Assisted Living Residents Face Challenges When Transitioning from Private Pay to Medicaid

Although the Medicaid program is a boon to thousands of low-income seniors, it may pose some difficulties for assisted living facility residents to remain where they’ve chosen to live.

Sometimes, residents who began as private pay eventually spend down their funds and can no longer afford to pay for their care out of pocket. In many cases, these people become eligible for Medicaid

However, some assisted living facilities aren’t willing to let the resident transition from private pay to Medicaid, for a couple of reasons.


This could include the fact that Medicaid reimbursement is less lucrative than private pay, and facilities would rather keep their beds open for someone else who can pay the full rate out of pocket, says Eric Carlson, from the National Senior Citizens Law Center (NSCLC).

Related to this is an even bigger issue: Medicaid only reimburses facilities for healthcare services, meaning that facilities often lose revenue on each Medicaid resident’s room and board costs.


David Kyllo, the executive director for the National Center for Assisted Living, says that Medicaid funding applies only to nursing facilities, not assisted living facilities, so unless individual states have waivers for the program and designate a certain number of assisted living slots for Medicaid funding, residents are not covered at all.

“The state has to determine whether that person gets one of their slots for Medicaid,” says Kyllo. “The facility could be willing, the resident could be willing, but if the state doesn’t have a slot to give them, they’re out of luck.”

Usually, once all the state-designated beds are taken, the facility will only accept private-pay residents. From this, a dilemma can develop when private-pay residents spend down their funds and become Medicaid eligible, as some assisted living facilities are unwilling to let these residents transition to the government program.

This is within legal rights for facilities who are not Medicaid-certified and have no obligation to accept Medicaid-eligible residents, says Carlson.

In some recent cases, elderly assisted living facility residents who exhausted their funds and needed to go on Medicaid were told to vacate, with the facility saying they wouldn’t accept Medicaid funds.

Although Carlson believes assisted living facilities have a moral responsibility to current residents, there’s not much recourse in these cases when the facilities aren’t Medicaid-certified, he says.

However, for facilities that do have certification, or who used to have it and then opted out, private-pay-turned-Medicaid residents may be able to fight back, as a condition of certification requires facilities to accept Medicaid as payment in full.

Carlson advises residents who are being threatened with eviction to simply stay put.

“The facility would need to force the person out, and the argument from the facility’s side is only that they’re not getting paid,” says Carlson. “However, the resident would have a very strong defense: ‘They’re just not taking the money I’m offering to them.’”

Most judges, says Carlson, would probably rule in favor of the resident, who has a way of paying the facility that isn’t being accepted, rather than refusing, or simply not being able to, pay.

It is conceivable, though, says Carlson, that a facility could win the argument if a state allows a facility to specifically designate a certain number of Medicaid beds, and the facility is at its limit. Even then, says Carlson, what may come of a lawsuit like this is unpredictable.

“Eviction rules and procedures in every state are different,” he says. “It’s an issue of state law.”

While Kyllo maintains assisted living facilities’ rights to deny Medicaid-eligible residents, he recognizes that there needs to be a change.

“If facilities don’t have money to pay their bills, they’re going to get in trouble with the state, or get shut down,” he says. “All that being said, we need to figure out how we’re going to better serve the low-income population in our country.”

Unless Medicaid rules change and funding is available to both nursing and assisted living facilities on a federal level, though, private pay residents in non-certified assisted living facilities who spend down their funds may unfortunately be unable to stay where they’ve chosen to live.

For now, says Carlson, he and his colleagues at the NSCLC are taking a “step-by-step” approach to address this issue.

“We’ve done a lot of research, and I hope over the next couple years we’ll be able to be more impactful on a specific state-by-state level,” he says. “By next year we have more intention to be involved with more states and work on proposals and amendments.”

Written by Alyssa Gerace