Medicare doesn’t cover most long-term care costs. Many families mistakenly believe it will, but Medicare only pays for short-term skilled nursing care after specific hospital stays and limits coverage to 100 days. It does not cover custodial care, such as help with daily activities like bathing or eating, long-term nursing home stays, or assisted living.
Here’s what you should know:
- Medicare’s Limitations: Focuses on short-term recovery, not ongoing care. Custodial care and extended nursing home stays are excluded.
- Medicaid’s Role: Covers long-term care for those who meet strict income and asset requirements. Recent policy changes, however, make eligibility more challenging.
- Costs Are High: Private nursing homes can exceed $100,000 annually, and assisted living averages $60,000 per year.
- Planning Is Key: Options include long-term care insurance, personal savings, or exploring Medicaid eligibility. Early family discussions about care preferences and financial planning can prevent last-minute crises.
With rising costs and limited public support, it’s critical to plan ahead to protect your finances and ensure your loved ones receive the care they need.
Does Medicare Pay for Long-Term Care?
Medicare Coverage for Long-Term Care
Understanding the limits of Medicare’s long-term care coverage can help your family avoid unexpected financial burdens. Medicare focuses on short-term recovery and rehabilitation, not ongoing daily assistance.
Skilled Nursing Facility Coverage
Medicare does cover skilled nursing facility (SNF) care, but only in specific situations. This care is aimed at recovery and rehabilitation after a qualifying hospital stay – not for long-term custodial care.
To qualify for Medicare SNF coverage in 2025, several conditions must be met:
- Three-Day Hospital Rule: The patient must have an inpatient hospital stay of at least three days (observation stays don’t count).
- Timely Admission: Admission to the SNF must happen within 30 days of being discharged from the hospital.
- Medical Necessity: The care must be related to the condition treated during the hospital stay and require skilled nursing or therapy services on a daily basis.
If these requirements are met, Medicare covers SNF care as follows in 2025:
- After the Part A deductible of $1,676 per benefit period is paid, Medicare covers the first 20 days in full.
- From days 21 to 100, patients are responsible for a daily co-payment of $209.50.
- Beyond 100 days, Medicare stops covering the costs entirely.
While this benefit can be helpful, it’s important to note that Medicare’s coverage is limited to skilled care and does not extend to other types of long-term care needs.
What Medicare Does Not Cover
Medicare does not pay for several key types of long-term care, leaving families to manage these expenses on their own:
- Custodial Care: Help with daily activities like bathing, dressing, eating, and using the bathroom is not covered, even if it’s provided by trained professionals in a healthcare setting.
- Long-Term Nursing Home Stays: After the 100-day SNF benefit is used up, Medicare offers no further support, and families must cover all additional costs.
- Assisted Living Facilities: Costs for assisted living, including memory care or independent living with added services, are not covered by Medicare.
- Home-Based Custodial Care: While Medicare may cover limited home health services, such as nursing visits or physical therapy, it does not pay for ongoing personal care assistance.
This gap in coverage can catch families off guard, often leading to unexpected financial strain.
Understanding these limitations is a critical step in planning for long-term care. Once you’re aware of what Medicare doesn’t cover, you can start exploring other options like Medicaid or long-term care insurance to help manage these expenses.
Skilled Nursing Care vs. Custodial Care
Understanding the difference between skilled nursing care, which involves medical expertise, and custodial care, which focuses on daily living assistance, is crucial. This distinction directly affects long-term care planning, especially when factoring in Medicare’s coverage limitations. Knowing which type of care your loved one needs can help you avoid unexpected costs and make informed decisions.
Skilled Nursing Care Explained
Skilled nursing care refers to medical treatments provided by licensed professionals, such as registered nurses (RNs), physical therapists (PTs), or occupational therapists (OTs). These services are designed for recovery or rehabilitation and require clinical expertise. Examples include physical therapy after a stroke, wound care for surgical sites, intravenous (IV) injections, and post-surgical rehabilitation. To qualify for Medicare coverage, these services must be prescribed by a doctor.
Medicare covers up to 100 days of skilled nursing care per benefit period, but only under strict conditions. For instance, the patient must have had a three-day hospital stay and be admitted to a Medicare-certified facility within a specific timeframe.
In contrast, custodial care focuses on assisting with daily activities and does not involve medical procedures.
Custodial Care Explained
Custodial care provides non-medical support for activities of daily living (ADLs), such as bathing, dressing, eating, toileting, and moving from bed to chair. This type of care is often delivered by non-licensed caregivers, family members, or aides. While essential for ensuring comfort and safety, custodial care does not require medical training or clinical expertise.
For example, a caregiver helping an older adult with dementia to bathe or dress is providing custodial care. However, Medicare does not cover custodial care unless it is part of a broader skilled nursing care plan prescribed as medically necessary. This means families often need to pay out of pocket, explore Medicaid eligibility, or rely on unpaid family caregivers to meet these needs.
| Care Type | Who Provides Care | Medicare Coverage | Typical Services | Duration Covered |
|---|---|---|---|---|
| Skilled Nursing Care | Licensed professionals (RNs, PTs, OTs) | Yes, up to 100 days per benefit period | Physical therapy, wound care, IV medications, post-surgical care | Up to 100 days (with qualifying conditions) |
| Custodial Care | Non-licensed caregivers, family members | No | Assistance with bathing, dressing, eating, toileting, supervision | Not covered |
Misunderstandings about Medicare coverage are common. A 2025 survey revealed that 58% of Americans mistakenly believe Medicare will pay for long-term care costs, even though nearly 70% of people turning 65 will require some form of long-term care.
To determine the type of care your loved one needs, evaluate the complexity of their situation. If medical procedures, therapy, or clinical monitoring are involved, skilled nursing care is likely required. If the need is primarily for help with daily tasks, custodial care is the appropriate option. Consulting a physician or care manager can provide clarity and help guide your decisions.
Planning ahead can make a significant difference. Families can explore options such as long-term care insurance, Medicaid planning, or family caregiving arrangements before a crisis arises. Tools like ElderHonor‘s toolkit offer valuable resources for navigating these decisions, including guidance on aging in place and end-of-life planning.
How Medicaid Covers Long-Term Care
Since Medicare doesn’t cover many long-term care needs, Medicaid becomes a key public option for extended care. Medicaid steps in to address the gaps left by Medicare, offering coverage for essential long-term care services to those who meet its eligibility criteria. For families facing long-term care challenges, Medicaid provides a broader safety net.
Medicaid Long-Term Care Benefits
Medicaid funds a range of long-term care services, including nursing home care and home- and community-based services (HCBS). HCBS allows qualified individuals to receive support like personal care, adult day care, and respite care for caregivers – right in their homes or communities.
For those who meet low-income requirements or have depleted their financial resources, Medicaid covers costs Medicare doesn’t, such as ongoing nursing home stays and custodial care. This financial support can be critical, especially considering the average need for long-term care spans about three years.
Medicaid Eligibility Requirements
Accessing Medicaid’s long-term care benefits requires meeting strict eligibility criteria. These include income and asset limits that vary by state, often forcing families to spend down their assets to qualify. Under the Budget Reconciliation Act of 2025, the home equity limit for Medicaid long-term care services will increase to $1 million starting January 1, 2028.
Applicants must provide extensive documentation, including financial records, proof of income, asset details, and medical assessments that demonstrate the need for care. Navigating these requirements can be challenging, and many families turn to professionals for help. State-specific rules and penalties for improper asset transfers add to the complexity. Recent changes, such as new work requirements and copays, may also make it harder to access home-based services, potentially pushing more individuals toward institutional care.
For those beginning to plan, tools like ElderHonor’s toolkit offer valuable resources. These include modules on estate management and guidance for having care planning discussions, helping families better understand Medicaid’s complexities.
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Covering Long-Term Care Costs
Medicare’s limited coverage and Medicaid’s strict eligibility rules leave many families facing significant out-of-pocket expenses for long-term care. In fact, 70% of Americans aged 65 and older will require some form of long-term care during their lifetime. This gap between what people expect and what reality delivers highlights the importance of planning ahead.
By 2025, the annual cost of a private nursing home room is projected to exceed $100,000. Assisted living averages around $60,000 per year, while in-home care runs between $25 and $30 per hour. With costs rising due to factors like inflation, workforce shortages, and growing demand, early financial planning is more important than ever.
Long-Term Care Insurance Options
One way to tackle these high costs is through long-term care insurance. These policies cover services like in-home care, assisted living, and nursing home care – expenses that Medicare typically does not handle. When exploring insurance options, it’s important to evaluate details such as the daily or monthly benefit amount, the elimination period (how long you wait before benefits start), the maximum benefit period, inflation protection, and the types of care settings covered.
Timing is everything with long-term care insurance. Premiums are lower for younger, healthier applicants. Since policies are medically underwritten, pre-existing health conditions can increase costs or even disqualify applicants. This makes it crucial to secure coverage well before care is needed. Also, take time to research the insurer’s financial stability and history to ensure they can meet long-term obligations.
Paying Out of Pocket
For those without insurance, personal savings often become the default funding source. While paying out of pocket allows for flexibility and immediate access to care, it can quickly drain retirement funds and disrupt inheritance plans.
Families can take several steps to manage these expenses. Setting aside dedicated savings specifically for long-term care is a straightforward approach. Tax-advantaged accounts like Health Savings Accounts (HSAs) are another option, offering triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses, including long-term care.
Other financial tools, such as reverse mortgages, annuities, or life insurance policies with long-term care riders, can also help cover costs. Consulting a financial planner can be a game-changer, helping families anticipate future needs and create a sustainable plan by coordinating multiple funding sources.
Having Family Discussions
Financial planning is only part of the equation – clear communication within the family is equally important. Early, open discussions about long-term care preferences and costs can help set expectations, prevent misunderstandings, and avoid last-minute decisions during a crisis. Key topics to address include care preferences, available financial resources, legal documents like powers of attorney, and the roles and responsibilities of family members.
“The goal of ElderHonor is to provide you knowledge to make confident decisions about your parents as they age so you are not in crisis mode but have those conversations and make plans before they are needed.”
ElderHonor offers tools like the ElderHonor Toolkit, which includes structured modules to guide these conversations. For families facing particularly challenging decisions, professional coaching can be invaluable. ElderHonor also provides one-on-one coaching to help families navigate disagreements and create tailored care plans. This personalized support can make a big difference in reaching agreements and ensuring everyone is on the same page.
Combining financial strategies with open family communication creates a well-rounded approach to long-term care planning.
2025 Medicare and Medicaid Updates
The Budget Reconciliation Act of 2025 (H.R. 1) has introduced sweeping changes to Medicare and Medicaid, directly affecting long-term care coverage. These updates bring new hurdles for families already navigating the complexities of care planning, with funding cuts and stricter eligibility rules set to roll out throughout 2025.
The Act is expected to result in 7.5 to 10 million low-income individuals losing Medicaid coverage, leaving 15 million uninsured. For families relying on these programs to manage long-term care costs, these changes mark a major shift in how care will be accessed and funded. Below is a breakdown of the key changes and their timeline.
Budget Reconciliation Act of 2025
Starting January 1, 2025, several major provisions take effect. One of the most significant changes is the reduction in Medicaid funding for Home and Community-Based Services (HCBS), which could push more people into nursing facilities.
Additionally, states are now prohibited from implementing new provider taxes to fund Medicaid programs. States that have expanded Medicaid will also face reduced allowable provider taxes, limiting their ability to generate revenue for optional programs like HCBS.
Another major change is the introduction of work requirements. Beginning January 1, 2027, adults aged 19 to 64 will need to meet work requirements or qualify for an exemption to maintain Medicaid coverage. While this primarily affects younger adults, the added administrative hurdles could also impact older adults and those with disabilities who may struggle with the process.
Changes to asset limits for long-term care eligibility are also on the horizon. Starting January 1, 2028, the Medicaid Long-Term Services and Supports (LTSS) home equity limit will be frozen at $1 million, making families with higher home equity ineligible.
Furthermore, as of October 1, 2028, Medicaid expansion enrollees will face copayments of up to $35 for most services. These additional out-of-pocket costs could discourage people from seeking necessary care or place a heavier financial burden on families.
| Year | Key Policy Change | Impact on Long-Term Care |
|---|---|---|
| 2025 | Ban on new provider taxes; funding cuts begin | Reduced HCBS funding |
| 2027 | Work requirements for adults 19-64 | Administrative hurdles for coverage |
| 2028 | Home equity limit frozen at $1 million | Stricter eligibility rules |
| 2028 | Copays up to $35 for expansion enrollees | Increased out-of-pocket costs |
These changes collectively reduce Medicaid’s capacity to support long-term care, making access more challenging and increasing costs for families. This underscores the importance of reassessing long-term care plans.
How Changes Affect Care Access
The new legislation introduces significant barriers for families seeking affordable long-term care. The funding cuts to states are particularly concerning, as they are likely to result in reductions to optional Medicaid programs like HCBS. These services are crucial for helping individuals remain in their communities rather than moving to institutional settings.
At the same time, the Act eliminates key protections for nursing home residents by imposing a moratorium on minimum staffing standards. This could lead to diminished quality and safety in nursing care facilities, even as HCBS options become scarcer.
For immigrant families, the changes are even more restrictive. Eligibility for Medicare among lawfully present immigrants is now limited to lawful permanent residents, Cuban and Haitian entrants, and COFA migrants for new enrollees. Other lawfully present immigrants will gradually lose eligibility, compounded by reductions in federal funding for emergency Medicaid.
The combined effect of these updates is clear: families can expect higher out-of-pocket costs and less public support for long-term care. With 58% of Americans mistakenly believing Medicare covers long-term care costs, the gap between expectations and reality continues to grow.
To navigate these challenges, families should revisit their assumptions about coverage and explore alternative funding strategies. Resources like ElderHonor’s educational tools and coaching services can provide guidance on adapting to these new requirements and building realistic care plans that account for reduced public program support.
Next Steps for Long-Term Care Planning
Planning for long-term care can be tricky, especially with recent changes to Medicare and Medicaid. However, taking steps now can help you manage costs and avoid financial stress later.
Here’s a breakdown of the key points and actions you can take to prepare.
Main Points to Keep in Mind
- Medicare has limited coverage for long-term care. It only pays for short-term skilled nursing care (up to 100 days after a hospital stay) and doesn’t cover custodial care like help with bathing, dressing, or eating. Since most long-term care involves custodial care, Medicare won’t cover these expenses.
- Medicaid is the largest public payer for long-term care but has strict income and asset requirements. Changes, such as those introduced by the Budget Reconciliation Act of 2025, could result in 7.5 to 10 million low-income individuals losing Medicaid eligibility.
- Misunderstandings about coverage are common. For instance, 58% of Americans mistakenly believe that Medicare covers long-term care costs. Meanwhile, around 70% of people aged 65 and older will need some form of long-term care, often for an average of three years. About 20% will require care for more than five years.
- Family caregivers shoulder most of the burden. While family caregiving remains the backbone of long-term care in the U.S., rising costs and reduced public support are creating financial and emotional strain on families.
With these realities in mind, here are some actionable steps to help you and your family prepare.
Steps Families Can Take Now
- Start talking about care preferences and finances early. Have conversations about care needs, financial resources, and family roles before health issues arise. Planning ahead allows for thoughtful decision-making rather than scrambling during a crisis.
- Review your financial situation and insurance coverage. Check your retirement savings, insurance policies, and any gaps in coverage. For example, Medicaid income limits for individuals in 2025 are set at $2,901 per month, so many families may need to explore alternative funding options.
- Look into long-term care insurance sooner rather than later. Premiums increase with age and pre-existing health conditions, so it’s best to secure a policy while you’re younger and healthier.
- Seek advice from professionals. Elder law attorneys can help you navigate Medicaid eligibility rules and protect assets, while financial planners can create funding strategies tailored to your situation and the evolving legal landscape.
- Use educational tools to guide your planning. Resources like the ElderHonor Toolkit offer detailed modules on topics such as assessing care needs, aging in place, and estate planning. For example, the “Start the Conversation” module includes tips for evaluating health and financial situations, plus 25 worksheets to organize your planning. Other modules, like “Aging in Place & The Move” and “Last Days & Arrangements”, provide additional guidance for living arrangements and end-of-life decisions.
- Consider family coaching for complex situations. If your family is struggling to reach consensus or needs extra support, personalized coaching – like ElderHonor’s one-on-one sessions – can provide tailored advice to help navigate these challenges.
The bottom line? Don’t wait for a crisis to start planning. With public support becoming less reliable, taking proactive steps now will give your family a stronger foundation to handle future long-term care needs.
FAQs
How can families find out if their loved one qualifies for Medicaid long-term care benefits?
Medicaid eligibility for long-term care benefits hinges on both financial and medical requirements, which can differ from state to state. To figure out if your loved one qualifies, you’ll need to assess their income, assets, and medical needs. Medicaid often enforces strict limits on income and resources, though some assets – like a primary home – might be excluded under certain conditions.
To make sense of the process, consider reaching out to your state’s Medicaid office or consulting with an elder care planning professional. For additional support and tools to navigate caregiving decisions, ElderHonor provides resources designed to help families tackle these challenges with confidence.
How can families plan for long-term care expenses that Medicare doesn’t cover?
Medicare generally doesn’t pay for custodial care, which includes help with everyday tasks like bathing or dressing – services that make up a large portion of long-term care. To handle these expenses, families can look into long-term care insurance, which covers services Medicare doesn’t provide. Another proactive option is starting a health savings account (HSA) early, allowing you to save funds that can later be used tax-free for qualified medical expenses.
It’s also a good idea to work with a financial planner to build a budget that factors in future care needs. For those who qualify based on income and assets, Medicaid might offer additional support. Exploring resources like ElderHonor can provide valuable guidance, helping families plan effectively and approach these challenges with greater confidence.
How can families begin conversations about long-term care and financial planning to avoid unexpected challenges?
Starting the conversation about long-term care early can make a world of difference in avoiding rushed, high-pressure decisions later. Begin by talking with your loved one about their preferences – do they want to stay in their home, or are they open to exploring assisted living options? From there, you can ease into other important topics like financial planning, insurance details, and any gaps in Medicare coverage that might need attention.
To make these discussions easier, ElderHonor provides helpful tools and resources designed to guide families through the process. By taking these steps now, you’ll feel more prepared and confident, no matter what the future holds.