

But here's what nobody tells you: Medicaid is probably the single most important financial safety net for your parent's long-term care. Not Medicare. Not private insurance. Medicaid. And while it absolutely is complicated, it's not a reflection on your family or your parent's status. It's a program designed specifically for what Medicare doesn't cover, and understanding it now,before crisis hits,might be the most practical thing you do for your parent's future.

What Medicaid Actually Is: Different From Medicare in Almost Every Way

Let's clear something up first. Medicaid and Medicare sound like they should be related, but they're not the same program at all. They're not even run the same way.

Medicare is a federal health insurance program you access because you're sixty-five years old or have specific disabilities. You paid into it through payroll taxes your whole working life. It's the same everywhere in the country, mostly, and it follows federal rules. Medicare covers hospital care, doctor visits, skilled nursing care for limited periods, and prescription drugs. It's healthcare insurance.

Medicaid is different in almost every meaningful way. It's health insurance for people with low incomes. Each state runs its own Medicaid program. California's Medicaid looks nothing like Texas's Medicaid, which looks nothing like New York's. They follow the same federal guidelines in broad strokes, but the details,how much money you can have, what counts as income, what services are covered,those vary significantly from state to state. You don't get Medicaid because you worked and paid taxes. You get it because you don't have enough money, and your state decides to help you pay for healthcare.

What makes Medicaid truly different from Medicare is what it covers. Medicare doesn't cover long-term custodial care. That means if your parent needs someone to help them get dressed, take a shower, eat meals, and remember to take medications for months or years, Medicare will not pay for that. Medicare pays for short-term skilled nursing care after a hospital stay, but once that's finished, you're on your own. This is the gap. This is enormous, and this is why Medicaid exists.

Medicaid covers what Medicare won't. Full coverage for nursing home care. Assisted living in many states. Extensive home health services focused on daily living, not just medical needs. Dental care, vision care, hearing aids, and durable medical equipment. Things your parent might need for years. This is where Medicaid becomes not just helpful but often absolutely essential.

Your Parent's Eligibility: Income and Assets Create a Two-Part Test

Medicaid eligibility comes down to two things: does your parent have low enough income and low enough assets? Both matter. Both are state-specific. And both can change.

Income limits vary by state. Some states use one hundred percent of the federal poverty level. Others use three hundred percent. For 2024, the federal poverty level for a single person is about $15,000 a year. So if your state uses one hundred percent, your parent needs income under $15,000. If your state uses three hundred percent, they could have income up to around $45,000 and still qualify. These numbers change yearly, and they're different for single people versus married couples.

The income part gets complicated immediately because states disagree on what counts as income. Does Social Security count? Usually yes. Does a pension count? Usually yes. What about money from investments? Most states say yes, but the exact calculation varies. What about gifts from your family? Different states treat this differently. This is why so many families need help,not because they're trying to hide money, but because the rules are genuinely confusing.

Asset limits are often the bigger barrier. Most states say your parent can have somewhere between $2,000 and $3,000 in cash and other liquid assets and still qualify for Medicaid. Some states are slightly higher. But that's it. No large savings accounts. No significant investments. The home doesn't count,your parent can't be forced to sell their house to qualify for Medicaid. One car usually doesn't count. But if your parent has a second property, money in savings, or investments, those count and they matter.

This asset limit is usually the reason planning starts before crisis hits. If your parent has $100,000 in savings and might need nursing home care in a few years, they don't qualify for Medicaid yet. They're above the asset limit. So they'll pay privately for care while their savings run down. When the money gets closer to the state limit, they can apply. But there are rules about how fast you can move money around, which we'll get to. The point is: assets determine eligibility in a concrete, measurable way.

What Medicaid Covers That Medicare Never Will

Here's what finally makes sense of the whole system: Medicaid covers long-term care. Not temporary care. Not short-term rehab. Long-term. Years. For as long as your parent needs it, as long as they stay eligible.

A nursing home typically costs $8,000 to $12,000 per month, depending on where you live. Some places are more. Medicare won't pay a dime for basic custodial care once skilled nursing is complete. A private insurance plan won't cover long-term custodial care because the premiums would be astronomical. Your family couldn't save enough money unless you'd been preparing specifically for this. Medicaid will cover all of it, indefinitely, as long as your parent qualifies and stays qualified.

Medicaid also covers assisted living in most states, though the exact coverage and co-pay rules vary. Your parent might live in an assisted living community where staff help with medications, meals, bathing, and activities, and Medicaid pays most or all of the cost. This is a massive benefit for families who want their parent in community-based care but can't afford the $3,000 to $6,000 monthly costs.

Dental, vision, and hearing coverage is another place Medicaid goes beyond Medicare. Medicare doesn't cover routine dental work, eye exams, or hearing aids. Medicaid does. For someone on a fixed income who suddenly needs new glasses or has a tooth problem, this coverage matters.

Home health services expand significantly under Medicaid. Medicare pays for skilled home health nurses and physical therapists for limited periods. Medicaid covers home health aides for extended periods, helping with bathing, dressing, meal preparation, and other daily living activities. Some states are more generous with this than others, but the difference between Medicare's short-term home health and Medicaid's longer-term coverage is substantial.

How Medicaid Coordinates With Medicare: The Secondary Payer Concept

Most people don't realize that your parent can qualify for both Medicare and Medicaid simultaneously. In fact, many people do. These people are called "dual eligible," and understanding how the programs work together saves confusion and potential overpayment.

When your parent qualifies for both, Medicare is the primary payer. That means Medicare pays for things it covers. Medicaid is secondary. Medicaid pays what Medicare won't or doesn't cover, up to whatever limit Medicaid sets. So if your parent has a hospital stay, Medicare pays most of the cost. Medicaid covers any gaps or copayments that Medicare requires. If your parent receives home health services, Medicare might pay for skilled nursing, and Medicaid might pay for a home health aide.

This coordination sometimes gets messy because the programs have different rules, different processes, and different requirements. A skilled nursing facility might be covered by Medicare for twenty-one days after a hospital stay, then covered by Medicaid after that if your parent qualifies. The facility has to track all of this correctly. Mistakes happen. This is another reason having someone,a social worker, an elder law attorney, or even a knowledgeable advocate,help manage the paperwork can be valuable.

Medicaid Planning: Getting Help Understanding This System

Let's be honest. The Medicaid system is complicated in ways that feel almost designed to confuse people. Rules vary by state. Rules change yearly. Income is calculated one way in one state, differently in another. Asset limits differ. Coverage varies. When most people say they don't understand Medicaid, they're not being modest. They're being accurate. The system is genuinely hard to understand without specialized knowledge.

This is precisely why elder law attorneys exist. These are lawyers who specialize in helping older adults and their families plan for long-term care, understand Medicaid, and legally protect assets. A good elder law attorney can review your parent's specific situation and explain how Medicaid works in your state. They can help determine if your parent qualifies now, or if some planning would help. They can explain the look-back period and help you understand whether past transactions will affect eligibility.

An elder law attorney isn't a luxury service. Think of it this way: mistakes in Medicaid planning are expensive. If your parent gives away assets in the wrong way, they might be ineligible for Medicaid for months or years. Those months or years could cost $100,000 or more in nursing home care. A consultation with an elder law attorney, which might cost $500 to $2,000, can save your family tens or hundreds of thousands of dollars. Many attorneys offer free initial consultations. It's worth asking.

Your state's bar association has referral information. The National Elder Law Foundation certifies specialists. Local Area Agencies on Aging usually know good attorneys in your region. Start there.

The Bottom Line: Why Medicaid Matters More Than You Probably Realize

If you think long-term care is something that happens to other people's parents, you're almost certainly wrong. Research suggests that about two-thirds of people over sixty-five will need some form of long-term care before they die. Some will need just a few months. Others will need years. The average is two years, but many people need much longer.

Long-term care costs more than most families have saved. It costs more than Social Security and pensions cover. It costs, potentially, everything your parent spent their life accumulating. Private insurance for long-term care is expensive and often has restrictions. Medicaid, as complicated and frustrating as it is, exists to prevent families from being financially destroyed by care costs.

Understanding the system now, before you're in crisis, changes everything. You can have conversations with your parent about whether they want to plan ahead. You can understand what assets matter and what doesn't. You can know whether waiting until care is needed makes sense or whether early planning would help. You can find an attorney who specializes in this and get actual answers instead of guessing.

The families who manage long-term care best aren't the ones with the most money. They're the ones who understand what's actually going to happen and plan accordingly. Medicaid is part of understanding. It's available to your parent if they need it, and knowing that changes the conversation completely.

How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.