Does Insurance Pay for Nursing Homes?

Nursing home care represents a substantial financial consideration for many families. Navigating the complexities of how various insurance types might contribute to these costs can be challenging. This article clarifies the roles different insurance plans play in covering nursing home expenses, helping individuals understand potential financial responsibilities and available resources.

Understanding Nursing Home Care Costs

Nursing home care encompasses a range of services, primarily categorized into skilled nursing care and custodial care. Skilled nursing care involves medical treatment and rehabilitation services provided by licensed professionals, often following a hospital stay. This care is typically prescribed by a physician and focuses on improving or maintaining a patient’s condition.

Custodial care, in contrast, provides assistance with daily living activities like bathing, dressing, eating, and mobility. This type of care is non-medical and aims to support an individual’s quality of life and compensate for lost independent functioning.

The national median cost for a semi-private room in a nursing home was approximately $9,277 per month or $111,325 annually in 2024. A private room averaged $10,646 per month or $127,750 per year.

General Health Insurance and Nursing Home Care

Standard health insurance plans, including those obtained through employers or purchased via the Affordable Care Act (ACA) marketplace, are primarily designed to cover acute medical needs. These plans typically do not cover long-term custodial care in a nursing home setting. Their focus is on medical treatments for illnesses or injuries, rather than ongoing personal care.

While these general health insurance policies might offer very limited, short-term benefits for skilled nursing care, this coverage generally applies if the skilled nursing is directly required following an acute medical event and a hospital stay. This is not intended for extended stays and does not extend to comprehensive, long-term personal care.

Medicare Coverage for Nursing Home Stays

Medicare Part A, which is hospital insurance, offers limited coverage for skilled nursing facility (SNF) care, but only under specific conditions. To qualify, an individual must have had a medically necessary inpatient hospital stay of at least three consecutive days, not counting the day of discharge or observation status time. Admission to the SNF must occur generally within 30 days of leaving the hospital, and a physician must certify that daily skilled nursing or rehabilitation services are medically necessary.

Medicare covers up to 100 days of SNF care per benefit period. A benefit period begins the day an individual starts inpatient hospital or SNF care and ends after 60 consecutive days without inpatient hospital or SNF care. For days 1-20, Medicare covers the full cost of approved services.

From day 21 through day 100, beneficiaries are responsible for a daily co-insurance amount, which is $209.50 per day in 2025. After 100 days in a benefit period, Medicare does not cover SNF costs, meaning the individual is responsible for all expenses. Medicare does not cover long-term custodial care in a nursing home if it is the only care needed.

Medicaid Coverage for Nursing Home Stays

Medicaid serves as the primary payer for long-term nursing home care for individuals who meet specific financial and medical eligibility criteria. As a joint federal and state program, Medicaid’s eligibility rules can vary. Generally, applicants must undergo “means-testing,” which evaluates their income and assets to determine financial need.

In 2025, for a single individual, the income limit for Nursing Home Medicaid is typically around $2,901 per month, with countable assets limited to approximately $2,000. Certain assets, such as a primary home (under specific conditions), a car, and personal belongings, are often exempt from these limits. A “look-back period,” generally 60 months (five years), is used to review asset transfers to ensure assets were not given away to qualify for Medicaid, and transfers within this period can result in a penalty period of ineligibility. Medicaid covers both skilled and custodial care for eligible individuals, making it a comprehensive option for those with limited financial resources.

Long-Term Care Insurance

Long-term care (LTC) insurance is specifically designed to cover the costs associated with chronic conditions requiring extended care, including nursing home care, assisted living, and in-home services. Policies typically define a daily benefit amount, which is the maximum dollar amount the policy will pay for care per day. They also specify a benefit period, which is the duration for which benefits will be paid, such as two years, five years, or even a lifetime.

An elimination period, similar to a deductible, is a waiting period before benefits begin, during which the policyholder is responsible for care costs. Common elimination periods range from 30 to 90 days. Benefits are typically triggered when an individual is unable to perform a certain number of Activities of Daily Living (ADLs)—usually two out of six, such as bathing, dressing, or eating—without assistance, or if they have a severe cognitive impairment like dementia. The medical professional must expect that the need for care will last at least 90 consecutive days for benefits to be triggered.

Other Financial Considerations for Nursing Home Costs

Beyond insurance, several other financial avenues exist for covering nursing home expenses. Personal savings and investments are often the initial source of funds for individuals needing care. This “private pay” approach allows individuals to directly cover costs from their accumulated wealth.

Veterans and their surviving spouses may be eligible for benefits through the Department of Veterans Affairs (VA), such as the Aid and Attendance pension. This benefit provides additional financial assistance to eligible wartime veterans or their surviving spouses who require the aid of another person for daily living activities, are housebound, or are patients in a nursing home. While the Aid and Attendance benefit can help offset costs, it typically does not cover the entire expense of nursing home care. Other options can include reverse mortgages, which allow homeowners aged 62 or older to convert a portion of their home equity into cash, or utilizing cash value from life insurance policies.