Planning for long-term care can feel overwhelming, especially when trying to understand what Medicare and Medicaid actually cover. About 60% of us will need help with everyday activities like getting dressed and making meals at some point in our lives, but there’s a lot of confusion about who pays for what.

Understanding these programs now can help you make informed decisions and avoid costly surprises later.

What Medicare Does and Doesn’t Cover

Here’s an important fact that surprises many people: Medicare generally doesn’t cover long-term care. This includes ongoing help with daily activities like bathing, dressing, eating, and using the bathroom – what’s called “custodial care.”

Limited Medicare Coverage

Medicare Part A does provide coverage for skilled nursing facility care, but only under specific circumstances:

• Short-term stays only: Coverage is limited to 100 days per benefit period
• Must follow hospitalization: You need a qualifying 3-day inpatient hospital stay first
• Skilled care required: The care must be medically necessary skilled nursing or rehabilitation services

Cost breakdown for skilled nursing facility care:

• Days 1-20: Medicare pays 100% after you meet your Part A deductible ($1,676 in 2025)
• Days 21-100: You pay $209.50 per day, Medicare covers the rest
• After 100 days: You pay everything

Medicare also covers hospice care for terminally ill patients and limited home health services when medically necessary and ordered by a doctor.

What Medicare Won’t Cover

Most long-term care needs fall outside Medicare’s scope:

• Assistance with activities of daily living when that’s the only care needed
• Long-term nursing home stays
• Assisted living facility costs
• Adult day care programs
• Most home care services for non-medical needs

How Medicaid Fills the Gap

Unlike Medicare, Medicaid is the country’s largest payer of long-term care services. Medicaid covers about 60% of nursing home residents and pays for more than half of the nation’s extended nursing home stays.

What Medicaid Covers

Nursing Home Care: Medicaid covers 100% of nursing home costs for eligible individuals, including room and board, personal care assistance with daily activities, skilled nursing care, medication administration, and medical supplies.

Home and Community-Based Services: About half of Medicaid’s long-term care spending helps people stay in their homes, covering personal care services, home health aides, adult day care, respite care for family caregivers, home modifications for accessibility, and transportation to medical appointments.

Medicaid Eligibility Requirements

To qualify for Medicaid long-term care, you must meet both financial and functional requirements.

Financial Limits (2025)

• Income limit: Generally $2,901 per month for individuals in most states
• Asset limit: Usually $2,000 for individuals
• Home equity: Protected up to $730,000 or $1,097,000 depending on your state

These limits vary significantly by state. Some states have different thresholds, and married couples have additional protections for the spouse remaining in the community.

Functional Requirements

You must need a “Nursing Facility Level of Care,” which typically means requiring hands-on help with at least two activities of daily living (bathing, dressing, eating, mobility, toileting).

The “Spend Down” Reality

Here’s something many middle-class families don’t realize: paying for long-term care can deplete even substantial savings. A private nursing home room averages $127,750 annually, while assisted living runs about $70,800 per year.

Many people who start paying privately eventually “spend down” their assets until they qualify for Medicaid. In fact, some people who are now on Medicaid didn’t start out qualifying – the high cost of care depleted their savings.

Other Options to Consider

Long-Term Care Insurance

Only about 4% of people over 65 have long-term care insurance, but it can provide valuable protection. These policies typically pay benefits when you need help with at least two activities of daily living.

Veterans Benefits

Military veterans may qualify for long-term care benefits through the Department of Veterans Affairs, including nursing home care and at-home services.

Medicare Advantage Plans

Some Medicare Advantage plans offer additional benefits beyond traditional Medicare, such as limited coverage for home health services. However, these plans generally don’t cover true long-term custodial care.

Planning Ahead Makes a Difference

Start the Conversation Early

Don’t wait until you need care to understand your options. Have conversations with family members about preferences and start researching what’s available in your area.

Consider Your Home

Your primary residence is typically protected from Medicaid’s asset limits if you live there or intend to return. However, Medicaid may seek reimbursement from your estate after your death, which could affect inheritance plans.

Explore Local Resources

Contact your local Area Agency on Aging to learn about services and support programs in your community. These agencies can help you understand what’s available before you need it.

Get Professional Guidance

Consider meeting with an elder law attorney to understand how different care scenarios might affect your finances and what planning strategies might be appropriate for your situation.

Long-term care planning isn’t just about insurance or government benefits – it’s about understanding your options so you can make informed decisions that align with your values and preferences.

Key Takeaways

• Medicare provides very limited long-term care coverage – mainly short-term skilled nursing after a hospital stay
• Medicaid is the primary payer for long-term care, covering both nursing homes and home-based services for those who qualify financially
• Income limits for Medicaid are typically around $2,901/month with asset limits around $2,000 for individuals
• Many middle-class families eventually qualify for Medicaid after spending down their assets on care costs
• Your home is usually protected from Medicaid’s asset limits, but estate recovery may apply
• Planning ahead helps you make informed decisions about future care needs