Medicaid Health Services for Low-Income Elderly Adults

Medicaid serves as the primary public insurance mechanism through which low-income elderly adults in the United States access a broad range of medical, long-term, and supportive health services. Governed by a federal-state partnership under Title XIX of the Social Security Act, the program covers populations whose income and assets fall below thresholds that disqualify them from relying solely on Medicare. This page examines the definition and scope of Medicaid elder health services, how the program operates, the scenarios in which older adults most commonly encounter it, and the criteria that distinguish what Medicaid will and will not cover.

Definition and scope

Medicaid is a joint federal-state program administered under 42 U.S.C. § 1396 et seq. and overseen at the federal level by the Centers for Medicare & Medicaid Services (CMS). For elderly adults — defined by CMS as individuals 65 and older — Medicaid functions both as a standalone coverage source for those who do not qualify for Medicare and, far more commonly, as a secondary "wrap-around" program that fills gaps Medicare leaves open.

Medicaid's scope for elderly populations includes two broad service domains:

1. Acute and medical services — physician visits, hospital care, prescription drugs, laboratory tests, diagnostic imaging, dental care, vision care, and hearing services, which Medicare covers incompletely or not at all.
2. Long-term services and supports (LTSS) — nursing facility care, home and community-based services (HCBS), personal care attendants, adult day health programs, and home health care services.

As of federal fiscal year 2023, Medicaid financed more than 60 percent of all nursing facility residents nationally (KFF State Health Facts, 2023). That proportion reflects the program's structural role: Medicare covers only short-term skilled nursing facility stays after a qualifying hospital admission, leaving custodial long-term care almost entirely to Medicaid.

Each state designs its own Medicaid plan within federal minimum standards. The federal minimum requirements for elderly populations are codified under 42 C.F.R. Part 440, which specifies mandatory benefit categories. Optional benefits — including personal care services and HCBS waivers — vary by state.

How it works

Medicaid for elderly adults operates through a layered eligibility and delivery structure.

Eligibility determination is conducted by state Medicaid agencies. For adults 65 and older, eligibility pathways include:

1. SSI-linked eligibility — individuals receiving Supplemental Security Income (SSI) automatically qualify in 32 states and the District of Columbia under Section 1634 agreements with the Social Security Administration (SSA). The Social Security Fairness Act of 2023 (Pub. L. No. 118-5, enacted January 5, 2025) repealed the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), effective for benefits payable after December 2023. Higher Social Security income resulting from this repeal may reduce or eliminate SSI eligibility for some older adults, and by extension may affect SSI-linked Medicaid eligibility; state agencies are responsible for reassessing eligibility where benefit amounts have changed as a result of the Act. The Social Security Administration has been implementing benefit recalculations since enactment, and affected individuals — particularly public-sector retirees and their spouses or survivors previously subject to WEP or GPO reductions — should contact their state Medicaid agency for a current eligibility review.
2. Medically needy pathway — individuals whose income exceeds standard thresholds but who incur high medical expenses may "spend down" excess income to meet a medically needy standard, defined at the state level within federal guidelines at 42 C.F.R. § 435.300–435.340.
3. Institutional or HCBS waiver eligibility — older adults requiring a nursing facility level of care may qualify for Medicaid LTSS even if they would not qualify for community Medicaid, under criteria set by the state plan or an approved 1915(c) waiver.

Benefits delivery occurs through two primary models:

• Fee-for-service (FFS): The state pays providers directly for each covered service rendered.
• Managed care: The state contracts with managed care organizations (MCOs) to deliver Medicaid benefits under a capitated payment model. As of 2022, 40 states used managed care for at least some portion of their Medicaid population, according to CMS managed care enrollment data.

Dual eligibility — holding both Medicare and Medicaid — applies to approximately 12.5 million adults nationally, per CMS Medicare-Medicaid Coordination Office data. For these individuals, Medicare pays primary and Medicaid covers Medicare premiums, cost-sharing, and services Medicare excludes, including most chronic disease management supports and long-term care. Dual-eligible individuals whose Social Security benefits increase as a result of the Social Security Fairness Act of 2023 (Pub. L. No. 118-5, enacted January 5, 2025) — which eliminated the WEP and GPO effective for benefits payable after December 2023 — should be aware that increased income may affect their Medicaid eligibility status or cost-sharing obligations and should contact their state Medicaid agency for a current eligibility review.

Common scenarios

Elderly adults encounter Medicaid health services across four distinct clinical and social situations:

Nursing facility admission after asset depletion — The most common pathway is an older adult who exhausts personal savings paying for nursing facility care (which averages more than $90,000 per year for a private room, per the Genworth Cost of Care Survey 2023) and then applies for Medicaid LTSS. Asset transfer rules under the Deficit Reduction Act of 2005 (42 U.S.C. § 1396p) impose a look-back period of 60 months for transfers made below fair market value.

Home and community-based services under 1915(c) waivers — Older adults who meet a nursing facility level of care but prefer to remain at home may access Medicaid HCBS waivers, which can cover personal care, respite, home modifications, and care coordination services. Waiver availability is capped by state; waiting lists for HCBS waivers exceeded 700,000 individuals nationally as of 2023, per the KFF HCBS Waiver Enrollment and Spending Report.

Dual-eligible supplemental coverage — Low-income Medicare beneficiaries use Medicaid to eliminate out-of-pocket Medicare costs, cover polypharmacy and medication management through the Low Income Subsidy (Extra Help) program, and access mental health services that Medicare covers only partially. Individuals whose Social Security income increases due to the Social Security Fairness Act of 2023 (Pub. L. No. 118-5, enacted January 5, 2025) — which repealed the WEP and GPO effective for benefits payable after December 2023, particularly affecting public-sector retirees and their spouses or survivors previously subject to those provisions — should verify continued dual-eligible status with their state Medicaid agency, as income changes may affect eligibility thresholds for certain Medicare Savings Programs. The Social Security Administration has been processing retroactive benefit adjustments and prospective recalculations since enactment; individuals who have not yet received a notice of benefit change but believe they may be affected should contact the SSA directly.

Post-acute transitional coverage — After a hospital discharge that exhausts Medicare's 100-day skilled nursing facility benefit, Medicaid may assume coverage for ongoing custodial care needs. This handoff is a critical point examined in elder transitional care services contexts.

Decision boundaries

Understanding what Medicaid covers — and what it does not — requires applying specific statutory and regulatory criteria.

Covered vs. non-covered services:

Medicare vs. Medicaid comparison: Medicare is an entitlement program based on work history and age (or disability), while Medicaid is a means-tested program based on income and assets. Medicare covers acute care comprehensively; Medicaid covers long-term custodial care that Medicare structurally excludes. Where both apply, Medicare's primary payer status is mandated under 42 U.S.C. § 1395y(b).

Estate recovery: States are required under 42 U.S.C. § 1396p(b) to seek recovery of Medicaid expenditures from the estates of deceased beneficiaries who received LTSS at age 55 or older. States may optionally extend estate recovery to all Medicaid expenditures for this age group. This creates a distinct planning boundary separating LTSS-funded individuals from those receiving only acute Medicaid coverage.

Level-of-care criteria: Access to Medicaid LTSS — whether institutional or HCBS — requires documented functional impairment meeting a state-defined level-of-care standard, typically assessed through standardized instruments such as the Minimum Data Set (MDS) for nursing facilities or a functional assessment tool approved under the state's HCBS waiver.

Income boundary shifts under the Social Security Fairness Act of 2023: The Social Security Fairness Act of 2023 (Pub. L. No. 118-5, enacted January 5, 2025) eliminated the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), effective for Social Security benefits payable for months after December 2023. The Social Security Administration began implementing benefit recalculations following enactment; affected individuals — including certain public-sector retirees and their spouses or survivors whose benefits were previously reduced under these provisions — may receive higher monthly Social Security income as a result. Some individuals have received retroactive lump-sum payments reflecting the difference in benefit amounts back to January 2024, in addition to increased ongoing monthly payments; both forms of income adjustment may affect Medicaid eligibility determinations depending on how a state treats retroactive income under its eligibility rules. Because Medicaid eligibility for elderly adults is income-sensitive, individuals who experience a benefit increase should have their eligibility redetermined by their state Medicaid agency. Increased income may move some individuals above the income threshold for SSI-linked Medicaid or certain Medicare Savings Programs, while also potentially affecting spend-down calculations under the medically needy pathway. Individuals uncertain about the effect of any benefit change on their Medicaid status should contact their state Medicaid agency or the Social Security Administration directly at 1-800-772-1213 or via ssa.gov.

References

• Centers for Medicare & Medicaid Services (CMS) — Medicaid Program Overview
• 42 U.S.C. § 1396 et seq. — Social Security Act, Title XIX (Medicaid)
• 42 C.F.R. Part 440 — Medicaid Services
• 42 C.F.R. Part 435 — Medicaid Eligibility
• CMS Medicare-Medicaid Coordination Office
• KFF — Medicaid Spending by Enrollment Group (State Health Facts)
• KFF — Medicaid Home and Community-Based Services Enrollment and Spending
• Social Security Fairness Act of 2023, Pub. L. No. 118-5 (enacted January 5, 2025)
• Social Security Administration — WEP and GPO Repeal Information