Long Term Care Planning

Long-Term Care Insurance and Medicaid (Definitive 2023 Guide)

Long-Term Care Insurance and Medicaid (Definitive 2023 Guide)

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— Last Updated May 27, 2022

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8 mins
Reviewed by
Eric Berkman

Guide Long-Term Care Insurance and Medicaid (Definitive 2023 Guide)

— Last Updated May 27, 2022

Stephanie Wilson

Director of Operations


Reviewed by

Eric Berkman

Long term care insurance and Medicaid are two options available to those in need of more intensive medical treatment such as nursing home care and other long-term situations. However, there are some key differences that you have to consider before deciding which is best for you. 

What is the Connection Between Long Term Care Insurance and Medicaid? 

As you read through this guide, you’ll notice that long term care insurance and Medicaid are technically completely different concepts, but there are a lot of overlaps in their designs and what they can help with. Here’s a quick overview of what each one is designed to be and some of the overlapping features that connect them.

Defining Long Term Care Insurance and Medicaid

Medicaid is a government-funded healthcare program designed to provide low-income individuals and families with health coverage. It expands far beyond long-term care, and it allows policyholders to receive free or reduced-cost medical treatment for a wide range of issues; including but not limited to: Regular checkups, vision, dental, emergency care, mental health services, and yes, long-term care. However, its position as a government-funded program makes it rely on the same treatment networks, referral systems, and similar drawbacks of Medicare. 

In contrast, long-term care insurance is private insurance provided via insurance companies. This type of insurance functions like other traditional insurance programs and policyholders are required to pay monthly premiums, deductibles, and other out-of-pocket fees. It’s also almost exclusively meant to cover those in need of long-term care such as nursing home patients

How They Work Together

In most situations, long term care insurance and Medicaid are used separately. You’ll typically have either private insurance or Medicaid. However, Medicaid does have its own long-term care insurance features that bring the two together. 

  • Needs-Based Coverage:

Since Medicaid is based on your specific needs, long-term care will be provided if and when it becomes necessary. In many ways, it works the same way as the privatized version of long-term care insurance, but it is far more limited. 

  • Covered Care:

Both options tend to cover the same types of long-term care. This includes nursing home residency, at-home care, and certain long-term outpatient treatments. 

  • Co-operative Features

While uncommon, you may qualify for Medicaid despite having a private long-term care policy. When this happens, you open your list of available options dramatically, and you can use the free or reduced-cost features of Medicaid while reserving your private insurance for situations where Medicaid is inappropriate. 

How They Add Up

When used together, and when applicable, long term care insurance and Medicaid create an all-encompassing form of coverage that minimizes costs while maximizing coverage. However, that typically isn’t an option because most people who qualify for Medicaid cannot afford long term care insurance.  And, Medicaid offers more coverage in general at the cost of flexibility and options. Private long-term care insurance is more reliable than Medicaid when it comes to long-term care coverage, but it usually lacks the all-encompassing, needs-based, theme of Medicaid. 

Does Long-Term Care Insurance Affect Medicaid Eligibility? 

Having private long-term care insurance usually affects your eligibility for Medicaid for multiple reasons, but that’s not always the case. 

First, to qualify for Medicaid, you need to be below 133% of the federal poverty line. Most individuals who can afford private long-term care insurance comfortably won’t fall below that required line; making Medicaid a non-option. 

If you are within the financial requirements, and your private long-term care insurance is covering your costs sufficiently, you will usually be ineligible for Medicaid as well. 

However, Medicaid will bypass these restrictions if you require long-term care and your private policy doesn’t sufficiently cover it. This means if you have private insurance but still find yourself paying unreasonable out-of-pocket costs that damage your financial state considerably, Medicaid could step in and cover those extra costs. 

In the end, it mostly comes down to your financial state and whether or not your private insurance is capable of covering your long-term care effectively. 

Who Qualifies for Medicaid Long-Term Care Insurance? 

Medicaid’s long-term care insurance is fairly easy to qualify for if you’re in the lower-income brackets. 

In general, Medicaid requires you to fall below 133% of the federal poverty line to qualify for any of its coverage. This is the same requirement for people of any age, people looking for general healthcare, or people looking for long-term care. 

For a long-term care plan specifically, you must be over the age of 21, and there must be a disability or other reason, such as advanced age, for you to qualify. In short, even if you fall below the poverty line, Medicaid won’t pay for unnecessary nursing home stays or other unnecessary long-term care. There has to be a reason for it. 

With that being said, there is another way to get Medicaid coverage for long-term care. If you have your own private long-term care insurance policy, and that policy leaves you paying hefty out-of-pocket costs, it is possible to qualify for Medicaid as a supplement to your private policy. 

In this situation, you won’t receive full Medicaid coverage, but Medicaid will step in to cover the extra costs left behind by your private insurance. 

Is Long-Term Disability Good for Your Maternity Leave? 

In short, yes. Especially if taking unpaid maternity leave will damage your financial state. 

Long-term disability coverage is available from both private insurers and the Medicaid program, and it’s designed to help you financially if you’re forced to leave work for medical reasons. This includes maternity leave. 

It works similarly to unemployment. During the duration of your situation, your insurer will pay you cash benefits to help alleviate the financial stress that stems from not working. When the situation is over, you lose the benefits and return to work. 

This can help pregnant mothers, or mothers in the prenatal stage take care of their health without struggling to make ends meet financially. Better yet, you don’t have to pay those cash benefits back in most situations. Just make sure you follow your policy’s guidelines for long-term disability payments, and you’ll be covered throughout your maternity leave without having to worry about being indebted later on. There are also great benefits of insurance.

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What Does Long-Term Medicaid Cover?

Private long-term care insurance is extremely flexible with its coverage so remember that when applying for disability insurance. This is due to how private insurers can add various features at their discretion, and you can choose from various plans. 

However, Medicaid’s long-term care insurance is a lot more restricted based on your needs. 

Beyond general coverage Medicaid offers to all low-income policyholders, its long-term coverage plans are focused on the necessities; although, exceptions are made when needed. 

Co-Habitat Rooms: 

In nursing home environments and similar situations, Medicaid will cover co-inhabited rooms. These are rooms that you share with other patients. It will not cover private rooms unless medically necessary, though. 

Respiratory Care: 

If you require respiratory care for long-term illnesses or even sudden emergencies, Medicaid will cover the costs of treatment. 

Standard Food: 

While receiving long-term care, Medicaid will pay for all standard food items offered by the treatment provider. However, special food items, such as special requests that aren’t on the menu, will not be covered. The exception to this is food required for medical reasons as approved by medical personnel. 

Prescription Drugs: 

Any prescription drugs you require throughout your long-term care are covered by Medicaid. In some instances, non-prescription medications offered by the treatment service are also covered. Items such as over-the-counter pain relievers fall into the latter category. 

Physical Therapy: 

If part of your long-term care situation requires physical therapy or occupational therapy, Medicaid will cover those services. 

Clinic Services: 

Clinic services are covered by Medicaid. 

Nursing Home Fees: 

Nursing home fees are covered by Medicaid. Even if you have private insurance paying most of your bills, Medicaid may pay the remainder of your costs in some situations. However, this is not always ideal. Most nursing homes have limited beds for Medicaid recipients, some states have long waiting lists for Medicaid beds, and some nursing homes outright decline Medicaid. In other situations, you may be required to pay via your own funds until you run out of money, and then the nursing home will accept Medicaid for the remainder of your treatment. 

At-Home Care: 

Most necessary forms of at-home care are covered. This includes in-home nursing services, at-home aides, and similar services you may need if you can’t do everything on your own but don’t quite need a nursing home’s services, either. 

Is Long-Term Medicaid Worth It? 

So, with all these supposed benefits, is long-term Medicaid worth it? Well, it depends on your situation.

Yes, Medicaid is typically easily available for anyone below the federal poverty line, and it covers a massive variety of treatments. However, it’s much more restrictive in almost every way compared to private long-term care insurance. 

Medicaid will pay for a nursing home room, but it won’t pay for private rooms unless they’re necessary. If you don’t like the food, Medicaid won’t pay for alternatives unless you have a medical reason for them. You’re also limited in options due to some service providers simply not accepting it; both with general care and long-term care. 

These restrictions aren’t the only drawbacks involved in using Medicaid for long-term care, though. The tight financial restrictions ensure that you can have almost no savings or assets to fall back on. 

In many situations, you’ll have to forfeit assets to help pay for your nursing home care, and there’s even a 5-year “back-check” to determine if you’ve offloaded assets before applying to cheat the system. 

If you’re older in age, this may affect the legacy that you pass down to your next-of-kin, and if you’re receiving long-term care for something that may potentially heal, it can leave you empty-handed when you do recover. 

With that being said, utilizing Medicaid to supplement your private insurance plan is recommended whenever possible. 

In short, if you’re not financially capable of paying for your care yourself, the major compromises may be worthwhile to preserve your health and receive proper care. However, if you can afford to utilize a private insurance option, having this flexibility, instead of using your assets and savings, is usually a better option. 

It can be a bit complicated to determine all of this. So, it’s recommended to consult a professional insurance agent before committing to a plan. 

Where Can I Find Out More and Get Advice on Long Term Care Insurance and Medicaid? 

As you can probably tell, it’s not easy to find the right solution to your long-term insurance needs. Both of your primary options have some major benefits and drawbacks that greatly affect their ability to cover you properly. 

Luckily, you’re not on your own. Policy Solver can help you find the right plan for you, and it can help you procure the perfect plan at the best rates. 

Policy Solver is a team of insurance specialists who can identify your unique needs and financial capabilities to help you navigate the complex insurance market, and their connections with the top insurance providers in the industry ensure you get the highest quality insurance at the lowest price possible. 

Don’t make insurance decisions on your own. Contact Policy Solver, today!

Policy Solver’s Services

Today, you can find multiple insurance consultants on the internet. However, choosing the right advisor is another difficult task.

Policy solver has knowledgeable, licensed agents, and is here to help you navigate through your disability insurance journey. We are a team of professional insurance policy brokers and we can save you time and money while finding the right policy for your specific needs.

Our experienced advisors will ask you a few questions to understand your unique situation and will come up with a comprehensive analysis of different insurance plans so they will be able to recommend the best policy at the best price for you.

So, what are you waiting for? Contact us or schedule a free consultation, and we will get back to you soon!



Janet Arrowood, Dec 3, 2021, Retrieved from Investopedia, Medicaid VS Long-Term Care Insurance, https://www.investopedia.com/articles/05/031005.asp

Author not credited, retrieved from Area Agency on Aging 2021, Medicare and Medicaid Long-Term Care: What Does it Cover? https://aaa1b.org/medicare-medicaid-long-term-care/

Official Medicaid site, retrieved from Medicaid.gov 2021, Long Term Services and Supports, https://www.medicaid.gov/medicaid/long-term-services-supports/index.html


Stephanie Wilson


December 8, 2021

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