The main sources of nursing home payment

Most people pay for nursing homes through a combination of three sources: their own savings and income, Medicare (for short stays only), and Medicaid (for longer stays when savings run out). A smaller number have long-term care insurance that covers part of the cost. Very few nursing homes are paid for entirely by one source — most residents use savings first, then switch to Medicaid once their money reaches a certain limit.

The cost of a nursing home varies widely by location and level of care. A semi-private room (shared with one other resident) typically costs more than a shared ward but less than a private room. The type of care — skilled nursing, which includes medical oversight, costs more than custodial care, which focuses on daily living help. Your state, the specific facility, and whether you need rehabilitation or permanent placement all affect what you will pay.

Key Takeaways

  • Medicare covers skilled nursing care for up to 100 days after a hospital stay, but only if you meet specific conditions — it does not cover long-term custodial care.
  • Medicaid covers long-term nursing home stays once your savings fall below your state's limit, but you must have lived in the nursing home for at least 30 days first.
  • Long-term care insurance, purchased before you need care, can cover part of daily costs, but policies vary widely in what they pay and for how long.
  • Many people use personal savings and income (Social Security, pensions, rental income) to pay until those resources run out, then transition to Medicaid.
  • Your state's Medicaid rules determine the income and asset limits, the types of care covered, and how much the facility receives per day.

Medicare coverage for short-term skilled nursing care

Medicare covers a nursing home stay only if you need skilled nursing care — medical care that must be provided by or under the supervision of a nurse. This includes wound care, physical therapy, medication management, or monitoring after surgery. Medicare does not cover custodial care, which is help with bathing, dressing, eating, and toileting without a medical component.

To be covered by Medicare, you must have been admitted to a hospital for at least three consecutive days (not counting the discharge day), and you must enter the nursing home within 30 days of leaving the hospital. Medicare then covers up to 100 days. For days 1 through 20, Medicare pays the full cost. For days 21 through 100, you pay a daily coinsurance amount (the amount changes each year). After day 100, you pay all costs yourself.

Medicare coverage ends when your doctor determines you no longer need skilled care, even if you have not used all 100 days. If you stay longer, you move to paying out of pocket or, if you meet Medicaid rules, you may transition to Medicaid coverage.

Medicaid coverage for long-term nursing home stays

Medicaid is the main source of payment for people who live in nursing homes long-term. Unlike Medicare, Medicaid covers custodial care — the daily help most residents need. However, Medicaid is a joint federal and state program, so the rules vary by state. Your state determines who is covered, what services are paid for, and how much the nursing home receives per day.

To be covered by Medicaid for nursing home care, you must meet an income limit and an asset limit. Income limits are usually around $2,500 per month, though some states allow higher income if you have high medical expenses. Asset limits vary by state but typically range from $2,000 to $3,000 in countable resources. Your home, one vehicle, and some personal items do not count toward the asset limit, but savings, investments, and a second property do.

Most states require you to spend down your savings to the asset limit before Medicaid begins paying. This means you pay the nursing home directly from your own money until your savings reach your state's limit. Once you may have access to, Medicaid pays the facility a set daily rate. You keep a small monthly allowance (usually $30 to $50) for personal needs; the rest of your income goes to the nursing home.

One important rule: Medicaid looks back five years at money you gave away or transferred. If you moved large sums to family members or into trusts to avoid spending them down, Medicaid may impose a waiting period before coverage begins. This is called the look-back period, and the rules are complex — speaking with an elder law attorney before making large transfers can prevent costly mistakes.

Long-term care insurance and what it covers

Long-term care insurance is a private insurance policy you buy before you need care. It pays a daily or monthly benefit toward nursing home costs, assisted living, or home care. Unlike Medicare and Medicaid, which are government programs, long-term care insurance is sold by insurance companies, and the cost and coverage vary widely.

A typical policy might pay $100 to $300 per day toward nursing home costs, though some pay more. The policy specifies how long benefits last — some cover a set number of years (three, five, or ten years), while others cover lifetime care. You choose these details when you buy the policy, and higher daily benefits and longer coverage periods cost more in premiums.

Long-term care insurance is most useful for people with substantial savings who want to protect their assets. If you have $500,000 or more in savings and want to leave money to heirs, insurance can cover part of the nursing home cost and preserve your estate. For people with modest savings, the premiums may not be worth the cost. For people with very low income and few assets, Medicaid is the realistic option, and insurance is unnecessary.

Personal savings, Social Security, and other income sources

Many people use their own money to pay for nursing home care until savings run out. This includes savings accounts, investments, retirement accounts (like IRAs and 401(k)s), pensions, and Social Security income. Some people also have rental income, annuities, or other sources.

If you are married, your spouse's income and assets are treated differently depending on your state and whether you are both in the nursing home. In most states, your spouse can keep a portion of your joint assets and continue receiving income while you are in the nursing home. The exact amount varies by state — some allow the spouse to keep half the couple's assets (up to a maximum), while others use different formulas. An elder law attorney in your state can explain your specific situation.

Social Security income typically goes toward the nursing home bill. If your Social Security check is $1,500 per month and the nursing home costs $8,000 per month, you pay the $1,500 from Social Security and cover the remaining $6,500 from savings, insurance, or Medicaid (once you may have access to).

Veterans benefits and other specialized programs

Veterans and their surviving spouses may be covered by the Department of Veterans Affairs (VA) Aid and Attendance benefit, which provides a monthly payment toward nursing home care, assisted living, or home care. The amount depends on your service history and family income. This benefit does not pay the full cost of a nursing home, but it can cover a significant portion and reduce the amount you need to pay from savings or Medicaid.

To explore whether you may have access to, contact your local VA office or a Veterans Service Officer. Some nursing homes specialize in caring for veterans and may be more familiar with VA benefits and how they coordinate with Medicaid.

A small number of nursing homes are run by religious organizations, fraternal groups, or unions and may offer reduced rates to members or have endowments that subsidize care. These are rare and usually have long waiting lists. Your local Area Agency on Aging can tell you whether any such facilities exist in your region.

How costs are split when multiple sources pay

In practice, most nursing home residents use multiple payment sources at different times. A common pattern is: Medicare pays for the first 100 days after a hospital stay, you pay from savings for months 4 through 24 (or however long your savings last), and then Medicaid takes over once you reach your state's asset limit.

If you have long-term care insurance, it typically pays alongside Medicaid. For example, if your insurance pays $150 per day and the nursing home costs $300 per day, Medicaid covers the remaining $150. The insurance payment reduces the amount Medicaid must pay, which protects your remaining assets.

Your nursing home's billing department should explain how your specific combination of payment sources works. Ask them to show you in writing how each source is being used and what you are responsible for paying. If the explanation is unclear, ask for clarification — this is your money, and you have the right to understand where it is going.

Frequently Asked Questions

Can I protect my house from being sold to pay for nursing home care?

Your primary home is protected under Medicaid rules — it does not count toward your asset limit, and Medicaid cannot force you to sell it while you are alive. However, after you pass away, your state's Medicaid program may try to recover costs from your estate, which could include a claim against your home. Some states allow you to protect your home by placing it in a trust or transferring it to a child before you need care, but the rules are strict and timing matters. An elder law attorney can explain your state's rules.

What happens if I run out of money before I die?

Once your savings fall below your state's Medicaid asset limit, you become covered by Medicaid, which then pays the nursing home. You will not be discharged or denied care because you are out of money. Medicaid is the safety net that ensures you can stay in the facility. You will keep a small monthly allowance for personal needs, and the rest of your income goes to the nursing home.

Does Medicare ever cover long-term nursing home care?

No. Medicare covers skilled nursing care for up to 100 days after a hospital stay, but it does not cover long-term custodial care. Once your skilled care needs end or you use your 100 days, Medicare stops paying. Long-term care is covered by Medicaid, private insurance, or your own money.

Can my family be forced to pay my nursing home bill?

In most states, adult children are not responsible for a parent's nursing home bill. However, a few states have "filial responsibility" laws that can require adult children to pay if a parent cannot. These laws are rarely enforced, but they exist in some states. Check with an elder law attorney in your state to understand your situation.

How do I know if a nursing home accepts Medicaid?

You can call the nursing home directly and ask whether they accept Medicaid residents. You can also search your state's nursing home directory (usually on your state health department website) and filter by Medicaid acceptance. Not all nursing homes accept Medicaid, and some accept only a limited number of Medicaid residents, so it is worth asking early if this is how you plan to pay.