Federal law makes nursing facility services mandatory for adults age 21 and older, the Centers for Medicare & Medicaid Services reports on its mandatory benefits page. Assisted living stays optional because federal law treats it as community-based care states may choose to cover.
Medicaid is a joint federal-state program that pays for care for people with low income and disabilities. The Congressional Research Service describes nursing homes as federally certified institutions subject to federal survey standards. It describes assisted living as state-licensed residential settings that bundle housing, meals, supervision, personal care and medication help.
Medical information disclaimer: This article is for general educational purposes only and does not provide medical advice, diagnosis, or treatment. Always consult a physician or other qualified health professional about symptoms, medications, tests, or treatment decisions.
Official resources:
- Read the official guidance from Medicaid — Use this primary source to verify the official guidance.
- Read the official guidance from Ohio — Use this primary source to verify the official guidance.
Table of Contents
- What does mandatory mean?
- Why is assisted living different?
- How do states cover assisted living?
- What should dementia families check?
What does mandatory mean?
Mandatory means a participating state must include the benefit in its Medicaid state plan. The Medicaid and CHIP Payment and Access Commission notes that the only two mandatory long-term services are nursing facility services and home health services in its benefits overview. Nearly all other home- and community-based services are optional state choices.
For families, that rule creates a clear floor. If a person with dementia meets a state's financial and care-need tests for nursing facility care, the state cannot withhold that category of care. It must cover room, board and care through the nursing benefit.
Why is assisted living different?
Assisted living is housing plus services, not a federally certified institution. Rooms, meals and supervision come bundled with help such as bathing, dressing and medication reminders. Oversight comes mainly from state licensing, not federal nursing-home survey rules.
Payment follows that split. Federal law bars Medicaid payment for room and board in assisted living, while it requires coverage of room, board and care in a nursing facility, KFF explains in its analysis of assisted-living coverage. In assisted living, Medicaid can pay only for covered services such as personal care or case management.
How do states cover assisted living?
States that cover assisted-living services do so as an optional benefit. The Congressional Research Service explains they use the Medicaid state plan or, most frequently, Section 1915(c) Home and Community-Based Services waivers that waive normal Medicaid rules.
Because coverage is optional, what is offered varies widely by state. The National Association of Medicaid Directors reports that 44 states covered some assisted-living services by March 2025, usually through capped waivers in its HCBS explainer. Benefits, eligibility rules, enrollment caps and waiting lists differ from state to state.
What should dementia families check?
The practical effect is two tests plus rent. The Ohio Department of Medicaid explains that people must meet financial and functional tests, often nursing-facility level of care, and pay rent and meals separately through income, SSI, state supplements or housing aid. Before choosing a building, confirm these points: Call the state Medicaid agency or waiver case manager before signing a contract and ask which services are covered and what you owe for room and board.
- Does your state waiver cover services in that assisted living building
- Does your family member meet its level-of-care and income tests
- How much rent and meals cost each month and how you will pay it
