How Nursing Home Care Is Paid For

When a parent or spouse needs a nursing home, the first worry for most families is how to pay for it. Nursing home care is among the most expensive services in health care, and the way it is paid for is often misunderstood. Many families assume Medicare will cover it; usually it covers only a short stay. This guide explains the main ways nursing home care is paid for (private funds, Medicare, long-term care insurance, VA benefits and Long-Term Care Medicaid) and how they fit together over a typical stay.

Figures change periodically. Double-check current amounts before relying on them.

The short version

Medicare pays for short-term skilled nursing or rehabilitation after a qualifying hospital stay, for up to 100 days per benefit period, with a daily coinsurance after day 20 ($217 a day in 2026). It does not pay for long-term custodial care.
Private payment (savings, income, family help) is how most stays begin.
Long-term care insurance, if the person has a policy, can pay for a period of time.
VA benefits can help eligible veterans and surviving spouses.
Long-Term Care Medicaid is the largest payer of long-term nursing home care in the country. Once a resident qualifies, Medicaid pays the nursing home, and the resident contributes most of their income.

The typical path of a nursing home stay

Many nursing home stays follow a pattern:

Hospital stay. An older person is admitted to the hospital as an inpatient after a fall, stroke or illness.
Rehabilitation under Medicare. If they were an inpatient for at least three days and need daily skilled care, Medicare Part A can pay for a stay in a skilled nursing facility for rehabilitation.
Medicare ends. Coverage stops when the person no longer needs daily skilled care or reaches day 100, whichever comes first. Often this happens well before day 100.
Private pay or insurance. If the person still needs nursing home care, the family pays privately or uses long-term care insurance.
Medicaid. Once the person’s assets are down to the state’s limit (or the family has completed planning) and they meet the other rules, Long-Term Care Medicaid takes over.

Not everyone follows this path. Some people enter a nursing home directly from home, without a hospital stay, and Medicare does not pay at all.

Medicare

Medicare Part A covers care in a skilled nursing facility (SNF) when:

the person had a qualifying inpatient hospital stay of at least three days (time “under observation” does not count as inpatient);
they need daily skilled nursing or therapy for a condition treated in the hospital, or one that arose while in the SNF;
they enter a Medicare-certified SNF, generally within 30 days of leaving the hospital.

In 2026, for each benefit period:

Days	What the person pays
1 to 20	$0
21 to 100	$217 a day
After 100	All costs

Medicare Advantage plans cover skilled nursing too, often with different rules, such as no three-day hospital requirement but with prior authorization and network limits.

Medicare does not cover custodial care, meaning help with daily activities when no skilled care is needed. That is what most long-term nursing home residents need. See Medicaid vs. Medicare for long-term care.

Private payment

Private payment means paying the nursing home’s daily rate from income, savings or family funds. Private rates are usually higher than what Medicaid pays. The state penalty divisors, which reflect average private-pay costs, range from roughly $7,200 to more than $16,000 a month in 2026. See Nursing home costs by state.

Families paying privately should:

keep every bill and receipt, because they help show that money was spent on care, not given away;
watch how quickly savings are dropping, so a Medicaid application can be filed at the right time;
ask before admission whether the nursing home accepts Medicaid and whether residents can stay in the same bed when they switch to Medicaid.

Long-term care insurance

A long-term care insurance policy pays a daily or monthly benefit once the person meets the policy’s benefit triggers, usually after an elimination period. Benefits can run for a set number of years or until a dollar pool is used. Partnership policies also protect assets for a later Medicaid application. See Long-term care insurance and Medicaid.

VA benefits

Veterans and surviving spouses may have several options:

VA nursing homes (Community Living Centers) and State Veterans Homes, for eligible veterans. See VA nursing homes.
VA-contracted community nursing homes, for some veterans with service-connected needs.
VA pension with Aid and Attendance, which adds monthly income for eligible wartime veterans and surviving spouses with limited income and assets. See VA pensions.

VA benefits and Medicaid interact; for example, some VA payments are not counted as income for Medicaid, while others are. See How VA benefits count for Medicaid.

Long-Term Care Medicaid

Medicaid pays for nursing home care for people who:

need a nursing-home level of care;
have countable assets at or below the state’s limit (often $2,000 for a single person in 2026; where the single limit is $2,000, a couple who both need care can usually keep $3,000);
meet the state’s income rules, either under a cap ($2,982 a month in many states in 2026), through a Miller trust, or through a medically needy pathway;
pass the look-back for gifts and transfers;
live in the state and meet citizenship or immigration requirements.

Once approved, Medicaid pays the nursing home its Medicaid rate. The resident pays most of their monthly income to the nursing home as their patient liability, keeping a personal needs allowance and, if married, possibly an allowance for the spouse at home.

Who pays what once Medicaid is approved: an example

Joe, 87, lives in a nursing home that charges $10,500 a month privately. He has $2,100 a month in Social Security and a $400 pension, and he qualifies for Medicaid.

His state’s personal needs allowance is $60 a month.
His Medicare Part B premium ($202.90 in 2026) is paid by the state through a Medicare Savings Program, so it is not deducted from his income. (If it were deducted, his share would be lower.)
His patient liability is $2,500 – $60 = $2,440 a month, paid to the nursing home.
Medicaid pays the nursing home the difference between its Medicaid rate and Joe’s $2,440.

This example is simplified. Deductions vary by state and situation.

Medicaid pending

A Medicaid application can take weeks or months to process. During that time the nursing home may admit the person as “Medicaid pending.” If the application is approved, Medicaid usually pays back to the month of eligibility, and up to three months before the application month in many states. From January 1, 2027, federal law (Public Law 119-21) shortens that retroactive window to two months for older adults and people with disabilities. See Medicaid pending and Retroactive coverage.

Spouses and nursing home costs

When one spouse enters a nursing home, the other spouse is protected by federal spousal impoverishment rules. The spouse at home keeps the home (within limits), a car, a share of the couple’s assets (the CSRA), and may receive part of the resident’s income (the MMMNA). A spouse at home does not have to spend everything on the other spouse’s nursing home care.

Common mistakes

Assuming Medicare will pay for a long stay.
Waiting too long to apply, missing months that Medicaid could have paid.
Giving money away to qualify, which causes a penalty.
Spending down on the wrong things, such as paying family members without a written care agreement.
Choosing a nursing home that does not accept Medicaid, which may force a move later.
Not planning for the spouse at home.

Getting help

Paying for a nursing home usually involves more than one source over time, and the switch to Medicaid is where families can save, or lose, the most. A Certified Medicaid Planner can help a family plan the timing, protect the spouse at home and prepare the application.

Frequently asked questions

Will the nursing home take our house? No. The nursing home cannot take the home. Medicaid may seek repayment from the estate after death through estate recovery, subject to protections.

Do children have to pay for a parent’s nursing home? Generally not, unless they signed as financially responsible or the state enforces a filial responsibility law, which is rare. Children should not sign as “responsible party” in a way that makes them personally liable. See Getting into a Medicaid nursing home.

Can a nursing home refuse Medicaid? A nursing home that does not participate in Medicaid can. A Medicaid-certified nursing home must follow federal rules, including not discharging a resident just because they switch from private pay to Medicaid in a Medicaid-certified bed.

Last updated for 2026. General information only, not legal or financial advice. Medicaid Answers is a free educational resource published by Medicaid Answers Foundation.