The most common ways to pay for nursing home care
Most people pay for nursing home care through a combination of three sources: their own savings, Medicare (which covers only certain short-term stays), and Medicaid (which covers long-term care once savings are spent down). Some families also use long-term care insurance, Veterans benefits, or a combination of these. The path you take depends on how much money you have saved, how long you need care, and which programs you are may be able to access for.
No single payment method works for everyone. A person who needs three weeks of skilled nursing after a hospital stay will use Medicare. Someone who needs five years of care will likely exhaust savings first, then move to Medicaid. A veteran may have access to Aid and Attendance benefits. Understanding what each option covers — and what it does not — helps you plan ahead and avoid running out of money unexpectedly.
Key Takeaways
- Medicare covers short-term skilled nursing care (up to 100 days) after a hospital stay, but not long-term custodial care.
- Medicaid covers long-term nursing home care once your savings fall below your state's limit, which varies widely by state.
- Private pay (using your own money) is often the first option people use, and Medicaid planning can help you preserve some assets before spending down.
- Long-term care insurance, if purchased before age 60, can cover a portion of nursing home costs, though premiums and coverage vary.
- Veterans and their spouses may be may have access to to Aid and Attendance benefits that help cover care costs.
Medicare: What it covers and for how long
Medicare Part A covers skilled nursing facility care, but only under specific conditions. You must have been hospitalized for at least three consecutive days (not counting the day you leave), and you must enter the nursing home within 30 days of leaving the hospital. The care must be for a condition related to your hospital stay — not for a separate problem that develops later.
Medicare pays the full cost of the first 20 days. From day 21 to day 100, you pay a daily coinsurance amount (in 2024, this is $200 per day, though the amount changes yearly) and Medicare covers the rest. After day 100, you pay all costs yourself. Most people do not stay longer than 30 days, so they never reach the coinsurance period.
Medicare does not cover custodial care — help with bathing, dressing, eating, and toileting when skilled nursing is not needed. If you need a nursing home only for these activities, Medicare will not pay. This is a critical distinction, because many people enter nursing homes for custodial care, not skilled care, and discover too late that Medicare does not cover it.
Medicaid: The primary payer for long-term nursing home care
Medicaid is the largest payer of nursing home care in the United States. Unlike Medicare, Medicaid covers both skilled and custodial care for as long as you need it — but only after your savings and assets fall below your state's limit. This limit is called the resource limit, and it varies by state. Some states set it at $2,000 for an individual; others allow more. Your state Medicaid office can tell you the exact limit where you live.
Medicaid also requires you to spend down your income (money coming in each month) on care costs before Medicaid pays. If you receive $2,500 per month in Social Security and nursing home care costs $6,000 per month, you pay the $2,500 and Medicaid covers the remaining $3,500. Some states allow you to keep a small monthly personal needs allowance (typically $30 to $75) for items like toiletries or a phone.
One important rule: Medicaid looks back five years at any money you gave away or transferred. If you gave large sums to family members or moved assets to avoid spending them down, Medicaid may impose a penalty period during which it will not pay, even after your savings are gone. This is why Medicaid planning with an elder law attorney before entering a nursing home can matter — there are legal ways to protect some assets, but they must be done correctly and in advance.
Private pay: Using your own savings and income
Many people pay for nursing home care out of pocket when they first enter, using savings, retirement accounts, pensions, and Social Security. The average cost of nursing home care varies widely by region and facility type, ranging from roughly $4,500 to $8,500 per month or more. Your financial advisor or the nursing home's business office can help you estimate how long your savings will last at your facility's rate.
Private pay is often the starting point because it is straightforward — you pay the facility directly, and there is no waiting period or paperwork delay. Many families use private pay for the first months or years, then transition to Medicaid once savings are depleted. Some facilities have agreements to accept Medicaid after a private-pay period; others do not, so ask about this before admission.
If you are paying privately and want to preserve some assets for your spouse or estate, an elder law attorney can advise you on legal strategies such as irrevocable trusts or spousal transfers, depending on your state's rules. These must be set up before you need care or before you explore for Medicaid, so timing matters.
Long-term care insurance and what it actually covers
Long-term care insurance is a separate insurance policy designed to cover nursing home, assisted living, or home care costs. If you purchased a policy before age 60, premiums are typically lower, though they still increase over time. Policies vary widely in what they cover, how much they pay per day, and how long benefits last.
A typical policy might pay $150 to $300 per day toward nursing home care for a set number of years (often three to five years). If your nursing home costs $6,000 per month and your policy pays $200 per day, the policy covers about $6,000 per month, leaving you to pay the difference or use other funds. Some policies have inflation riders that increase the daily benefit over time; others do not, which means the benefit becomes less valuable as costs rise.
Long-term care insurance is not right for everyone. Premiums can be expensive, and if you do not use the policy, the money is gone. People with substantial savings may not need it; people with very limited income may not be able to afford it. An insurance agent or financial advisor can help you decide whether it makes sense for your situation.
Veterans benefits for nursing home care
Veterans and their surviving spouses may be may have access to to Aid and Attendance benefits through the Department of Veterans Affairs. This is a monthly payment that can help cover nursing home costs. The amount varies based on your income and assets, and it is separate from your regular VA pension or disability payment.
To explore whether you are may have access to to Aid and Attendance, contact your local VA office or work with a VA-accredited representative (many are free through veterans organizations). The process process takes time, and the VA will review your medical records and financial situation. If you are approved, the benefit is paid to you or your representative, and you can use it toward nursing home costs.
Aid and Attendance does not cover all nursing home costs, but it can significantly reduce what you or your family must pay out of pocket. Some veterans also have access to VA community living centers (nursing homes run by the VA itself), which are free to may be able to access veterans, though waiting lists can be long.
Planning ahead: What to do before you need care
The best time to understand your payment options is before you enter a nursing home. If you have time, meet with an elder law attorney to review your assets, discuss Medicaid planning strategies, and understand what will happen to your savings. Ask your financial advisor how long your current savings will last at typical nursing home costs in your area.
If you have long-term care insurance, find the policy and review what it covers. If you are a veteran, gather your discharge papers and contact the VA to ask about Aid and Attendance. If you have a spouse, understand how Medicaid rules protect the spouse who stays at home — most states allow the home spouse to keep the house and a certain amount of savings without it affecting the nursing home resident's Medicaid may be able to access.
Having these conversations now, while you are healthy and can think clearly, makes the transition to nursing home care much less stressful. You will know what to expect financially, and your family will understand the plan.
Frequently Asked Questions
Can I keep my house if I go on Medicaid for nursing home care?
Yes. Medicaid does not count your primary residence as an asset when determining whether you are may be able to access, so you can keep your home. However, after you pass away, Medicaid may place a lien on the house to recover some of the costs it paid for your care. Your state's rules on this vary, so ask your Medicaid caseworker or an elder law attorney about your state's recovery rules.
What happens to my spouse's money if I go on Medicaid?
Medicaid protects the spouse who remains at home. That spouse can keep the house, a car, and a certain amount of savings (called the spousal resource amount, which varies by state but is often $24,000 to $30,000). The home spouse's income is also protected. This means your spouse will not become impoverished because you need nursing home care.
If I run out of money before I die, will the nursing home kick me out?
No. Once you are approved for Medicaid, the nursing home must continue to care for you. Medicaid will pay the facility directly. However, you should confirm before admission that the facility accepts Medicaid, because not all do. Ask in writing whether the facility will accept Medicaid if you transition from private pay.
How do I know if I should buy long-term care insurance?
Long-term care insurance makes most sense if you have significant assets to protect, are in good health, and can afford the premiums without strain. If you have very limited savings, Medicaid will cover you anyway. If you have substantial wealth, the cost of care may not threaten your financial security. A financial advisor can help you decide based on your specific situation.
Can I transfer money to my children to protect it from Medicaid?
Not right before you need care. Medicaid looks back five years at transfers and gifts. Large transfers within that window trigger a penalty period during which Medicaid will not pay. However, an elder law attorney can advise you on legal strategies if you plan ahead — some transfers and trusts are allowed under Medicaid rules if done correctly and in advance.