How Families Pay for Long-Term Nursing Home Care
Long-term nursing home care is expensive, and Medicare pays for very little of it. Here are the main ways families cover the cost, and the planning steps that help most.
Short recovery stays after a hospital admission are often covered by Medicare. Long-term care, when someone lives in a nursing home because they can no longer be safely cared for at home, is a different matter. Most families pay through some combination of their own money, insurance and, eventually, Medicaid.
Private funds
Many residents begin by paying privately from savings, pensions, Social Security and the sale or rental of a home. Facilities usually quote private rates per day, and the rate may depend on the room type and level of care. Ask every home on your shortlist for a written list of what the daily rate includes and what is billed separately (for example, some therapies, supplies, hair care or a private phone line).
Use our nursing home cost planner to see how long savings, income and long-term care insurance would last, and roughly when Medicaid could start paying.
Long-term care insurance
A long-term care insurance policy can pay a daily or monthly benefit toward nursing home care. Most policies have an elimination period (a waiting period, often counted in days of care, before benefits start), a daily or monthly maximum, and a lifetime limit. If there is a policy, find it early, call the insurer to start a claim, and ask exactly what documentation it needs from the doctor and the facility.
Medicaid
Medicaid is the largest payer of long-term nursing home care in the United States. It is run by each state within federal rules, so eligibility, application steps and covered services vary. A few points apply broadly:
- Financial limits. Applicants must have limited income and assets. Some assets, such as a primary home in certain circumstances, may not count.
- The look-back period. In most states Medicaid reviews asset transfers made in the five years before applying. Gifts or transfers for less than fair value during that time can lead to a period of ineligibility.
- Protections for a spouse at home. Federal “spousal impoverishment” rules let the spouse who remains at home keep a share of the couple’s income and assets.
- Most income goes toward care. A resident on Medicaid usually contributes most of their monthly income to the cost of care, keeping a small personal needs allowance set by the state.
- Estate recovery. States are required to seek repayment from the estates of some Medicaid recipients after death, with exceptions and protections that vary by state.
See the exact limits for your state, how to apply and where to get free help in our nursing home Medicaid guide by state.
Not every nursing home accepts Medicaid, and some limit the number of Medicaid beds. If a resident may need Medicaid later, ask each home whether a resident who starts as private pay can stay once they become eligible.
Veterans benefits
Eligible veterans may receive nursing home care through the Department of Veterans Affairs: in VA Community Living Centers, State Veterans Homes, or community nursing homes that contract with the VA. Eligibility depends on factors such as service-connected disability and income. Some veterans and surviving spouses also qualify for a VA pension with an additional “Aid and Attendance” amount that can help with care costs. A county veterans service officer can help with applications at no charge.
See the current Aid and Attendance amounts, who qualifies for VA nursing home care, and the state veterans homes in our directory in our guide to VA benefits for nursing home care.
Planning steps that make the biggest difference
- Gather financial documents early: bank and retirement statements, insurance policies, deeds and income records.
- Make sure a durable power of attorney and a health care proxy are in place while your loved one can still sign them.
- Ask the facility’s business office how private pay, insurance and Medicaid applications are handled.
- For complex situations, such as a spouse at home, a family business or recent large gifts, consider talking to an elder law attorney before applying for Medicaid.