Guides · Paying for care
How to Pay for Nursing Home Care: Medicare, Medicaid, Insurance and Savings
Medicare covers only a short skilled-nursing stay. For anything longer, the options are Medicaid, long-term care insurance and your parent's own savings. Here is how each one works.
By naveen · Updated · How we research our guides
What to know
- To pay for nursing home care beyond a short stay, the sources are savings and income, long-term care insurance if a policy exists, and Medicaid for people who qualify.
- Medicare covers up to 100 days of skilled nursing per benefit period after a qualifying three-day hospital stay, and in its own words, "Medicare doesn't pay for long-term care."
- Medicaid pays for long-term nursing home care for people who meet income and asset rules, with a 60-month look-back at asset transfers.
- Whoever handles your parent's money will need legal authority to do it, which is why a durable power of attorney matters here too.
- Retirement Checklist puts the money questions in order with the documents they depend on.
Nursing home care is paid for from savings and income, long-term care insurance if your parent has a policy, or Medicaid for people who qualify; Medicare covers only a short skilled-nursing stay of up to 100 days (Medicare.gov). In Medicare's own words, "Medicare doesn't pay for long-term care." Which mix applies depends on how long care is needed and what your parent has.
Which sources pay for nursing home care?
Four sources pay, each with a limit. ACL's LongTermCare.gov says that "You will have to pay for long-term care services that are not covered by a public or private insurance program" (ACL).
| Source | What it pays for | The limit |
|---|---|---|
| Medicare | A short skilled-nursing stay | Up to 100 days per benefit period, after a qualifying 3-day inpatient stay; not long-term custodial care |
| Medicaid | Long-term nursing home care | Only for people who meet income, asset and care-need rules, set by each state within federal law |
| Long-term care insurance | Help with daily living, in settings the policy covers | Only if a policy was bought in advance; its terms decide when and how much it pays |
| Savings and income | Anything | Until they run out |
Each row has its own guide: Medicaid and paying for long-term care and long-term care insurance. For what each type of facility provides, see assisted living, memory care and nursing homes.
Does Medicare pay for nursing home care?
Only for a short skilled stay. Medicare Part A covers care in a skilled nursing facility only after "a prior medically necessary inpatient hospital stay of at least 3 days in a row," and "Part A limits SNF coverage to 100 days in each benefit period" (Medicare.gov). The person must need daily skilled care, such as physical therapy or intravenous medications.
The day-to-day help with dressing, bathing and using the bathroom is long-term custodial care, and Medicare doesn't pay for it at home, in the community, in assisted living or in a nursing home (Medicare.gov).
How does Medicaid pay for nursing home care?
Medicaid pays for long-term nursing home care for people who qualify: ACL's LongTermCare.gov says "Medicaid covers nursing home services for all eligible people age 21 and older" (ACL). It's a joint federal and state program, eligibility depends on income and assets, and states "have considerable leeway in how they operate their programs" (ACL).
Two rules shape the timing:
- The look-back. For transfers made on or after February 8, 2006, Medicaid looks back 60 months at assets given away or sold for less than fair market value, and a transfer inside that window can bring a period of ineligibility (42 U.S.C. 1396p(c)).
- Income after eligibility. Once someone is covered in a nursing home, the state reduces what it pays the facility by the person's income left after required deductions, including a personal needs allowance and an amount for a spouse at home (42 C.F.R. 435.725).
States can also pay for care at home or in the community through home and community-based services, for people who would otherwise need nursing home care (42 U.S.C. 1396n(c)). What's offered varies by state. The details are in our guide to Medicaid and paying for long-term care.
What about long-term care insurance?
Long-term care insurance pays toward help with daily living: ACL describes policies that "reimburse policyholders a daily amount (up to a pre-selected limit)" for help with activities such as bathing, dressing or eating (ACL). That's the gap Medicare leaves. Whether a policy pays depends on its terms: what triggers benefits, how long the waiting period is, how much it pays and for how long. A policy has to exist before care is needed, so the first question is whether your parent has one and what it says. See long-term care insurance.
Who handles the money?
Someone with legal authority does: paying for care means dealing with banks, benefits and bills on your parent's behalf. A durable power of attorney "gives the person you choose the power to manage your financial estate" (ACL). Without one, the CFPB explains, "A court can name a guardian or conservator to manage your money and property if the court decides that you can't manage your money by yourself" (CFPB); see conservatorship and guardianship.
Two other things protect the money itself. Beneficiary designations on retirement accounts, insurance and payable-on-death accounts are a separate check from the will. And it can help to know the warning signs of scams.
Why plan before care is needed?
Because several rules depend on time. The 60-month look-back means decisions about assets interact with Medicaid eligibility years later. A long-term care policy has to be bought before it's needed, and ACL warns that someone in poor health or already receiving long-term care "may not qualify for long-term care insurance." And the legal documents that let family manage money have to be signed while your parent can sign them. None of that requires deciding anything today; it requires knowing what the options are.
An elder law attorney in your parent's state is the professional for how these pieces fit together. We name the category, never a firm.
What questions are worth asking?
- If care were needed in the next year, what would pay for it?
- Does your parent have a long-term care policy, and what does it say triggers benefits?
- Has your parent made large gifts or transfers in the last five years?
- Who has legal authority to handle your parent's money if they can't?
- Who in the family would apply for Medicaid, and do they know what documents it takes?
Every guide in paying for care
Frequently asked questions
Does Medicare pay for nursing home care?
Only for a short skilled stay. Medicare Part A covers skilled nursing facility care for up to 100 days per benefit period after a qualifying inpatient hospital stay of at least three days in a row. Medicare doesn't pay for long-term custodial care, such as help with bathing, dressing and using the bathroom.
How do most people pay for a nursing home?
Through savings and income, long-term care insurance if a policy exists, and Medicaid for people who qualify. ACL's LongTermCare.gov says Medicaid pays for "the largest share of long-term care services." Medicare's role is limited to a short skilled stay. Which combination applies depends on your parent's finances, any policy, and state rules.
Will Medicaid take my parent's house?
It depends on the state and the circumstances. A home can be excluded when Medicaid counts assets, subject to a federal home equity limit. After death, federal law requires states to seek recovery of long-term care costs from some recipients' estates, which can include the home. Ask an elder law attorney in your parent's state before anything is transferred or sold.
What is the Medicaid look-back period?
It's the 60 months before an application during which Medicaid reviews asset transfers made for less than fair market value. Transfers inside that window can result in a period of ineligibility. The 60-month window comes from federal law, 42 U.S.C. 1396p, for transfers on or after February 8, 2006, and each state applies it.
Can Medicaid pay for care at home instead?
Yes, for people who would otherwise need nursing home care. States can pay for care at home or in the community, such as personal care, through home and community-based services. What's offered, who qualifies and whether there's a waiting list depend on the state, so the state Medicaid agency is the place to ask.
Getting started
How care gets paid for depends on decisions and documents that are easiest to handle early. The plan this site builds asks four questions, including which state your parents live in, and puts the steps that matter most for your family in order. It's free and takes about 90 seconds.
Sources
- Medicare.gov, Long-term care coverage: Medicare's statement that it doesn't pay for long-term care.
- Medicare.gov, Skilled nursing facility care: The 100-day skilled nursing benefit and the 3-day inpatient stay rule.
- 42 U.S.C. 1396p, Transfers of assets and estate recovery (govinfo.gov): The 60-month look-back and estate recovery.
- 42 U.S.C. 1396n, Home and community-based waivers (govinfo.gov): Medicaid payment for care at home.
- 42 C.F.R. 435.725, Post-eligibility treatment of income (eCFR): How a resident's income goes toward care.
- ACL LongTermCare.gov, Who pays for long-term care?: What Medicare, Medicaid and private sources pay.
- ACL LongTermCare.gov, Medicaid estate recovery: Recovery from a recipient's estate after death.
- ACL LongTermCare.gov, What is long-term care insurance?: How policies pay and who may not qualify.
- CFPB, Managing someone else's money: Considering a financial caregiver?: Powers of attorney, and when a court names a guardian or conservator.
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