Unlocking Medicaid: What’s COVERED for Assisted Living in 2026?
Feb 12, 2026
If you’ve heard about Medicaid but feel confused about what it actually covers in assisted living, you’re not alone. I see this trip people up all the time, especially when they’re trying to figure out if Medicaid can really support a profitable assisted living business. Let’s break it down simply so you know what’s covered, how it works, and what to do next.
Want the full breakdown? Watch the video below👇
Medicaid and Medicare Are Not the Same Thing, and That Matters
One of the first things you need to understand is the difference between Medicare and Medicaid. I’ve seen so many new operators mix these up, and it leads to bad assumptions.
Medicare is a federal health benefit that most people get at age 65. It covers hospital stays, doctor visits, and prescriptions. What it does not cover is assisted living. That means you cannot get paid by Medicare for providing assisted living care.
Medicaid is different. Medicaid is federally funded but run by each state. This is the program that can pay for assisted living when someone qualifies under the right waiver. If you remember one thing, remember this. Assisted living is a Medicaid play, not a Medicare one.
💡 This clarity alone saves people months of confusion.
How Residents Qualify for Medicaid in Assisted Living
Medicaid works through something called waiver programs. For assisted living, the most common one is the Elderly, Blind, and Disabled waiver. That’s usually the population you’ll be serving.
To make this work, two things must happen at the same time. The resident must qualify for Medicaid, and you must be certified as a Medicaid provider. One without the other does not work.
Residents also have strict financial rules. They can only keep a small amount of money in their bank account. Because of that, they must "spend down" most of their income each month to stay eligible.
✅ Resident qualifies under a Medicaid waiver
✅ Resident meets income and asset limits
✅ You are certified to accept Medicaid
What Medicaid Actually Pays for Assisted Living
This is where things start to click. Medicaid typically pays assisted living using one all-inclusive daily rate. This rate is set by the state and can vary by location.
Let’s keep the math simple. If your state pays $100 per day, that equals about $3,000 per month from Medicaid. In some states, that rate can be adjusted based on the level of care you provide.
But that’s not the only money coming in.
Most Medicaid residents also receive Social Security. To stay eligible for Medicaid, they must contribute around 80 to 90 percent of that income to you. This is called RUF, which stands for rent, utilities, and food. That often adds up to around $900 per month.
Some residents also have a share of cost. This is extra money they must pay if they have additional income. Not everyone has this, but when they do, it can add a few hundred dollars more.
✅ Medicaid daily rate payment
✅ Monthly RUF payment from Social Security
✅ Possible share of cost payment
💡 In many states, $4,000 per resident per month is very realistic with Medicaid.
Why Medicaid Can Still Support a Profitable Business
A lot of people assume Medicaid means low margins. I’ve seen the opposite when it’s done correctly.
One big advantage is cash flow. Medicaid allows you to bill as often as you want. Some providers bill weekly. That means instead of waiting all month, you can have consistent money coming in every week.
For example, if you bill $700 per resident per week and you have 10 residents, that’s $7,000 coming in regularly. This helps cover payroll, food, and utilities without constantly stressing about timing.
💡 Predictable cash flow is one of Medicaid’s biggest hidden benefits.
What You Must Do to Get Certified as a Medicaid Provider
You cannot skip this part. To accept Medicaid, you must first be a licensed assisted living facility. No license means no Medicaid payments.
Next, you need to find your state’s Medicaid department. This is often different from the licensing department, which adds confusion. To find the Medicaid office in your state, I suggest looking into the health and welfare or social services programs.
To get certified, you’ll complete an application, submit proof of your license and insurance, and provide banking details. Approval can take anywhere from a few weeks to several months, so plan ahead.
After that, you must contract with Medicaid insurance payers, sometimes called managed care organizations. Residents choose their payer, so you will want to be contracted with all of them in your state.
✅ Licensed facility
✅ Approved Medicaid provider
✅ Contracted with state payers
Wrap Up
Medicaid can absolutely work in assisted living when you understand how it’s structured. Once you know what’s covered, how payments stack together, and how to get certified, it becomes much less intimidating. The key is taking it step by step and setting things up the right way from the start.
If you need help creating a business plan for your assisted living business, check out the Free Business Plan Checklist.
And if you’re ready to figure out your next step, join me for the next Roadmap Challenge, where I’ll walk you through how to get started.
Show full transcript 👇
Transcript
00:00:00
Hey friend, have you heard about Medicaid, but you're not sure what it is, how it works, and if it's even something that you could use in assisted living to help you be profitable. Today, we're going to talk about that. I've been working with Medicaid for over 5 years now. Have a really good grasp on it, and I'm here to help you and understand what Medicaid is and how you can leverage that to help you run a profitable assisted living business. So, if you're interested, make sure you
00:00:24
stick around for today's video. Hey friend, I'm Brandon Gustafson. I help first-time assisted living entrepreneurs launch profitable, purpose-driven businesses, creating prosperity, purpose, and peace in their lives so they can reach their financial goals of time and financial freedom and helping them move things along. I help people from I don't know how to get started all the way to those who want to launch and own multiple facilities or already have their facilities and want to continue
00:00:49
growing. I have a quick quiz for you. Go to aliquiz.com. You can take that. It's 30 seconds. will put you into the right program to work with me to see which is the best fit for you as you're trying to launch your assisted living business. I have a special offer for you here at the end of this video. So, make sure you stick around to work with me directly at a fraction of my normal coaching fees. So, make sure you check that out. Uh stick around to the end of the video. You can learn more about that and get over to
00:01:15
assisted livinginvesting.net. You can access my free underwriting calculator. It's a big blue box right there on the top of the page. Go grab that. It's a tool that can help you out as you're trying to launch your assisted living business. Now, with all that out of the way, let's get into today's video. Hey friend, welcome back to Assisted Living Investing. Super excited to have you here with me. Let's get into the topic of Medicaid and can you actually use Medicaid? What's covered for
00:01:44
Medicaid and assisted living? Can you use Medicaid to help you be profitable as you are trying to launch your assisted living business? So, let's start off with the basics. What is Medicaid? This is something that a lot of people get confused with because they hear Medicare, they hear Medicaid, they don't just I don't know the difference between the two. So, Medicare is a federal program. It generally is something that people qualify for once they hit a certain age, 65 plus. It is federally funded. There are different
00:02:14
parts of Medicare. There's part A, B, and D. A is inpatient, B is outpatient, and D is prescription. So Medicare, your residents in assisted living will likely have Medicare, but Medicare does not have an assisted living benefit to it. So you will not be able to receive funds from Medicare. So I just want to get that out of the way. You are not considered impatient or outpatient or prescription. You will provide medication. You will work with doctors who provide outpatient care. Impatient is if they have to go into a hospital
00:02:51
for an extended period of time. Assisted living is not that. We are helping people who who have needs. They need help getting dressed. They need reminders. They need help with getting their food. They may need help eating. All of those types of things. Those are things that we provide in assisted living, but they're not covered by Medicare. Medicaid, on the other hand, is, and I'll tell you a little bit more about the billing procedure and how Medicaid payments work here in just a second, but I want to explain to you
00:03:21
what Medicaid is. Medicaid is also a federally funded program, but it is administered at a state level. So, at its core, I'll try to simplify this for you. Let's say, so a state is told, you have $100 million that we're going to give you, the federal government, we have $100 million. we're going to give you that to you for your Medicaid programs. The state then says, "Okay, cool. I've got $100 million I can use for whatever I want for Medicaid. Now, I need to go through a budgeting process
00:03:50
and a budget approval process." And this is the things that are going to fall under Medicaid are like CHIP. Um, uh, you could have like the former food stamps program was on here that's it's now CHIP. You could have young individuals, children that are in the foster system or or something along those lines. There's other certain requirements that you can hit to receive Medicaid. They're what are called waiver programs. So, you qualify for Medicaid by qualifying for a certain waiver. For
00:04:20
the ones that we work with in assisted living, oftent times that waiver, not all the time, but oftent times it's called elderly, blind, and disabled. So, that's the population that we would work with. They qualify for Medicaid by being elderly, blind, or disabled. and that's how they qualify to be a Medicaid recipient. Now, we're going to talk a little bit about how a provider how you as an assisted living owner is going to become certified as Medicaid as well here and at the end of the video. So,
00:04:49
make sure you stick around for that. But there's there's two things that have to happen when you're serving this population. They have to qualify for Medicaid and you have to be certified. So, if you want these payments to work, then you've got to have both of those. So, let's talk about the payments here. The payments on on how this works is there's a billing code for assisted living. In most states, there is just one code for assisted living. It is not going to be the same across state lines.
00:05:15
Like for me, it could be A1000 and for you, it could be B62C 49. Like, it could just be some random collection of of numbers and things like that. These are done at a state level. So, they do not follow traditional codes that you would see if you're billing for something for Medicare. They're Medicaid codes. There will be generally one code. It is all-inclusive for assisted living, and it's what is called a daily rate. So, that daily rate will be something that is oftentimes set by the state. In
00:05:47
some states, like in Idaho, we are able to adjust that daily rate based off of the level of care that we are providing to residents. So, as long as we can demonstrate there's a higher level of care, then we can increase our Medicaid rates. Doesn't happen in every state, but it is something that you want to look at. So, you you're going to have this code. Let's say it's $100 a day. Let's keep math really simple here. So, you're going to bill that daily rate at $100 per day to Medicaid. There's 30
00:06:17
days in a month. 30 times 100 is $3,000 per month in in Medicaid income. Oftent times it can be higher than $100 per day. I'm just using that for illustrative purposes to show how how this how this will work. In addition to that daily rate though, your residents are going to be receiving social security. They're going to be getting money from some other source as well. And in order for them to continue to qualify for Medicaid, they have to do what is called a spend down. they have to they can only have a maximum amount
00:06:51
of money in their bank account at any given time and oftentimes it's like a couple hundred dollars. So that means if they receive $1,000 per month in their social security income that they need to shift 80 to 90% the state will tell you exactly what this number is. They have to shift 80 to 90% of those funds over to you. there. That's what we call a rough payment. RUF, rent, utilities, and food. So, we collect roughly $900 per per resident per month through the rough payment. That's their social security
00:07:29
income that they've received. So, they we will bill them directly on a monthly basis like we would with a private pay resident. uh we set them up on a is is what we prefer to do and we collect that $900 directly from them. We bill our daily rate to Medicaid. So now we're up to $3,900. And then depending on the state and the resident and their financial situation, you may be able to do what we call a share of cost or cost or an SOC. And that is basically maybe they've gotten money from another
00:08:00
investment or family or or something. They have to further spend down money. in the state will tell you what this is because there's a formula that goes into it for them to continue to qualify for Medicaid. They will have that share of cost that they also have to bill that you that you bill for and you collect from your residents directly. So, not every resident has a share of cost. Some of them do. Those can be a couple hundred up to $1,000. So, let's say in our example, let's say we've got $30 or
00:08:27
$100 per day for 30 days. That's $3,000 that we're billing Medicaid for our daily rate. We're collecting $900 for our rough payment RUF that we're we're getting from from the resident that comes from their social security. And let's say that this specific resident also has an additional $100 in their share of cost. So 3,000 plus 900 plus 100, we are getting five $4,000 per month with this Medicaid resident. I will say this is very common. This is something that I I would say is a very
00:08:58
reasonable amount for you to be looking at at receiving when it comes to Medicaid payments. That's the payment structure. That's how you're going to do this. Some of this is billing the estate. Some of it is collecting directly from residents. This is why Medicaid can be a little bit confusing, but also how I want to demonstrate to you that you can actually make a decent amount of money when you're working with a Medicaid population. So, this isn't something that uh you're giving away
00:09:21
freely. This is something that you can generate a pretty healthy income from when it when it comes to that point. There are also when it comes to Medicaid programs, there are other programs that are out there, but you have to get certified for each of those individual programs and individual waiverss. So, we'll talk here in just a second about how you become a certified Medicaid provider. But what I want you to understand is generally, especially when you're getting started, it's easiest to
00:09:50
just focus on that one code, that all-inclusive assisted living code for your residents who have qualified for Medicaid under an elderly, blind, and disabled waiver. Okay, that's the simplest thing to do. Once you've kind of built in these processes, then you can start looking at the different codes and the different programs that are out there because your residents qualification for Medicaid under that waiver program, they're going to have extra benefits. So, when it comes to you as a provider
00:10:18
and getting certified, what you're going to have to do is you have to number one become a licensed facility. So, you cannot do this if you are unlicensed. you can't serve a Medicaid population or you can't I mean you could you just can't get paid for it. Um at least from the state. Okay. So you need to be a licensed facility if you want to work with Medicaid. Just the reality of it. The next thing is you need to identify the Medicaid program in your state, the Medicaid department. And this is a pain
00:10:49
like the licensing process when it comes to assisted living. The hardest part is finding the the correct agency, the correct department that's going to help you get licensed as a facility. And to add more complexity to that, the Medicaid department, the Medicaid agency is probably going to be different from the licensing department at the state for your facility. So, you're going to have to dig even more in into trying to find this person. The the spots that I find are most common are like a health
00:11:15
and welfare department, something to do with welfare. Sometimes you might have like a social services type of a department as well. So there's a few different areas you can look at if you have figured out how to get your license. They can oftentimes tell you the correct department. So that can save you quite a bit of time as you're trying to figure it out. But you got to figure out who they are and then you've got to fill out their application. It's going to be very similar to your license
00:11:38
application. We'll ask a few different types of questions and they definitely need your bank account information cuz that's how they're going to send you the funds. They need to verify your insurance that you have your license. They want to verify a few things, but you have to go through this application process and submit it and then wait for them to process it. And then my experiences can take 2 weeks up to four, five, 6 months. Just kind of depends. It's kind of a pain when you're working
00:12:04
with them. But you fill out the application, you get approved, and once you are certified as a Medicaid provider, then you will need to contract with the different insurance payers that do Medicaid in your state. In some states, there's just one. Like in Colorado, we worked with one. It was through Gain One is is who we had to do our contracting with. And basically, they the way these these companies work, they're what are called managed care organizations. I've actually worked professionally for one of these before
00:12:34
in the past. They they are contracted out by Medicaid and Medicaid says, "We want you to handle all the billing and all the benefits and all of the things for us and so you're you're going to do that. We'll pay you a little bit of a cut off the top." So, when it comes to that, you're going to have to contract with every single one of those payers if you want to be able to serve a resident who chooses them because in during an open enrollment period, if there are multiple payers, a resident can say,
00:13:02
"Oh, I want to go with United Health or I want to go with Blue Cross and Blue Shield or I want to go with Molina or I want to go with the state-based version of our Medicaid." They get to choose which one they want to work with. So, they choose. And so if they choose somebody that you're not contracted with, then you're not going to be able to bill that specific payer. I know that sounds confusing. The cool thing is the contracting process is generally pretty simple. It's it there's some paperwork
00:13:30
and stuff like that, but it goes pretty fast. They're these are usually the health insurance providers, so they know what's going on. This is not something that's weird for them. So they're easy to contract with. But you're going to need to contract with the different payers that are in your state. In Idaho, we have three of them. So, we have contracted with them and they recently actually shifted over from what was Bluec Cross of Idaho and now it's a United Health Plan. The residents had
00:13:55
who were on Blue Cross of Idaho had to choose a new insurance provider and then we had to become contracted with the new insurance provider as well. So, that was a little bit of a pain, but it's just kind of the reality when you're working in this world of Medicaid. But once you do that, you just have to stay current on your certification for Medicaid. Stay current on your contract with the health insurance provider. And once you do those things, then you're able to continually bill. What you're billing
00:14:22
those payers once you are a certified Medicaid provider is that daily rate. Now, the cool thing about Medicaid is you can actually bill as often as you want. Um, so you could bill daily if you really wanted to. They typically only pay out once a week, but that means that you could bill once a week and then you could have money coming in. So, let's say, let's use our example. We've got $100 per day. We've got 7 days in a week. That's $700. We've got 10 residents. That's $7,000 that we could
00:14:52
be billing and collecting on a weekly basis, right? That's pretty cool. We'd have $7,000 and 7,000 and 7,000. So, by the time we get to the end of the month, we've got the full $28,000 that have come in. but the way that it's coming in is a lot more consistent and that can help out when it comes to cash flow and and meeting bills and and things like that. So, it's one of the unique things about Medicaid that not a lot of people realize that you can do. So, it's a really cool program. It is something
00:15:20
that it can be scary to a lot of people because it is like what I just walked you through that's kind of confusing and and hard to understand especially when you have Medicare and Medicaid that sounds so similar but you you can figure out. So we we talked through a lot difference between Medicare Medicaid. We talked about the Medicaid payments and how they work and then how to get certified as a Medicaid provider. If you found this video helpful, make sure you like the video, subscribe, ring the bell
00:15:46
as well so you get notified we every time we put out content. We go live on Tuesdays, put out content on Thursdays to help you launch your assisted living business. Make sure you share this with somebody who's trying to figure out Medicaid and they're confused so that they can get the help that they need as they're trying to launch their assisted living business. And I mentioned at the start of the video that I had a special offer to work with me um as you're trying to launch your assisted living
00:16:06
business. It is my roadmap challenge. We do this multiple times a year, but is working directly with me to help you build a roadmap to help you launch your assisted living business. So, this is not courses or anything like that. Is working directly with me to help you learn what you need to do to launch your assisted living business. I would love to have you in there. It's at a fraction of my normal coaching rates. And again, it's a live coaching challenge experience. I would love to have you in
00:16:31
there. Go check out roadmapchallenge.com to learn more to see if it's a good fit for you or not. Would love to have you in there. And yeah, are you curious about assisted living investing, but you're not sure how to get started? At Assisted Living Investing, I help first-time assisted living entrepreneurs launch profitable, purpose-driven businesses, creating prosperity, purpose, and peace in their lives. I help people from I don't know how to get started all the way to those that want
00:16:53
to scale a multifacility business. To figure out which coaching program is the best fit for you, go check out my 30 secondond quiz at aliquiz.com to help you figure out how to move forward and launch your assisted living business. And remember, it doesn't take a lot, just a little bit. Just keep going step by step by step. But I promise you, if you do and you are consistent and persistent, you're going to be successful. Thanks for watching and have a great day.
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