Financial Guide
How to Pay for Nursing Home Care
A complete guide to Medicare, Medicaid, insurance, VA benefits, and private pay options for nursing home costs.
TL;DR
Nursing home care costs a median of $8,000-$9,000/month. Medicare only covers short-term skilled nursing (up to 100 days). Medicaid is the primary payer for long-term care but requires meeting strict income and asset limits. Long-term care insurance, VA benefits, and private savings fill the gaps. Most families use a combination of sources.
How Much Does Nursing Home Care Cost?
Nursing home care is the most expensive form of senior care. According to the Genworth Cost of Care Survey, the national median costs are:
Semi-Private Room
$8,000/mo
~$96,000/year
Private Room
$9,000/mo
~$108,000/year
Costs vary dramatically by state and metropolitan area. Alaska, New York, and Connecticut are among the most expensive, while Oklahoma, Missouri, and Louisiana tend to be more affordable. Use our cost calculator to estimate costs in your state.
Medicare Coverage for Nursing Home Care
Medicare is the federal health insurance program for people 65 and older. It covers skilled nursing facility (SNF) care on a short-term basis, but it does not cover long-term custodial care -- the type of care most nursing home residents need.
What Medicare Covers
- Up to 100 days of skilled nursing facility care per benefit period
- Requires a qualifying 3-day minimum hospital stay (inpatient, not observation status)
- Days 1-20: Fully covered by Medicare (no copay)
- Days 21-100: You pay a copay of $204.50/day (2024 rate)
- After day 100: No Medicare coverage; you pay the full cost
Key Limitation
Medicare only covers “skilled” nursing care -- services like physical therapy, IV medications, or wound care that require licensed medical professionals. It does not cover long-term custodial care (help with daily activities like bathing, dressing, and eating), which is the primary reason most people are in a nursing home.
Medicaid: The Primary Payer for Long-Term Care
Medicaid is a joint federal-state program and the largest single payer of nursing home care in the United States. Unlike Medicare, Medicaid does cover long-term custodial care -- but you must meet strict financial eligibility requirements.
Eligibility Requirements
Income Limits
Vary by state, but typically around $2,829/month for an individual (300% of the SSI Federal Benefit Rate in most states). Some states use different income methodologies.
Asset Limits
Generally $2,000 in countable assets for an individual. Your primary home (up to a certain equity value), one vehicle, personal belongings, and certain burial funds are typically exempt.
Look-Back Period
Medicaid reviews 60 months (5 years) of financial records to identify asset transfers made below fair market value. Gifts or transfers during this window can result in a penalty period of ineligibility.
Spend-Down Rules
If your assets exceed the Medicaid limit, you must “spend down” by paying for care out of pocket until your assets fall below the threshold. This means most people begin as private-pay residents and transition to Medicaid once their savings are depleted. Married couples have additional protections: the “community spouse” can retain a portion of joint assets (the Community Spouse Resource Allowance), which varies by state but is typically between $30,828 and $154,140 (2024).
Check your potential eligibility with our Medicaid eligibility estimator. Rules vary significantly by state, so consulting a Medicaid planning attorney is strongly recommended.
Long-Term Care Insurance
Long-term care insurance (LTCI) is a private insurance product designed specifically to cover nursing home, assisted living, and home care costs. It can be a valuable tool, but it must be purchased before you need care.
Typical Policy Features
- Daily benefit: $150-$300/day (you choose the amount when purchasing the policy)
- Elimination period: 30-90 days before benefits begin (similar to a deductible)
- Benefit period: Typically 2-5 years, or unlimited (premiums increase with longer periods)
- Inflation protection: Some policies include automatic benefit increases (3-5% annually) to keep pace with rising care costs
Important Considerations
Premiums are based on your age and health at the time of purchase. The ideal time to buy is in your mid-50s to early 60s. Once you have a chronic condition or cognitive decline, you will likely be denied coverage. Insurers can also raise premiums over time, which has happened frequently in recent years.
Veterans Benefits
The Department of Veterans Affairs offers several programs that can help pay for nursing home care for eligible veterans and their surviving spouses.
Aid & Attendance Benefit
A pension supplement for veterans (or surviving spouses) who need help with daily activities. Maximum monthly rates:
Veterans
$2,431/mo
Surviving Spouses
$1,318/mo
To qualify, the veteran must have served at least 90 days of active duty with at least one day during a period of war, and must have an honorable discharge.
VA Community Living Centers
The VA operates its own nursing home facilities (Community Living Centers) across the country. Veterans with a service-connected disability rating of 70% or higher, or those who need care for a service-connected condition, may receive care at no cost. Eligibility for others depends on available resources.
Out-of-Pocket and Private Pay
Many families pay for nursing home care directly from personal savings, retirement accounts, or other assets. In fact, private pay is the starting point for most nursing home residents who eventually transition to Medicaid.
Common Private Pay Sources
- Retirement savings: 401(k), IRA, and pension distributions
- Home equity: Selling the family home or taking a reverse mortgage
- Life insurance: Some policies can be converted to a long-term care benefit or sold through a life settlement
- Annuities: Medicaid-compliant annuities can convert countable assets into an income stream
- Family support: Contributions from adult children or other family members
Hybrid Approaches: Combining Payment Sources
Most families don't rely on a single payment source. A realistic financial plan for nursing home care often involves layering multiple options:
A Common Payment Timeline
- 1Medicare (days 1-100): After a qualifying hospital stay, Medicare covers skilled nursing for up to 100 days
- 2Private pay + insurance: Long-term care insurance benefits kick in after the elimination period, supplemented by personal savings and retirement income
- 3Medicaid transition: Once assets are spent down below the threshold, Medicaid takes over as the primary payer
Planning ahead is critical. The 60-month Medicaid look-back period means you can't simply transfer assets to qualify. Families should consult with an elder law attorney well before care is needed to develop a comprehensive financial strategy.
Finding the Right Facility
Cost is just one factor. Quality of care varies enormously between facilities. Before committing to any nursing home, review its inspection history, staffing levels, and quality metrics.
Frequently Asked Questions
Does Medicare pay for nursing home care?
Medicare covers up to 100 days of skilled nursing facility care after a qualifying 3-day hospital stay. Days 1-20 are fully covered, and days 21-100 require a $204.50/day copay (2024). Medicare does not cover long-term custodial care, which is what most nursing home residents need.
How do I qualify for Medicaid nursing home coverage?
Medicaid eligibility for nursing home care requires meeting both income and asset limits, which vary by state. Generally, individuals must have income below approximately $2,829/month and countable assets below $2,000. Most states apply a 60-month look-back period on asset transfers. A Medicaid planning attorney can help navigate the rules in your state.
What is the average cost of a nursing home per month?
The national median cost is approximately $8,000/month for a semi-private room and $9,000/month for a private room, or roughly $96,000 to $108,000 per year. Costs vary significantly by state and metro area. Use our cost calculator to estimate costs in your state.
Can I use long-term care insurance for nursing home costs?
Yes. Long-term care insurance policies typically cover $150 to $300 per day for nursing home care. Most policies have an elimination period of 30 to 90 days before benefits begin. You must purchase the policy before you need care, and premiums increase significantly with age.
What VA benefits are available for nursing home care?
Veterans who need assistance with daily activities may qualify for the Aid & Attendance benefit, which provides up to $2,431/month. Surviving spouses may receive up to $1,318/month. The VA also operates its own Community Living Centers (nursing homes) for eligible veterans. Contact your local VA office to determine eligibility.
What happens if I run out of money paying for a nursing home?
If you exhaust your savings while in a nursing home, you can apply for Medicaid. Most nursing homes accept Medicaid, and federal law prohibits them from discharging a resident solely because they transition from private pay to Medicaid. However, the facility must be Medicaid-certified, and you will likely need to move to a semi-private room.
This guide is for informational purposes only and does not constitute financial, legal, or medical advice. Eligibility rules, benefit amounts, and costs change frequently. Consult with a qualified elder law attorney or financial advisor for guidance specific to your situation. All figures cited are based on 2024 data and national medians unless otherwise noted.