InsuranceOct 26, 2026
Long-term Care: What it Costs, Who Pays, and Options Besides Insurance
Key takeaways Long-term care is mostly help with daily living, and neither Medicare nor Medigap pays for it beyond limited short-term skilled care. At 2025 national medians, assisted living runs about $74,400 a year and a private nursing home room about $129,575, with local costs varying widely. Medicaid is the largest public payer, but it requires spending down to strict limits, looks back 60 months at gifts, and can recover costs from your estate. Spousal protections let the at-home spouse keep part of the couple's assets and income, within limits that change every year. Reverse mortgages, existing life insurance, care-focused annuities, VA Aid and Attendance, and PACE can each cover part of the cost, and most of them interact with Medicaid rules. Very few families sit down to plan for long-term care on a quiet afternoon. The subject usually comes up after a fall or a frightening stretch of forgetfulness, and the people around the kitchen table suddenly have to decide what kind of help a parent or spouse needs and how they're going to pay for it. Those conversations often start from an assumption that turns out to be wrong, which is that Medicare will step in once the help becomes serious. Learning about this now gives you the one thing many families didn't have, which is time to see how long-term care costs, public programs, and your own resources fit together while every option is still open. What counts as long-term care, and why doesn’t Medicare cover it? Long-term care, which you'll also see called ‘custodial care’ or ‘long-term services and supports’ , includes medical and non-medical care for people living with a chronic illness or disability. Most of it is to help with the basic personal tasks of everyday life, known as activities of daily living, such as dressing, bathing, and using the bathroom. It can be delivered at home, in the community, in an assisted living facility, or in a nursing home. Because most of this care is non-medical care, Medicare and most health insurance, including Medicare Supplement Insurance (often called Medigap) , doesn't pay for it, whether it happens in a nursing home or in the community (1) . The tax code uses a narrower definition that's useful to know, because tax deductions and many care-related benefits are tied to it. For federal tax purposes, a person is chronically ill if a licensed health care practitioner has certified within the past 12 months that they can't perform at least two of six activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) without substantial help for at least 90 days, or that they need substantial supervision because of severe cognitive impairment (2) . How likely is someone going to need it, and for how long? Someone turning 65 today has almost a 70% chance of needing some type of long-term care in their remaining years. Women need care longer on average than men do (3.7 years for women compared with 2.2 years for men) , and while about one-third of 65-year-olds may never need long-term care, roughly 20% will need it for more than five years. More people receive care at home, and for longer, than in facilities, and unpaid care at home is the most common arrangement, used by 59% of people who receive care (3) . Those are federal averages last updated in 2020, so read them as the broad odds rather than a forecast for your own family. What does long-term care cost right now? The national figures below come from a survey of more than 25,000 provider rates gathered between July and November 2025 and released in March 2026 (4) . In 2025 cost growth slowed after several years of steep increases, with most care settings rising between 1% and 5% and adult day health care falling 5%, though actual costs still vary with individual care needs, provider availability, and local market conditions (4) . A median is a midpoint, so plenty of families pay more than these figures, particularly in higher-cost areas. To put the table in household terms, consider a hypothetical stay of three years in assisted living at the 2025 national median. Three years at $74,400 comes to $223,200, and that's before any price increases that may happen along the way. Will Medicare pay for any of it? Yes, Medicare does pay for some care. Short-term skilled nursing after a hospital stay Medicare Part A covers care in a skilled nursing facility (SNF), meaning nursing and therapy that has to be performed by or under the supervision of professionals, but only for a limited time and only after a qualifying hospital stay. That qualifying hospital stay must be at least three consecutive days as an admitted inpatient, not counting the day you leave. Time spent under observation or in the emergency room doesn't count toward those three days, even if you stay overnight, so it's worth asking your doctor or hospital staff directly whether Medicare will cover a SNF stay before you're discharged (5) . You also generally need to enter the facility within about 30 days of leaving the hospital, and a doctor must have decided you need daily skilled care, such as intravenous medication or physical therapy. In 2026, you pay nothing for days 1 through 20 once the $1,736 Part A deductible is met, $217 a day for days 21 through 100, and you pay all costs from day 101 onward, because Part A limits SNF coverage to 100 days in each benefit period (5) . That coinsurance adds up quickly. A person who used all 80 days from day 21 through day 100 in 2026 would owe $17,360 in coinsurance alone, and when the need for daily skilled care ends, so does this coverage, even if the person still needs help with bathing and dressing. Home health care Medicare also covers home health services, but only if you're homebound and need part-time or intermittent skilled care, such as wound care, injections, or physical therapy. A home health aide's help with bathing or walking is covered only while you're also receiving one of those skilled services. In many cases, part-time or intermittent means skilled nursing and aide services combined of up to 8 hours a day and no more than 28 hours a week. Medicare doesn’t pay for round-the-clock care at home. It also won’t pay for shopping and cleaning that isn’t part of the care plan your doctor ordered, or for help with bathing, dressing, and using the bathroom if that’s the only help you need (6) . If Medicare won’t pay, will Medicaid? Medicaid is a joint federal and state program for people with limited income and assets, and unlike Medicare it does pay for custodial care both in nursing homes and at home. It's also the largest public payer of long-term care services. Federal rules set the framework, but states have considerable leeway, so eligibility rules and covered services vary from state to state. Once a state finds you financially eligible, it makes a separate determination about whether your care needs qualify you for nursing home care or home and community-based services, which most states base on how much help you need with personal care and other services (7) . What do the Medicaid financial limits look like? Each state sets its own limits, but the federal standards give you a reference point. For 2026, the federal asset standard for an individual is $2,000 in savings, and the income cap is $2,982 a month (12). Your state may use these figures or set its own, so check with your state Medicaid agency. Once a nursing home resident qualifies, they keep a small personal needs allowance (at least $30 a month under federal rules), plus any income set aside for a spouse at home. The rest of their income goes toward the cost of their care (9) . Your home generally doesn’t count toward Medicaid’s asset limit, but federal law sets a separate cap on home equity when Medicaid is paying for long-term care (10) . Medicaid won't pay for nursing facilities or other long-term care services if your home equity exceeds your state's limit, unless your spouse, a child under 21, or a blind or disabled child lives in the home (11) . For 2026, states must set that limit between a minimum of $752,000 and a maximum of $1,130,000 (12) . Does Medicaid count your spouse’s savings toward the asset limit too? Yes. When one spouse applies, Medicaid counts the couple’s savings together. Federal spousal impoverishment rules then protect part of those savings for the spouse living at home. If that spouse’s own income is low, part of the applicant’s income can go to them as well (9) . For 2026, the protected savings amount falls between $32,532 and $162,660. The rules also protect a monthly income for the spouse at home of at least $2,705 in the lower 48 states as of July 1, 2026, and up to $4,066.50 (12) . Can you give assets away before applying to reach the required minimum? Medicaid's look-back period is 60 months (5-years) . For someone entering a nursing home, the clock runs backward from the date they're both institutionalized and have applied for Medicaid, and any assets given away or sold for less than fair market value during that window can trigger a penalty period during which Medicaid won't pay for their care. The penalty for months it won’t pay equals the total value transferred divided by the state's average monthly private-pay cost of nursing home care, and it doesn't begin until the person is otherwise eligible for Medicaid and would be receiving that level of care (11) . Once a penalty starts, it keeps running even if the person stops receiving institutional care, and states must offer an undue hardship exception when a penalty would endanger someone's health or deprive them of food, clothing, or shelter (10) . Here’s how that works in a state like Iowa, which uses $9,838.96 as its average monthly nursing home cost for applications filed from July 1, 2026, through June 30, 2027 (8) . Say, hypothetically, a parent gave an adult child $60,000 three years before applying. Dividing $60,000 by $9,838.96 means about 6.1 months with no Medicaid coverage. That penalty doesn’t start until the parent is already in a nursing home and otherwise qualifies for Medicaid, which means their savings are already down to the state’s asset limit (the federal standard is $2,000) (12) . For those six months, someone still has to pay the nursing home bill averaging about $9,839 a month, and the parent has almost no savings left to cover it. Gifts made before that 60-month window begins don’t trigger a penalty, which is one reason to talk with an elder law attorney years before care is likely (11) . Medicaid can recover what it paid from the estate after the person’s death If the person was 55 or older when Medicaid paid for their care, the state must try to recover those costs from their estate after they die. That includes nursing home care, care at home, and related hospital and prescription costs, and states can choose to recover other Medicaid costs too (13) . Recovery has to wait while a spouse, a child under 21, or a blind or disabled child of any age survives them, but once the spouse dies, the state can go after the estate (11) . Every state must also offer a hardship waiver. If the person is expected to stay in a nursing home permanently, the state can even place a lien, which is a legal claim, on their house while they’re still alive. It can’t do that if a spouse, a child under 21 , a blind or disabled child, or a sibling who co-owns the home lives there (13) . What about long-term care insurance and how does it work? Long-term care insurance pays for personal and custodial care at home, a community organization, or in a facility (22) . Most policies start paying when you need help with two or more of six activities of daily living or have a cognitive impairment, and only after a waiting period called the elimination period. That period is typically 30, 60, or 90 days, and you pay for your own care during it. After that, most policies reimburse your costs up to a daily limit until you reach the policy’s lifetime maximum (23) . Your premium depends on your age when you buy, the type of policy, and the coverage you choose, and the insurer can raise it later if its pricing assumptions prove wrong (24) . Most individual policies also require medical underwriting, so a health problem can mean a smaller policy, a higher rate, or no policy at all. Ask for a company’s premium rate history before you buy (22) . For premiums by age and a closer look at who benefits most from a policy, read our article Long-Term Care Insurance: What It Costs and Who Really Needs It here . Whether or not you buy a policy, these are other common resources families use to pay for care. Options besides long-term care insurance Most people pay for care with a mix of resources, including personal income and savings, life insurance, annuities, and reverse mortgages, often alongside or instead of insurance (14) . Here's how each of those works, along with two programs that many families overlook. Your own income and savings, with a tax break Paying from savings and income can come with a federal tax deduction. Amounts paid for qualified long-term care services, meaning care required by a chronically ill person under a plan of care prescribed by a licensed health care practitioner, count as medical expenses. Nursing home meals and lodging count too when a principal reason for being there is medical care. You can deduct only the portion of total medical expenses that exceeds 7.5% of your adjusted gross income (AGI), and only if you itemize deductions on Schedule A (2) . In a hypothetical household with an adjusted gross income of $90,000, the first $6,750 of qualifying medical costs wouldn't be deductible, but everything above it would be. Home equity and reverse mortgages A reverse mortgage lets homeowners 62 and older draw cash from their home equity as a lump sum, monthly payments, or a line of credit without selling the home, and there's nothing to repay as long as they keep living there. You keep title, stay responsible for property taxes, insurance, and repairs, and must meet with an approved counselor before applying. The balance comes due when the last borrower dies, sells, or permanently moves out, and the money doesn't count as income for Medicaid eligibility (15) . The catch for long-term care planning is the move-out rule. Under a Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, if the borrower moves out, into a nursing home for example, a spouse who isn't a co-borrower may have to sell the home and move, unless they qualify as an Eligible Non-Borrowing Spouse under rules from the Department of Housing and Urban Development (HUD), which can be difficult (16) . Federal HECM rules also allow the full balance to be called due if a borrower doesn't live in the home for longer than 12 consecutive months because of physical or mental illness and no other borrower lives there (17) . A reverse mortgage tends to fit best when the goal is paying for care at home, not funding a permanent move into a facility. Life insurance you already own Some life insurance policies include an accelerated death benefit, which pays a tax-free advance on the death benefit while you're alive if you need long-term care for an extended period or meet other conditions. The advance is typically capped at 50% of the death benefit, and the monthly amount available for nursing home care is typically about 2% of the policy's face value, with home care paying about half that. On a hypothetical $200,000 policy, that works out to $4,000 a month for nursing home care or $2,000 for home care. Every dollar you take reduces what your beneficiaries receive, and using the feature may affect Medicaid eligibility (18) . If you no longer need the coverage, a life settlement lets you sell the policy for cash, usually only if you're a woman 74 or older or a man 70 or older, and the proceeds may be taxed (18) . Annuities designed around care An immediate annuity converts a single premium into guaranteed monthly income, and it's available regardless of your health, even if you're already receiving care. A deferred long-term care annuity, available up to age 85 and subject to some health screening, creates one fund for care expenses and a separate fund you can use however you like. In both cases the payments may not be enough to cover the full cost of care, and inflation can erode the value of a fixed monthly income over time (19) . Annuities also carry Medicaid rules of their own. Buying an annuity is treated as a penalized transfer unless the state is named as a remainder beneficiary, and for an applicant, the contract generally must also be irrevocable and non-assignable, actuarially sound, and pay out in equal amounts with no deferral or balloon payments (11) . With Medicaid in mind, have an elder law attorney review any annuity before signing. Veterans benefits Veterans and survivors who receive a pension from the Department of Veterans Affairs (VA) may qualify for Aid and Attendance, a monthly payment added on top of that pension. You may qualify if you need another person's help with daily activities like bathing, feeding, and dressing, if illness keeps you in bed much of the day, or if you live in a nursing home because of lost mental or physical abilities related to a disability (20) . PACE The Program of All-Inclusive Care for the Elderly (PACE) coordinates medical and social services through a team of health professionals so that most participants can stay in their community instead of moving into a nursing home. You can join if you're 55 or older, live in a PACE organization's service area, are eligible for nursing home care, and can live safely in the community when you enroll. PACE becomes your sole source of Medicare and Medicaid benefits, and you can leave the program at any time (21) . What do people most often get wrong about paying for care? Counting on Medicare or Medigap to pay. Medicare's nursing facility coverage is short-term, tied to a qualifying hospital stay and a need for daily skilled care, and it ends after 100 days no matter what (5) . Ongoing help with bathing, dressing, and supervision falls outside both Medicare and Medigap (1) . They give money away too close to needing care. Gifting savings to children can feel like protecting the family, but transfers made within the 60-month look-back can create a penalty period that begins only when the parent is already in care and has spent down to Medicaid's limits (11) . By then, the money given away is no longer there to pay the bills. They assume the house is always safe. The home is generally excluded when Medicaid decides eligibility, but that protection has limits. States must seek repayment from the estates of enrollees who received long-term care at 55 or older, and they can place liens on the property of people who are permanently institutionalized (13) . Families who want the home to stay in the family need a plan worked out with an elder law attorney. Where should you start? Every option here comes with tradeoffs that depend on details only you know, from your state's Medicaid rules to the equity in your home. If the possibility of a six-figure annual care bill has been sitting in the back of your mind, a short questionnaire can match you with a vetted financial advisor who can help you see how your savings, your home, and your benefits would hold up, while you still have the time to choose. Find the right financial advisor for your situation. Important disclosures Medicaid and legal disclosure: Medicaid eligibility rules, asset and income limits, home equity limits, transfer penalties, and estate recovery practices are set within federal guidelines but vary significantly by state and change each year. Figures in this article are federal standards for 2026 or an Iowa example labeled as such, and your state’s limits may differ. This article is general information, not legal advice. Before transferring assets, buying an annuity, creating a trust, or applying for Medicaid long-term care coverage, consult a qualified elder law attorney licensed in your state or contact your state Medicaid agency. Insurance and Medicare disclosure: Medicare coverage rules and cost-sharing amounts change annually, and Medicare Advantage plans may cover services differently than Original Medicare. Medicare plan availability and costs vary by location. Contact a licensed Medicare advisor or visit Medicare.gov to compare plans available in your area. Features of life insurance, annuities, and reverse mortgages vary by contract, insurer, lender, and state. This article does not recommend any product, insurer, or lender. Tax disclosure: This article describes federal tax rules in general terms and is not tax advice. Tax laws change, and state rules may differ. Consult a qualified tax professional about your situation. Veterans benefits disclosure: VA pension and Aid and Attendance eligibility depends on service history, income, net worth, and medical need. Contact the VA or an accredited representative for a determination. Cost data disclosure: Cost figures are national medians from the 2025 CareScout Cost of Care Survey, as of its March 2026 release. Actual costs vary by location, provider, and level of care. Illustrative calculations in this article are hypothetical and do not account for future price increases. Investment disclaimer: Nothing on this site constitutes investment advice. All investors are encouraged to conduct their own research before making any investment decision. Past performance is not a guarantee of future results. Editorial independence: Greensprout's editorial team writes on behalf of the reader. Our goal is to provide clear, useful information to help you make better financial decisions. Our editorial content is not influenced by advertiser relationships. Affiliate disclosure: Greensprout is an independent, advertising-supported publisher and comparison resource. We may earn compensation when you click on links to products from our partners. This does not affect our editorial standards or recommendations. References 1. Medicare.gov. "Long-term care." https://www.medicare.gov/coverage/long-term-care 2. Internal Revenue Service. "Publication 502 (2025), Medical and Dental Expenses." https://www.irs.gov/publications/p502 3. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. "How Much Care Will You Need?" https://acl.gov/ltc/basic-needs/how-much-care-will-you-need 4. Genworth Financial, Inc. "CareScout Releases 2025 Cost of Care Survey Results." March 2, 2026. https://investor.genworth.com/news-events/press-releases/detail/1054/carescout-releases-2025-cost-of-care-survey-results 5. Medicare.gov. "Skilled nursing facility care." https://www.medicare.gov/coverage/skilled-nursing-facility-care 6. Medicare.gov. "Home health services." https://www.medicare.gov/coverage/home-health-services 7. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. "Medicaid." https://acl.gov/ltc/medicare-medicaid-and-more/medicaid 8. Iowa Department of Health and Human Services. “Long-Term Care.” https://hhs.iowa.gov/medicaid/services-care/long-term-care 9. Medicaid.gov. “Spousal Impoverishment.” https://www.medicaid.gov/medicaid/eligibility-policy/spousal-impoverishment 10. Centers for Medicare & Medicaid Services. "New Medicaid Transfer of Asset Rules Under the Deficit Reduction Act of 2005" and related enclosures (Sections 6011 through 6016), July 27, 2006. https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/CMS/2006.smdl-enclosures.dra-sections-6011-and-6016.pdf 11. Social Security Administration. "Compilation of the Social Security Laws, Sec. 1917 [42 U.S.C. 1396p]: Liens, Adjustments and Recoveries, and Transfers of Assets." https://www.ssa.gov/OP_Home/ssact/title19/1917.htm 12. Centers for Medicare & Medicaid Services. "CMCS Informational Bulletin: Updated 2026 SSI and Spousal Impoverishment Standards." April 27, 2026. https://www.medicaid.gov/federal-policy-guidance/downloads/cib04272026.pdf 13. Medicaid.gov. "Estate Recovery." https://www.medicaid.gov/medicaid/eligibility-policy/estate-recovery 14. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. "Costs & Who Pays." https://acl.gov/ltc/costs-and-who-pays 15. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. "Reverse Mortgages." https://acl.gov/ltc/costs-and-who-pays/paying-privately/reverse-mortgages 16. Consumer Financial Protection Bureau. "What happens if I have a reverse mortgage and I have to move out of my home, such as moving into a nursing home or to live with family?" https://www.consumerfinance.gov/ask-cfpb/what-happens-if-i-have-to-move-out-of-my-home-into-a-nursing-home-or-assisted-living-and-i-have-a-reverse-mortgage-en-243/ 17. Electronic Code of Federal Regulations. "24 CFR 206.27, Mortgage provisions" (Home Equity Conversion Mortgage Insurance). https://www.ecfr.gov/current/title-24/part-206/section-206.27 18. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. "Using Life Insurance to Pay for Long-term Care." https://acl.gov/ltc/costs-and-who-pays/who-pays-long-term-care/using-life-insurance-to-pay-for-long-term-care 19. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. "Annuities." https://acl.gov/ltc/costs-and-who-pays/paying-privately/annuities 20. U.S. Department of Veterans Affairs. "Aid and Attendance benefits and Housebound allowance." https://www.va.gov/pension/aid-attendance-housebound/ 21. Medicaid.gov. "Program of All-Inclusive Care for the Elderly." https://www.medicaid.gov/medicaid/long-term-services-supports/program-of-all-inclusive-care-for-elderly 22. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. “What is Long-Term Care Insurance?” https://acl.gov/ltc/costs-and-who-pays/what-is-long-term-care-insurance 23. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. “Receiving Long-Term Care Insurance Benefits.” https://acl.gov/ltc/costs-and-who-pays/what-is-long-term-care-insurance/receiving-long-term-care-insurance-benefits 24. U.S. Department of Health and Human Services, Administration for Community Living, LongTermCare.gov. “Long-term Care Insurance Costs.” https://acl.gov/ltc/costs-and-who-pays/what-is-long-term-care-insurance/long-term-care-insurance-costs
