Does Medicaid Pay for Memory Care in Tennessee?

The Short Answer: Medicaid Covers Care Services, Not Room and Board

Tennessee's Medicaid program — TennCare — does cover memory care through the CHOICES in Long-Term Services and Supports program, but the coverage has a critical gap that catches many families off guard. TennCare CHOICES will pay for the care services your parent receives inside a licensed memory care facility (personal care assistance, medication management, nursing oversight), but it will not pay for room and board.

That distinction means a family whose parent qualifies for TennCare CHOICES Group 2 and moves into an Assisted-Care Living Facility (ACLF) with a secure memory unit can get Medicaid to cover the care component — often the larger portion — but must still pay for housing, meals, and utilities out of pocket. The room and board gap typically runs $1,500 to $2,500 per month depending on the facility and region, which is still far less than the full private-pay cost of $5,500 to $7,000+ per month, but it's not zero.

How TennCare CHOICES Groups Apply to Memory Care

Tennessee uses a three-group system under TennCare CHOICES, and which group your parent falls into determines both what Medicaid covers and whether there's a waitlist.

Group 1: Nursing Facility Care

Group 1 is the only entitlement group — meaning there is no enrollment cap and no waitlist. If your parent meets the medical and financial eligibility criteria, they must be admitted and covered. Group 1 fully covers the cost of care in a licensed skilled nursing facility, including any secure dementia unit within that facility. The resident contributes all income except a $70 monthly Personal Needs Allowance as "patient liability."

This is the group that provides the most comprehensive memory care coverage, but it requires the highest level of care need. Your parent must score at least 9 out of 26 on the Pre-Admission Evaluation (PAE) acuity scale, or qualify through a Safety Determination if they score 5 to 8 points and documentation shows they cannot be safely served in a lower-intensity setting.

Group 2: Home and Community-Based Services

Group 2 covers individuals who meet the nursing facility level-of-care standard but choose to receive care at home or in an ACLF rather than a nursing home. This is the group that covers memory care in assisted living settings — but with two significant limitations.

First, Group 2 is subject to a statewide enrollment cap (historically around 12,500 slots), which means there can be a waiting period to get in. Second, individual care plans are capped at a cost-neutrality limit of $294.87 per day ($107,627.55 per year). If your parent's care needs exceed that ceiling, they must transition to Group 1 (nursing facility).

And the room and board exclusion applies here. TennCare pays the ACLF for care services; the family pays for the room.

Group 3: At-Risk Services

Group 3 serves individuals who don't meet the full nursing home level of care but are "at risk" of institutionalization without support. The benefit cap is much lower — approximately $18,000 per year — and services focus on keeping the person at home. Group 3 can cover adult day care and limited personal care, but it's not designed to fund full-time memory care facility placement.

Financial Eligibility: The Income Cap Trap

Tennessee is a strict income-cap state. There is no "medically needy" spend-down pathway for adults, which means if your parent's gross monthly income exceeds $2,982 (300% of the 2026 SSI Federal Benefit Rate) by even a single dollar, they are categorically ineligible for TennCare CHOICES — regardless of how high their medical expenses are.

The only way to resolve this is to establish a Qualified Income Trust (QIT), also called a Miller Trust. The QIT is an irrevocable trust that channels the applicant's income through a dedicated bank account and distributes it in a specific federally mandated sequence. Tennessee requires the trust to name the State of Tennessee (Bureau of TennCare) as the primary remainder beneficiary.

On the asset side, the applicant can have no more than $2,000 in countable resources. If the applicant has a spouse, the community spouse can retain a Community Spouse Resource Allowance (CSRA) of up to $162,660. The primary home is exempt if it is occupied by the applicant, spouse, or a disabled child, subject to the $752,000 equity limit.

Why "Memory Care" Isn't a License Type

A detail that confuses many families shopping for facilities: Tennessee does not issue a specific "memory care" license. What people call "memory care" operates as a secured unit within a facility licensed as either an ACLF or a Residential Home for the Aged (RHA), or as a special care unit within a licensed skilled nursing home.

This matters for Medicaid coverage because the facility's license type determines which CHOICES group applies. An ACLF memory unit falls under Group 2 (care services covered, room and board not covered). A nursing facility memory unit falls under Group 1 (fully covered as an entitlement).

When evaluating facilities, always ask:

• What license does this facility hold — ACLF, RHA, or skilled nursing?
• For the memory care unit specifically, which TennCare CHOICES group provides coverage?
• What is the out-of-pocket room and board cost if my parent qualifies for Group 2?

Covering the Room and Board Gap

For families whose parent is in a Group 2 ACLF memory unit, the room and board cost must come from somewhere. Common sources:

The resident's own income. After contributing to the QIT waterfall (if applicable), any remaining income can go toward room and board. Social Security, pension payments, and retirement account distributions all count.

Family contributions. Family members may pay the room and board portion directly. Ask TennCare or a benefits counselor how the payment will be treated in your parent's specific eligibility case.

Long-term care insurance. If the parent purchased a long-term care policy before their diagnosis, it may cover facility room and board. Check the policy's benefit triggers and daily/monthly maximums.

Veterans Aid & Attendance. Veterans and surviving spouses of veterans may qualify for the VA's Aid and Attendance pension supplement, which may help cover the room and board gap. Confirm the current rate and eligibility directly with the VA.

The Tennessee Dementia & Memory Care Guide includes a complete breakdown of CHOICES Group coverage, a QIT setup walkthrough with the monthly waterfall ledger, and a facility evaluation scorecard to use during tours.

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