Paying for Long-Term Care: All Your Options

The Reality of Long-Term Care Financing

Most long-term care is paid for through a combination of personal savings, family contributions and, for those who qualify, Medicaid. Medicare covers only limited, short-term skilled care. Long-term care insurance can help, but most people do not have it. Understanding each option clearly is the first step.

Medicare

Medicare generally does not pay for ongoing custodial long-term care. This is the most important fact for families to understand.

Medicare may cover:

• Short-term skilled nursing facility care after a qualifying 3-day hospital stay (days 1–20 at full Medicare rate; days 21–100 with significant daily co-pay; nothing after day 100)
• Short-term skilled home health care ordered by a physician for a homebound patient
• Hospice care for those with a terminal diagnosis and a life expectancy of 6 months or less

Medicare does not cover: assisted living, memory care room and board, ongoing personal care (bathing, dressing, eating), or long-term nursing home residence for custodial purposes.

For a detailed explanation, see our Medicare and long-term care guide.

Medicaid

Medicaid is the primary payer for long-term care in the United States for people who meet financial and medical eligibility requirements. It covers nursing home care and, in many states, home and community-based services through waiver programs.

Key facts about Medicaid and long-term care:

• Eligibility rules — income limits, asset limits and covered services — vary significantly by state
• Medicaid has a look-back period (typically 5 years) for asset transfers — consult an elder-law attorney before transferring assets
• Many states have waiting lists for home and community-based waiver programs
• Medicaid does not cover all assisted living communities — ask specifically whether a community accepts Medicaid

For state-specific information, see our Medicaid long-term care guide.

Private Funds

Most people begin paying for long-term care with personal savings, retirement accounts, Social Security income and pension income. This is called "private pay." Many people spend down their assets over time and eventually qualify for Medicaid.

• Savings and investment accounts
• Retirement accounts (IRA, 401(k))
• Social Security and pension income
• Home equity — through sale of the home, a reverse mortgage or a home equity loan
• Life insurance with a long-term care rider or accelerated death benefit

Long-Term Care Insurance

Long-term care insurance (LTCI) is designed specifically to cover the cost of long-term care services. Policies vary widely in what they cover, how much they pay and when benefits begin.

• Benefits are typically triggered when the insured cannot perform 2 of 6 activities of daily living (ADLs) or has a cognitive impairment
• Policies have an elimination period (waiting period) — typically 30–90 days — before benefits begin
• Daily or monthly benefit amounts vary; inflation protection riders help maintain purchasing power
• Covered settings vary — verify that the policy covers the type of care you are planning for
• Premiums can increase over time — ask about the insurer's rate increase history

For a detailed guide, see our long-term care insurance guide.

Veterans Benefits

Eligible veterans and surviving spouses may qualify for VA benefits that help pay for long-term care. Key programs include:

• Aid and Attendance benefit: a pension supplement for veterans who need help with daily activities or are in a nursing home
• VA Community Living Centers (nursing homes operated by the VA)
• VA-contracted community nursing homes
• Home-based primary care and adult day health care programs
• Caregiver Support Program for family caregivers of eligible veterans

Contact the VA at va.gov/geriatrics or call 1-800-827-1000 to learn about eligibility and available programs.

PACE (Program of All-Inclusive Care for the Elderly)

PACE is a Medicare and Medicaid program that provides comprehensive medical and social services to frail older adults who need nursing-home-level care but prefer to remain in the community. PACE covers medical care, personal care, adult day services, transportation and more — all coordinated through a PACE center.

PACE is available in many but not all states and communities. To find a PACE program near you, visit the National PACE Association at npaonline.org.

Community Programs and Free Resources

• Area Agencies on Aging: provide free information, referrals and care coordination — find yours through the Eldercare Locator at eldercare.acl.gov or 1-800-677-1116
• State pharmaceutical assistance programs: help with medication costs
• Supplemental Nutrition Assistance Program (SNAP): food assistance for low-income seniors
• Low Income Home Energy Assistance Program (LIHEAP): utility assistance
• Volunteer caregiver programs through local nonprofits and faith communities