Eligibility Overview: The Money Test, the Care Test and the Residency Test

To get Long-Term Care Medicaid, an applicant has to pass three separate tests. The money test looks at income and assets. The care test looks at medical need. The residency test looks at where the person lives and their citizenship or immigration status. Failing any one means a denial, even if the other two are easily met. This guide walks through each test in plain terms and points to the detailed guides.

Figures change periodically. Double-check current amounts before relying on them.

Before the three tests: the “category”

Long-Term Care Medicaid is for people who are 65 or older, blind or disabled. Most applicants for nursing home or home care qualify by age. Younger applicants usually need a disability finding, often from Social Security.

Test 1: The money test

The money test has two parts: assets and income. Both must be met.

Assets

Countable assets must be at or below the state’s limit on the date that counts (often the first day of the month). In 2026:

many states use $2,000 for a single applicant, the same as the federal SSI limit;
where the single limit is $2,000, the limit for a couple who both apply is usually $3,000;
some states use higher amounts, and a few states use very different rules. See Asset limits by state.

Countable assets include cash, bank accounts, stocks, bonds, many retirement accounts, the cash value of some life insurance, and property other than the home. Exempt assets usually include the home (within limits), one car, personal belongings and a qualifying burial fund. See What counts as an asset? and Exempt assets.

For married couples, the spouse at home can keep a share of the couple’s assets, the Community Spouse Resource Allowance (CSRA), which in 2026 ranges from $32,532 to $162,660 depending on the state and the couple’s assets. See The CSRA.

Income

States use one of two main approaches for nursing home and waiver care:

A hard income cap. Many states use a limit of 300% of the SSI federal benefit, which is $2,982 a month in 2026. A person with income above it may still qualify by setting up a Qualified Income Trust (also called a Miller trust), depending on the state.
Medically needy (spend-down). Other states let people with higher income qualify once their medical bills, including nursing home costs, use up the income above a set level. See The medically needy pathway.

Once a person qualifies, most of their income goes toward the cost of care (the patient liability), after allowances for personal needs and, for married couples, the spouse at home.

The look-back

The money test also looks backward. The state reviews gifts and transfers for less than fair market value in the 60 months before the application. Transfers that are not exempt can cause a penalty period with no Medicaid payment for long-term care. See The five-year look-back.

Home equity

If no spouse or protected child lives in the home, the applicant’s home equity must be under the state’s limit: between $752,000 and $1,130,000 in 2026. See Home equity limits.

Test 2: The care test

The applicant must need the level of care the program provides. For nursing home Medicaid and most waivers, this means nursing home level of care (NFLOC). Each state sets its own definition, but most look at:

how much help the person needs with activities of daily living (ADLs), such as bathing, dressing, eating, using the toilet, moving from bed to chair, and continence;
cognitive impairment, such as dementia, and whether the person needs supervision for safety;
medical needs, such as skilled nursing tasks or unstable conditions;
behavior, such as wandering.

The assessment is usually done by a nurse or social worker using a state form, often in person. See Nursing home level of care and Activities of daily living.

A person can meet the money test easily and still be denied because they do not need enough care. And the reverse is common too: someone clearly needs care but has too many assets.

Test 3: Residency and citizenship

State residency

The applicant must live in the state and intend to stay. There is no minimum length of residence. For someone who moves to a nursing home in another state to be near family, residency usually shifts to the new state once they move there with the intent to stay. If the person cannot express intent, special rules apply, often based on where a guardian or family placed them.

Citizenship and immigration status

Applicants must be U.S. citizens or nationals, or qualified non-citizens who meet federal rules. Some qualified non-citizens must wait five years before getting full Medicaid. Proof of citizenship and identity is required, but people who receive Medicare or SSI are generally exempt from having to submit it again. See Citizenship and residency rules.

Applicants generally must provide a Social Security number or apply for one.

Putting it together: a worked example

Walter, 81, is a widower in a state that uses a $2,000 asset limit and the $2,982 income cap. He has:

$1,850 a month in Social Security and a pension;
$11,000 in a savings account;
a paid-off car;
a house where his daughter lives (she is 54 and not disabled);
no gifts in the past five years.

His doctor says he has advanced dementia and needs help with bathing, dressing, toileting and eating.

Test	Result
Category	Passes (age 81)
Assets	Fails until savings drop to $2,000; the car is exempt
Home	Exempt while he intends to return, in his state; his daughter’s presence does not protect it from estate recovery unless she qualifies as a caregiver child
Income	Passes ($1,850 is under $2,982)
Look-back	No transfers
Care test	Passes, needs help with several ADLs
Residency	Passes

Walter’s family uses part of his savings to prepay his funeral and buy needed clothing and hearing aids, pays the nursing home for the month, and applies when his countable assets are under $2,000. His daughter speaks with a Certified Medicaid Planner (CMP) about whether she qualifies for the caregiver child exemption, since she moved in three years ago to care for him.

Common reasons applications are denied

Assets over the limit, often because of a forgotten account or life insurance policy.
Missing documents or missed deadlines.
A transfer in the look-back period that was not explained.
The care assessment found the person did not need nursing home level of care.
Income over the cap in a state that requires a Qualified Income Trust, with no trust set up.

A denial can be appealed. Most notices give a short deadline, so act quickly.

Common questions

Do I have to be poor to qualify? You have to meet the limits at the time you apply, but many people who once had substantial savings qualify after spending on care or through legal planning.

Is the asset limit checked once or every month? It is checked at application and at each renewal, and you must report changes. In most states, the asset test is applied as of a point in each month.

Does my spouse’s income count? For the applicant’s eligibility, most states count only the applicant’s income. See Income for couples.

Can I qualify if I own a home? Usually yes. See The home exemption.

What if I fail the money test now but expect to pass soon? You can plan for that date. A Certified Medicaid Planner (CMP) can help time the application.

A checklist before applying

List all income sources with current amounts.
List all assets with balances on the first of the month.
Gather five years of statements for every account.
Get the doctor’s notes on care needs.
Gather proof of identity, citizenship and residency.
Check your state’s figures in its state guide.
Talk with a Certified Medicaid Planner (CMP) before moving money.

What happens after the tests are met

Meeting the three tests is not the end. After approval:

the state sends a notice with the start date and the monthly patient liability;
the person must report changes in income, assets, address or living arrangement, usually within a short deadline;
eligibility is renewed, generally once a year, with updated statements.

Keeping assets under the limit after approval matters. A refund, an inheritance or a growing bank balance can cause a loss of coverage if it is not handled in time.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.