Most nursing home costs are not covered by standard health insurance
Medicare covers some nursing home stays, but only under specific conditions and only for a limited time. Private health insurance almost never covers the cost of living in a nursing home. Long-term care insurance, Medicaid, and your own savings are the main sources that actually pay for extended nursing home care. Understanding which payer covers which costs — and for how long — is the difference between knowing what you owe and being surprised by a bill.
Key Takeaways
- Medicare covers up to 100 days in a skilled nursing facility after a hospital stay of at least three days, but only if you need skilled care like wound dressing or physical therapy.
- Medicare does not cover custodial care — help with bathing, dressing, and meals — which is what most long-term nursing home residents actually need.
- Medicaid covers nursing home care for people with low income and assets, but the rules vary by state and you must spend down savings to become may be able to access.
- Long-term care insurance, if you have it, may cover nursing home costs, but the policy terms determine what it actually pays and for how long.
- Most nursing home residents pay out of pocket, through Medicaid, or through a combination of Medicare (for the first 100 days) and then Medicaid or savings.
What Medicare covers and for how long
Medicare covers a skilled nursing facility stay only after you have been in a hospital for at least three consecutive days. The stay must be for the same condition you were hospitalized for, or a related one. Medicare then covers up to 100 days, but with cost-sharing: you pay nothing for days 1 through 20, and a daily copay for days 21 through 100. After day 100, Medicare pays nothing.
The key word is skilled care. Medicare pays only for care that requires a nurse or therapist — wound care, intravenous medication, physical therapy, speech therapy, or similar services. It does not pay for help with bathing, dressing, eating, or toileting, even if you need that help every day. Most people who stay in nursing homes long-term need custodial care, not skilled care, so Medicare stops paying after the skilled need ends — often much sooner than 100 days.
If you are discharged from the nursing facility and then readmitted within 30 days for the same condition, the new stay may be covered as a continuation. If you are readmitted after 30 days, a new three-day hospital stay is required to trigger Medicare coverage again.
Why private health insurance does not cover nursing homes
Private insurance — the kind you buy through an employer or the individual market — is designed to cover medical treatment, not long-term residential care. A nursing home is a place to live, not a hospital. Even if you need medical services while you live there, your insurance treats the room, board, and custodial care as non-medical expenses that insurance does not cover.
Some supplemental insurance policies (Medigap plans) cover some of the copays Medicare charges during a skilled nursing stay, but they do not extend the stay beyond 100 days or cover custodial care. If you have a health savings account (HSA), you cannot use it to pay for nursing home room and board either, though you can use it for medical services provided at the facility.
How Medicaid covers nursing home care
Medicaid is the main payer for long-term nursing home care in the United States. Unlike Medicare, Medicaid covers both skilled care and custodial care — the daily help with bathing, dressing, and meals that most residents need. Medicaid also covers the room and board itself, not just the medical services.
To be covered by Medicaid for nursing home care, you must meet your state's income and asset limits. Income limits vary by state but are usually around $2,500 per month for a single person. Asset limits also vary — some states allow up to $2,000 in countable assets, others allow more. Your home, one vehicle, and some personal items do not count toward the asset limit, but savings, investments, and a second property do.
If your income or assets are above the limit, you must spend them down on care costs until you may have access to. This is called "spending down to Medicaid." Once you are below the threshold, Medicaid covers the nursing home bill. The amount Medicaid pays varies by state and by facility — some nursing homes accept Medicaid, others do not.
Long-term care insurance and what it actually pays
Long-term care insurance is a separate policy designed specifically to cover nursing home care, assisted living, and in-home care. If you have this insurance, the policy document spells out what it covers, how much it pays per day, and for how long. Some policies cover only nursing homes; others cover assisted living and home care too.
The daily benefit amount — say, $150 or $300 per day — is what the policy will pay toward your care costs. If the nursing home costs more than that, you pay the difference. If it costs less, the policy pays what the home charges, up to the daily limit. Most policies have a maximum benefit period — often three years or five years — after which they stop paying.
Long-term care insurance is expensive, especially if you buy it after age 60, and premiums can increase over time. Not everyone can afford it or may have access to for it. If you have it, contact your insurance company before entering a nursing home to understand what the policy covers and what paperwork the facility needs.
Veterans benefits for nursing home care
Veterans may be covered for nursing home care through the Department of Veterans Affairs (VA) if they meet service requirements and financial thresholds. The VA covers both skilled nursing facilities and community living centers. The amount the VA pays depends on your service history, disability rating, and income.
If you are a veteran, contact your local VA office or call the Veterans Benefits hotline to learn what nursing home benefits you may have. Some states also offer additional veteran-specific programs. This coverage can significantly reduce out-of-pocket costs, but you must start the process before or shortly after admission.
Out-of-pocket costs and what to budget for
If you do not have Medicare coverage, Medicaid coverage, long-term care insurance, or veteran benefits, you pay the nursing home bill yourself. The cost varies widely by region and facility type. Some nursing homes are more expensive than others, and costs in urban areas are typically higher than in rural areas. You will need to contact specific facilities to learn their rates.
Even if one of the payers above covers part of your stay, you may owe copays, deductibles, or the difference between what the payer allows and what the facility charges. Some facilities charge extra for services like therapy, medications, or special diets. Ask the nursing home for a detailed cost breakdown before admission so you know what you are responsible for.
Frequently Asked Questions
Can I use my Medicare Advantage plan to cover a nursing home stay?
Medicare Advantage plans follow the same rules as Original Medicare: they cover skilled nursing facilities for up to 100 days after a hospital stay, with the same copays and limitations. They do not cover custodial care or extended stays. Contact your plan to confirm coverage before admission.
What happens if I run out of money while in a nursing home?
If you have spent down your savings, you can explore for Medicaid to cover the remaining costs. The nursing home's social worker can help you start the process. Medicaid will cover care going forward, though the facility must accept Medicaid for this to work. Some facilities do not accept Medicaid, so confirm this before admission.
Does long-term care insurance cover the full cost of a nursing home?
It depends on the policy. If your daily benefit amount matches or exceeds the nursing home's daily rate, the policy covers the full cost. If the home costs more than the daily benefit, you pay the difference. Check your policy document or call your insurance company to see what your specific daily benefit is.
Can I use my life insurance policy to pay for nursing home care?
Some life insurance policies have a long-term care rider that allows you to draw on the death benefit early if you need nursing home care. Not all policies have this option. If you have life insurance, contact your insurance company to ask whether this feature is available on your policy.
Will my nursing home bill go down after Medicare stops paying?
No. The nursing home's daily rate stays the same whether Medicare, Medicaid, you, or a combination of payers is covering it. What changes is who pays the bill, not the amount. If Medicare stops paying and you do not have Medicaid coverage, you become responsible for the full daily rate.