Who Pays for Long-Term Care: Medicare, Medicaid, or You

Medicare.gov has a page called "Long-term care." Under the title there is a status box, and the box contains two lines. The first reads Not Covered. The second, under Costs, reads: "You pay all costs."

Two floors up in the same hospital, a discharge planner will tell a family that Medicare covers the rehab.

Both of those are true. They are about different things, and what separates them is a single adjective sitting in a regulation from 1983.

Everything turns on the word "skilled"

42 CFR 409.31 is where Medicare says what it is buying. Skilled nursing and skilled rehabilitation services are services that are ordered by a physician, that require the skills of technical or professional personnel — the regulation lists registered nurses, licensed practical nurses, physical therapists, occupational therapists, speech pathologists and audiologists — and that are furnished directly by or under the supervision of those people. Three more conditions follow in paragraph (b). The care has to be needed on a daily basis. It has to be for a condition treated during the qualifying hospital stay, or one that arose in the SNF while being treated for such a condition. And it has to be care that, "as a practical matter, can only be provided in a SNF, on an inpatient basis."

Now look at what happens to everything else. 42 CFR 411.15 lists the services Medicare does not pay for, and paragraph (g) is custodial care. The regulation never describes it. It defines it by subtraction, in a parenthesis: "Custodial care is any care that does not meet the requirements for coverage as SNF care as set forth in §§ 409.31 through 409.35 of this chapter."

Bathing, dressing, toileting, cueing, sitting with somebody who gets up at three in the morning and tries to leave — none of that is named anywhere. It is the remainder. Which is why the conversation at a care conference is never really about whether a person needs help. It is about which side of 409.31 the help falls on, and the family and the facility are usually arguing about two different questions without noticing.

One argument that sounds like this one is not this one: coverage ending because a person has "plateaued" is a separate issue with its own manual language, and "not improving" is not a reason to end Medicare coverage.

Medicare's stretch of road is short, and it has a day counter on it

Before any of it starts, 42 CFR 409.30 wants two things: at least 3 consecutive calendar days as a hospital inpatient, not counting the day of discharge, and admission to the SNF within 30 calendar days of that discharge. Note the word inpatient. Observation days in a hospital bed do not count, and that is its own fight.

After that, 42 CFR 409.61(b) sets the shape of the benefit in two sentences: up to 100 days per benefit period, Medicare pays for all covered services for the first 20, and for the 21st through the 100th day it pays everything except a daily coinsurance amount that belongs to the beneficiary.

Home health is the other Medicare door, and it is narrower than families expect. Medicare.gov's coverage page conditions it on being homebound and needing part-time or intermittent skilled care. It then puts numbers on "intermittent": skilled nursing and home health aide services combined, up to 8 hours a day and a maximum of 28 hours a week. A provider who decides it is necessary can stretch that to 35 hours a week for a short time, at less than 8 hours a day. The same page names four things it will not pay for, and the list reads like a description of what long-term care actually is: 24-hour-a-day care at home, home meal delivery, homemaker services unrelated to the care plan, and custodial or personal care that helps with daily living "when this is the only care you need."

When Medicare's part ends, it ends on paper, and the paper has a clock. The document that starts one is covered separately in filing a fast appeal of a skilled nursing discharge, and the coinsurance line it produces shows up in reading a skilled nursing facility bill.

Medicaid has to pay for the nursing home. It does not have to pay for the house.

This is the asymmetry that decides more cases than any dollar figure, and almost nobody hears it stated plainly.

Nursing facility services for people aged 21 and older are a mandatory Medicaid benefit. 42 CFR 440.210(a)(1) says a state plan must, at a minimum, furnish the services defined in §§ 440.10 through 440.50 — and 440.40(a) is nursing facility services. Home and community-based services are not in that range. They live in a waiver under section 1915(c) of the Act and 42 CFR part 441, subpart G, which a state applies for, designs, caps, and may run a waiting list against. That is the whole reason a family can be told their parent qualifies for care at home and then be told to wait, and it is why what "approved but waiting" means is a question about a waiver rather than about a person.

There is a second paragraph doing quiet work here. 42 CFR 441.310(a)(2) makes federal money unavailable for the cost of room and board under an HCBS waiver, with two narrow exceptions — respite care in a state-approved facility that is not a private residence, and a portion of rent and food attributable to an unrelated live-in caregiver on waivers that permit them. That single sentence is why a waiver can pay the aide who works in an assisted living community and cannot pay for the apartment she works in.

Then the eligibility arithmetic. These figures come from the chart attached to the CMS informational bulletin dated 27 April 2026, which is marked effective 1 January 2026 unless a line says otherwise:

The 300% figure is not a policy choice a caseworker makes. 42 CFR 435.1005 ties federal matching for people covered under a special income standard to income that "does not exceed 300 percent of the SSI benefit amount payable under section 1611(b)(1) of the Act to an individual in his own home who has no income or resources." Three times $994.00 is $2,982.00, and it will be a different number in January.

Two more things are worth knowing before anyone signs anything. The look-back on transfers for less than fair market value is 60 months for disposals made on or after 8 February 2006, under 42 U.S.C. 1396p(c)(1)(B)(i). And the penalty it produces is a division problem, not a fixed term: the cumulative uncompensated value of what was transferred, divided by the average monthly cost to a private patient of nursing facility services in the state at the time of application. The statute puts no ceiling on the number of months that quotient can produce. A gift to a grandchild for a wedding is inside that arithmetic in exactly the same way a deliberate transfer is.

After approval, most of the income goes back out. Under 42 CFR 435.725, the state reduces its payment to the facility by the resident's income less certain protected amounts, the first of which is a personal needs allowance of at least $30 a month.

A policy pays on its own trigger, and the trigger is written in the tax code

A long-term care policy does not follow Medicare's definitions and does not care what the facility calls the level of care. For a tax-qualified contract, the gate is 26 U.S.C. 7702B(c)(2), and everything hangs on a certification by a licensed health care practitioner. Two of its clauses do the work. One is that the person is unable to perform, without substantial assistance from another individual, at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity. The other is that they require substantial supervision to protect them from threats to health and safety due to severe cognitive impairment. A third, at (c)(2)(A)(ii), reaches a level of disability similar to the first "as determined under regulations prescribed by the Secretary," which makes it a route through rulemaking rather than through the statute's own test.

The statute names six activities: eating, toileting, transferring, bathing, dressing, continence. And it adds a sentence that is worth reading twice, because it constrains the insurer rather than the claimant: a contract "shall not be treated as a qualified long-term care insurance contract unless the determination of whether an individual is a chronically ill individual described in subparagraph (A)(i) takes into account at least 5 of such activities."

Certification is only the first clock. The NAIC's Shopper's Guide to Long-Term Care Insurance describes the second one, the elimination period — commonly 20, 30, 60, 90 or 100 days, chosen at purchase, during which the policyholder pays for their own care. The guide also notes two asymmetries most people discover late: the elimination period for home care may be shorter than for facility care, and — in the minority of policies that set different benefit triggers for the two settings, since the guide says most do not — the nursing home trigger is usually the harder one.

The third constraint is the daily maximum. Automatic inflation protection, the guide says, typically raises the maximum daily benefit by a fixed percentage each year, usually 3%, either for the life of the policy or for a set period of 10 or 20 years. A policy bought without it, paying $150 a day, comes to $4,500 in a 30-day month — about 42% of CareScout's national median for a private nursing home room. The policy is not failing. It is doing exactly what its schedule page says.

Private pay is the leftover, and assisted living is nearly all of it

The CareScout Cost of Care Survey 2025, fielded July through November 2025 and published in tables stamped 03/02/26, gives national medians:

A non-medical caregiver at home runs a national median of $35 an hour; CareScout's $80,080 annual figure for that column is that rate at 44 hours a week for 52 weeks, which is worth checking against the hours actually needed before it gets used as a comparison.

Assisted living is where the map goes blurry, and the reason is structural rather than financial. Nursing facilities are certified against a federal rulebook — 42 CFR part 483, the same one that produces the F-tags on an inspection report. Assisted living has no federal counterpart. It is licensed state by state, which means the disclosure requirements, the eviction notice periods and the refund rules all come out of a state code, and the residency agreement is doing work that a federal regulation does in a nursing home.

Four handoffs, and each one arrives as a document

Almost every unpleasant surprise in this subject is one of four moments, and each is announced on paper before it hits a bank account.

The binder this site is named after has a tab for each of the four payers, and the tabs are wildly uneven. Medicare's is thick and covers about three months. Medicaid's is thick and covers years. The insurance tab is three pages. Private pay has no tab at all, because it is not a program — it is what is left when the other three have finished.

The four offices to call, none of which is the facility

The business office can tell you what it billed. It cannot tell you whether a denial was right, whether a transfer will be penalized, or what a policy's certification form requires. Those are four different phone numbers, and they are free.

• Coverage, appeals, Medigap. Your State Health Insurance Assistance Program (SHIP), through shiphelp.org or 1-800-MEDICARE.
• Eligibility, waivers, spend-down and penalty periods all belong to your state Medicaid agency, and the state-by-state list of them sits on Medicaid.gov.
• A policy that will not pay, or a claim form you cannot decode. Your state insurance department, listed by the NAIC.
• If the trouble is something happening inside the building, that is the long-term care ombudsman assigned to the facility. The Eldercare Locator or 1-800-677-1116 will tell you who it is.

Estate planning, asset transfers and the wording of a Medicaid application are work for an elder law attorney licensed in the state where the parent lives. Nothing on this page is a substitute for that, and the 60-month look-back is precisely the sort of thing that is cheap to ask about in advance and expensive to discover afterward.

Sources

Every figure, section number and quoted phrase above was checked against the document itself on 28 August 2026. The eCFR sections were pulled from the eCFR at title 42's issue date of 13 August 2026.

• 42 CFR 409.30 (the 3 consecutive calendar days of inpatient hospital care, not counting the day of discharge, and the 30-day admission window); 409.31 (the definition of skilled nursing and skilled rehabilitation services and the three conditions in paragraph (b)); 409.61 (up to 100 days per benefit period, free for 20, coinsurance for 21 through 100); 411.15 paragraph (g) (custodial care excluded, and defined only by reference to 409.31 through 409.35).
• 42 CFR 440.210 and 440.40 (nursing facility services for individuals 21 or older as a required service); 441.310 paragraph (a)(2) (no federal financial participation for room and board under HCBS waivers, and the two exceptions); 435.1005 (the 300 percent special income standard); 435.725 (post-eligibility treatment of income and the $30 personal needs allowance floor).
• 42 U.S.C. 1396p, subsection (c) for the 60-month look-back date and the penalty formula at (c)(1)(E), and subsection (f) for the home equity disqualification, its $500,000 floor and $750,000 state-option ceiling, and the CPI indexing at (f)(1)(C) that produces the live figures.
• CMS, 2026 Medicare Parts A & B Premiums and Deductibles, released 14 November 2025: SNF daily coinsurance for days 21–100 of $217.00 in 2026 against $209.50 in 2025.
• CMS Center for Medicaid and CHIP Services, informational bulletin Updated 2026 SSI and Spousal Impoverishment Standards (27 April 2026), and the standards chart attached to it, for every figure in the Medicaid table above. Medicaid.gov was not serving this bulletin when the figures were checked, so it was read from the Internet Archive's capture of that same address, dated 19 May 2026; the captured file carries the CMS letterhead, the April date, the signature of the CMCS director and the two-page standards chart the figures are taken from. The narrative on Medicaid.gov's spousal impoverishment page still prints income allowance figures "for 2016" in its body text — the chart in the bulletin is the current one, not the page.
• Social Security Administration, SSI monthly payment amounts, 1975–2026: $994.00 for an eligible individual and $1,491.00 for a couple in 2026, after a 2.8% adjustment.
• Medicare.gov, Long-term care (the Not Covered status and "You pay all costs") and Home health services (homebound and part-time or intermittent conditions, the 8-hours-a-day and 28-hours-a-week figures, and the four excluded categories).
• 26 U.S.C. 7702B, subsection (c)(2), for the chronically ill individual certification, the 90-day and 2-of-6 test, the severe cognitive impairment alternative, the six named activities of daily living, and the requirement that a qualified contract take at least 5 of them into account.
• National Association of Insurance Commissioners, A Shopper's Guide to Long-Term Care Insurance (2022 edition), for the elimination period options, the note that home care elimination periods may be shorter and home care triggers easier than nursing home triggers, and the description of automatic inflation protection at a fixed percentage, usually 3%.
• CareScout Cost of Care Survey 2025 and its Median Cost Data Tables (stamped 03/02/26), fielded July through November 2025, for the national medians. The arithmetic behind each column is in the tables' own footnotes and it is not the same one twice: nursing home annual figures are 365 days of care, and the monthly figures are that annual number divided by 12; adult day health care is 5 days a week for 52 weeks, again divided by 12; assisted living is reported as a monthly rate for a private one-bedroom, with the annual figure at 12 times that. The in-home column used here is the one labelled non-medical caregiver — $80,080 a year at 44 hours a week for 52 weeks, which is the same $35 an hour the survey's home care table prints, and the same $220 a day it prints after dividing by 365.

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