How Families Pay for Long-Term Care
A nursing home can cost more than $100,000 a year. Here are the four ways most families pay for it, and the rules you need to know before you spend a dollar.
How Families Pay for Long-Term Care
A nursing home can cost more than $100,000 a year. Here are the four ways most families pay for it, and the rules you need to know before you spend a dollar.
Medicare and Medicaid Are Not the Same
This is the most common mix-up families make. Medicare will not pay for a long nursing home stay. Medicaid can.
Medicare
Federal health insurance for people 65 and older
What it covers
Hospital stays and doctor visits
Up to 100 days of rehab in a skilled nursing facility after a 3-day inpatient hospital stay, with a daily copay from day 21
Short-term skilled home health care
What it does not cover
Not covered: Long-term custodial care, like help with bathing, dressing, and eating
Not covered: Assisted living rent
Medicaid
Joint federal and state program with income and asset limits
What it covers
Long-term nursing home care
In many states, some in-home and assisted living care through waiver programs
What to know
• Each state sets its own limits and rules
• Medicaid looks back 5 years at gifts and transfers
• It is the largest payer of nursing home care in the U.S.
Get the Checklists for Every Step
Members get the conversation guide, the paperwork checklist, care comparison worksheets, and a live Q&A with Sara every month.
Option 1
Private pay
Paying from your parent's own money. Most care starts here.
• Savings, pensions, and Social Security
• Selling or renting the home, or a reverse mortgage
• Life insurance with a long-term care or accelerated benefit rider
Option 2
Long-term care insurance
A policy that pays a daily or monthly amount for care. It has to be bought before care is needed.
• Benefits usually start when your parent can't do 2 of 6 daily activities, like bathing or dressing, or has a cognitive impairment
• Many policies have a waiting period of 30 to 90 days
• Find the policy now and read the benefit amount and waiting period
Option 3
VA benefits
Veterans who served during a wartime period, and their surviving spouses, may qualify for a monthly pension with Aid and Attendance.
• Your parent must need help with daily activities
• There are income and asset limits
• Only VA-accredited representatives can help file claims, and they can't charge to prepare the first claim
Option 4
Medicaid
The main way families pay for a long nursing home stay after other money runs low.
• Your parent must meet medical, income, and asset rules
• Some assets don't count, like the home in many cases
•Planning ahead can change what the family keeps
Medicaid Terms You'll Hear
Rules and dollar amounts change by state and year. These are the basics every family should know.
Asset limit
The most your parent can have in countable assets and still qualify. In many states it's about $2,000 for a single person.
Exempt assets
Things that usually don't count toward the limit, like the home (up to a value cap), one car, personal belongings, and an irrevocable funeral trust.
5-year look-back
Medicaid reviews every gift and transfer from the last 60 months. Money given away can trigger a penalty period with no coverage.
Spend-down
Using countable assets on allowed expenses, like care, home repairs, or a funeral trust, until your parent is under the limit.
Spousal protections
If one parent needs care and the other lives at home, the spouse at home can keep a share of the couple's assets and income.
Medicaid compliant annuity
A tool some married couples use to turn countable savings into monthly income for the spouse at home. It must meet strict rules, so use it only with professional guidance.
3 Medicaid Myths That Cost Families Money
Myth
“Medicaid is only for people with no money.”
Fact: Medicaid pays for more nursing home care than any other source in the U.S. Families from many income levels qualify.
Myth
“You have to spend everything first.”
Fact: Some assets are exempt, and married couples have added protections. Your parent may not need to spend down to zero.
Myth
“Once they're in a nursing home, it's too late.”
Fact: Even in a crisis, there are legal options. The sooner you ask, the more choices you have.
Talk to an Elder Law Attorney Before You:
● Give money or property to children or grandchildren.
● Sell or transfer your parent's home.
● Add a child's name to a bank account or deed.
● Pay a family member to provide care without a written agreement.
● Apply for Medicaid.
Each of these can trigger a penalty or delay coverage if done the wrong way.
Learn the Rules Before the Bills Start
Members get Medicaid lessons, cost worksheets, and a live Q&A with Sara every month to ask about their own situation.
$29
per month, cancel anytime
Questions About Paying for Care
Will Medicaid take my parent's house?
The home often doesn't count while your parent or a spouse lives there, up to a value limit. After death, states are required to try to recover Medicaid costs from the estate, which can include the home. Ask an elder law attorney about your state's rules.
Can my parent give money to the kids to qualify for Medicaid?
Gifts made within 5 years of applying can cause a penalty period with no Medicaid coverage. Talk to an elder law attorney before any money or property changes hands.
Does Medicaid pay for assisted living?
In many states, waiver programs pay for some care services in assisted living. Room and board is usually not covered.
Is it too late to buy long-term care insurance?
It depends on your parent's age and health. Policies require health questions, and many people over 75 or with a diagnosis won't qualify.
Does the VA pay for nursing home care?
Some veterans qualify for care in VA or community nursing homes. Others use the VA pension with Aid and Attendance to help pay for care.
How long does a Medicaid application take?
Federal rules give states up to 45 days to decide most applications, or 90 days if disability is involved. Missing paperwork adds time.
Worried About Paying for Your Parent's Care?
Tell me what's going on. Someone will contact you within 1 business day.