Nursing Home Medicaid Denied? Long-Term Care Coverage Appeals Explained

For elderly and disabled individuals who can no longer live independently, nursing home care can cost $8,000–$15,000 per month or more. Medicaid is the primary payer for nursing home costs for those who cannot afford private pay — but qualifying for nursing home Medicaid and getting claims covered is a process filled with legal complexity, bureaucratic hurdles, and frequent denials.

If your or a loved one's nursing home Medicaid application or claim has been denied, here is what you need to know.

Two Separate Hurdles: Medical and Financial Eligibility

Nursing home Medicaid has two distinct eligibility requirements, and denials can come from either:

Medical (Level of Care) Eligibility

To qualify for nursing home Medicaid, the individual must need a nursing facility level of care. Each state defines its criteria, but generally this means requiring significant assistance with activities of daily living (ADLs) such as bathing, dressing, eating, mobility, and toileting, or having medical needs that require skilled nursing care.

Common denial reasons:

• The state's assessment concluded the individual does not meet the level of care standard
• Functional assessment scores fell below the state's threshold
• Documentation of care needs was incomplete or inconsistent with the assessment

Appeal strategy: A detailed physician's statement documenting the individual's specific care needs, the risks of non-nursing-home care, and clinical justification for nursing facility placement is essential. Independent functional assessments can counter the state's findings.

Financial Eligibility: Assets and Spend-Down

Nursing home Medicaid has strict asset limits. In most states, an individual can keep only $2,000 (or a similar low limit) in countable assets. However, many assets are exempt:

• The primary home (subject to conditions, including that a spouse or dependent relative lives there, or the individual plans to return)
• One vehicle
• Personal belongings and household goods
• Burial funds up to certain limits
• Term life insurance

Common denial reasons:

• Assets exceed the countable limit
• Uncompensated transfers: Gifts or transfers of assets within the look-back period (60 months for most transfers to individuals, 60 months for transfers to trusts) trigger a period of Medicaid ineligibility proportional to the value transferred
• Improper asset documentation

Appeal strategy: Work with an elder law attorney to identify all exempt assets, document asset values accurately, and address any transfer penalties. Medicaid planning before the look-back period is the ideal strategy, but post-denial legal review can still uncover relief options.

PASRR: Preadmission Screening and Resident Review

Before entering a nursing facility, individuals with serious mental illness or intellectual or developmental disabilities must undergo a PASRR (Preadmission Screening and Resident Review) evaluation. PASRR has two levels:

• Level I: Initial screen for possible mental illness or IDD
• Level II: In-depth evaluation when Level I screen is positive

PASRR denials or improper placements can prevent nursing home admission or result in discharge. If a PASRR determination seems inconsistent with the individual's needs, the determination can be challenged through the state PASRR process and the Medicaid fair hearing process.

Medicaid Fair Hearing Rights

As with all Medicaid denials, nursing home Medicaid applicants and beneficiaries have the right to a state fair hearing. This is a formal administrative proceeding where:

• You can present evidence, witnesses, and documentation
• An impartial hearing officer reviews the state's decision
• The decision is based on the state's Medicaid plan and federal Medicaid law

Request the hearing promptly — deadlines are typically 90 days from the denial notice, and some states have shorter windows. If you request a hearing before a benefit reduction or termination takes effect, aid-pending continuation may apply.

Spousal Impoverishment Protections

For married couples where one spouse needs nursing home care, federal law includes spousal impoverishment protections:

• The community spouse (the one staying home) can keep a protected spousal resource allowance (CSRA) — typically $29,000–$157,000 depending on the state and year
• The community spouse can also keep a minimum monthly maintenance needs allowance (MMMNA) from the institutionalized spouse's income
• These protections prevent the "well" spouse from being impoverished by the nursing home costs of the other

If the state's financial determination failed to properly apply spousal impoverishment protections, that is grounds for appeal.

Elder Law Attorneys

For nursing home Medicaid denials, consulting an elder law attorney is strongly recommended. Elder law attorneys specialize in Medicaid planning and appeals, and many offer initial consultations. The National Academy of Elder Law Attorneys (NAELA) maintains a directory of members by state.

Fight Back With ClaimBack

Nursing home Medicaid denials have profound consequences for vulnerable families. ClaimBack helps you understand the denial reasons, organize your appeal documentation, and fight for the coverage that federal and state law provide.

Start your LTC Medicaid appeal at ClaimBack

Related Reading

• How to Write an Insurance Appeal Letter
• Internal vs. External Insurance Appeal: What's the Difference?
• Common Reasons Insurance Claims Are Denied