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Trust Law/Level IV · Trusts that care/4.2 Old age and long-term care/Lesson 1

Paying for long-term care

How people in the US pay for long-term care: Medicare’s limited skilled-nursing coverage, Medicaid, long-term care insurance and private funds.

Education, not legal advice. Trust law changes from country to country and state to state, and the right structure depends on your situation. Anything you sign should be drafted or reviewed by a qualified lawyer where you live.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Medicare covers skilled nursing for up to 100 days per benefit period: in 2026, $0 a day for days 1-20 after the $1,736 Part A deductible, then $217. The catch: a 3-day inpatient admission, and observation time does not count.
  2. Medicaid is the main long-term care payer. For 2026 a spouse at home keeps resources between $32,532 and $162,660 (state choice) and income of at least $2,643.75 a month; transfers within 60 months can still trigger penalties.
  3. PACE bundles Medicare and Medicaid care for people aged 55 or older who need nursing-home-level care but can live safely in the community; enrolment requires living in a PACE organization’s service area.
  4. Long-term care insurance premiums count as medical expenses up to 2026 age limits, $4,960 at 61-70 and $6,200 over 70; per-diem benefits are tax-free up to $430 a day. A state Partnership policy adds a dollar-for-dollar Medicaid asset disregard.
  5. Before paying anyone, free State Health Insurance Assistance Program counselling and the Eldercare Locator (1-800-677-1116) map local options; private nursing-home care had a 2024 national median of $127,750 a year, so planning early is the cheapest step.

MaterialsYour Medicare card or other health-insurance card, to see which coverage you haveContact details for your state’s Medicaid agency, which medicaid.gov lists by stateAny long-term care insurance policy you hold, with its benefit triggers and benefit amounts

Wonder

  1. Does Medicare pay for a long stay in a nursing home?
  2. How does Medicaid treat gifts made in the years before someone applies?
  3. What does a long-term care insurance policy actually pay for, and when?

Explore

  1. Medicare covers skilled nursing facility care only on a short-term basis. Under Original Medicare Part A, it generally requires a medically necessary inpatient hospital stay of at least 3 days in a row and a need for daily skilled nursing or therapy, and it covers up to 100 days in each benefit period. For 2026, medicare.gov lists $0 a day for days 1-20 after the Part A deductible, $217 a day for days 21-100, and all costs after that. Medicare Advantage plans may have different rules.
  2. Most long-term care is not medical. It is custodial care: help with bathing, dressing, eating and other daily activities, at home, in assisted living or in a nursing home. Medicare.gov states that Medicare does not pay for long-term care when that is the only care a person needs, and that Medicare Supplement (Medigap) policies do not either. This gap is why families look at the other ways of paying described below, and why many use more than one over time.
  3. Medicaid, a joint federal and state program, is described on medicaid.gov as the primary payer across the nation for long-term care services. It is means-tested: each state sets income and asset limits within federal rules, and many people qualify only after spending their own savings on care. Coverage includes nursing-facility care and, depending on the state, care at home or in the community. Income rules and the home are covered in lessons 4.2.4 and 4.2.5.
  4. Medicaid also looks back at gifts. Under the Deficit Reduction Act of 2005, transfers for less than fair value made within 60 months before applying (for transfers on or after 8 February 2006) can cause a penalty period without long-term care coverage (lesson 4.2.3). After death, states must seek to recover long-term care costs paid for people aged 55 or older from their estates, with delays while a surviving spouse or a child under 21 or blind or disabled is alive (lesson 4.2.5).
  5. Long-term care insurance pays benefits when a policy’s triggers are met, commonly needing help with a set number of daily activities or having a severe cognitive impairment. Premiums depend largely on age and health when the policy is bought. Under the Deficit Reduction Act of 2005, states may offer certified ‘Partnership’ policies: for each dollar of benefits paid, a dollar of the policyholder’s assets can be disregarded when Medicaid eligibility is assessed and in estate recovery. Not every state has a Partnership program.
  6. Private pay means using savings, pensions, Social Security, retirement accounts or the proceeds of selling a home. Costs vary widely by state and type of care. The Genworth and CareScout Cost of Care Survey for 2024 reported national medians of $127,750 a year for a private nursing-home room, $70,800 for assisted living and $77,792 for a home health aide at 44 hours a week. Free Medicare counselling is available through State Health Insurance Assistance Programs. This lesson describes the options; it does not suggest which to use.

Key facts

  • Medicare Part A covers up to 100 days of skilled nursing facility care per benefit period, generally after an inpatient hospital stay of at least 3 days in a row.
  • Medicare does not pay for long-term custodial care when that is the only care a person needs.
  • Medicaid is means-tested, and medicaid.gov describes it as the primary payer for long-term care services in the US.
  • The Deficit Reduction Act of 2005 set a 60-month look-back for transfers made on or after 8 February 2006.
  • Long-term care Partnership policies let a dollar of assets be disregarded for Medicaid for each dollar of benefits paid, in states with a Partnership program.
  • The Genworth and CareScout Cost of Care Survey for 2024 reported a national median of $127,750 a year for a private nursing-home room; costs vary widely by state.

Exercise nine, six, three, one

9CollectList up to 9 sources of money or coverage that could help pay for care in your family (some families have fewer), such as Medicare, Medicaid, an insurance policy, savings, a pension, Social Security, a home or help from relatives.
6ClusterSort them into 6 categories: Medicare, Medicaid, insurance, savings and investments, income, and property and family help.
3DistillReduce the 6 categories to 3 groups: sources that pay only for short-term or skilled care, sources that could pay for long-term custodial care, and sources you need to ask your state Medicaid agency or an adviser about.
1CrystallizeWrite 1 sentence naming the payment source you most want to learn more about, and why.

Fact check

Dates, figures and claims checked against the published sources listed below.

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