Who Pays for Nursing Home Care?

1Why this matters

Many families learn how nursing home care is paid for in a crisis, after a hospital stay, with days to decide. The most common surprise is that Medicare covers far less than they expected, and the most expensive mistakes, such as giving away money or misunderstanding a hospital's observation status, happen in the first weeks. This guide explains what Medicare pays, how Medicaid covers long-term care, and the rules that protect a spouse. For how the two programs differ in general, see our guide to Medicare and Medicaid.

2What does Medicare pay for?

Medicare Part A covers care in a skilled nursing facility only after a qualifying hospital stay: at least three days in a row as an inpatient, not counting the day you leave. The care must be daily skilled nursing or therapy for a condition treated in the hospital, and you generally must enter the facility within 30 days of leaving the hospital.

• Days 1 to 20: nothing after the Part A hospital deductible, which is $1,736 per benefit period in 2026.
• Days 21 to 100: $217 a day in 2026.
• After day 100: nothing; Medicare stops paying for that benefit period.

Coverage also ends sooner if you stop needing daily skilled care, even before day 100. Many Medigap policies pay the daily coinsurance for days 21 to 100.

3The three-day rule and observation status

Time in the hospital under observation, or in the emergency room, does not count toward the three days, even if you stay overnight in a hospital bed. Hospitals must tell you in writing, with a Medicare Outpatient Observation Notice, when you have been under observation for more than 24 hours. Ask every day whether you are an inpatient or under observation, because the answer decides whether Medicare will pay for skilled nursing afterward.

4What Medicare does not pay for

Medicare does not pay for long-term custodial care: help with bathing, dressing, eating, using the toilet and moving around when that is the only care you need. A stay that is mainly custodial is not covered however long it lasts. Medicare Advantage plans cover skilled nursing much as Original Medicare does, often without the three-day rule, but generally do not cover long-term custodial care either, though some add limited extra benefits.

5How Medicaid pays for long-term care

Medicaid is the main public payer for long-term nursing home care. To qualify, a person must meet the state's medical need standard, usually a need for help with several daily activities, and its income and asset limits, which are strict and vary by state. The home, one car and personal belongings are often excluded, with a limit on home equity. Many people spend down their savings on care before Medicaid begins to pay.

Once on Medicaid, most of the person's monthly income goes toward the cost of care, after keeping a personal needs allowance, which federal rules set at no less than $30 a month and most states set higher, and after paying any health insurance premiums. Medicaid pays the rest. Many states also pay for care at home or in assisted living through waiver programs, which can let people delay or avoid a nursing home. To check basic Medicaid eligibility, use our Medicaid calculator, though long-term care rules are stricter than the general income test.

6The five-year look-back

When someone applies for Medicaid long-term care, the state reviews money and property transferred in the previous 60 months. Giving assets away or selling them for less than fair value in that period can bring a penalty period during which Medicaid will not pay for nursing home care, calculated from the amount given away.

Some transfers are exempt, such as transfers to a spouse, to a child who is blind or has a disability, or in some cases of the home to a child who provided care that kept the parent at home. A few states handle the rules differently, so get advice before moving any money.

7How spouses are protected

When one spouse needs nursing home care and the other stays at home, federal spousal impoverishment rules let the community spouse keep a share of the couple's resources and enough income to live on, so they are not left in poverty. The amounts are updated yearly and vary by state within federal limits. The home is generally not counted while a spouse lives there.

After the Medicaid recipient's death, states must seek to recover what they paid for long-term care from the estate, but they generally cannot while a surviving spouse, a child under 21, or a blind or disabled child is living, and there are hardship exceptions.

8Other ways to pay

• Long-term care insurance, if bought years earlier, pays a daily amount for care.
• Veterans may qualify for nursing home care through the VA or for extra pension payments for help with daily activities.
• The PACE program, in many areas, covers medical care and long-term care for people 55 and older who need nursing home level care but can live safely in the community.
• Hospice care is covered by Medicare for people with a terminal illness, including in a nursing home, though room and board is not.

9Before choosing a facility

Ask whether the facility is certified by Medicare for skilled nursing and whether it accepts Medicaid, and if so for how many beds, because a resident who runs out of money may otherwise have to move. Medicare's Care Compare tool shows star ratings, staffing levels and inspection results for every certified nursing home.

10Common mistakes

• Assuming Medicare will pay for a long stay. It covers short-term skilled care only.
• Not checking whether a hospital stay was inpatient or observation.
• Giving money to family shortly before applying for Medicaid, which can trigger a penalty period.
• Waiting until savings are gone to contact the state Medicaid agency, instead of planning the application.
• Choosing a facility that does not accept Medicaid when savings may run out.

12What this does not tell you

Medicaid rules for long-term care differ by state, including asset limits, home equity limits, the personal needs allowance and spousal protections. Your state Medicaid agency has the exact figures.

This guide is general information, not legal or financial advice. Decisions about transferring assets are best made with an elder law attorney or legal aid office.