🎯 In 30 seconds: Help with bathing, dressing and getting around is called long-term care, and Medicare does not pay for it. Most people turning 65 will need some. Costs run from about $25,000 a year for adult day care to about $130,000 for a private nursing home room. People pay from savings, insurance, family help or, after spending down, Medicaid. Plan in your 50s, while you have choices.
How likely, and for how long
The federal government’s long-term care site says someone turning 65 today has almost a 70% chance of needing some long-term care. About a third may never need it, while 20% will need it for more than five years. Women need care for longer on average (3.7 years) than men (2.2 years). The risk is real, but very uneven, which is exactly the kind of risk insurance is built for.
What care costs: 2025 national medians
| Type of care | Median cost | Per year |
|---|---|---|
| Adult day health care | $95 a day | $24,700 (5 days a week) |
| Assisted living | $6,200 a month | $74,400 |
| In-home caregiver | $35 an hour | $80,080 (44 hours a week) |
| Nursing home, semi-private room | $315 a day | $114,975 |
| Nursing home, private room | $355 a day | $129,575 |
These are CareScout’s 2025 survey medians. Prices vary a lot by state and city, so look up your area before planning.
What Medicare and health insurance pay
- Medicare, Medigap and ordinary health insurance do not pay for long-term custodial care, at home or in a nursing home.
- Medicare Part A covers short stays in a skilled nursing facility after a qualifying hospital stay, for rehab or skilled care. For 2026: days 1 to 20 cost $0 after the $1,736 Part A deductible, days 21 to 100 cost $217 a day, and from day 101 you pay everything.
- Once someone only needs help with daily activities rather than skilled care, Medicare stops paying even before day 100.
A worked example: what to plan for
Rosa is 60. She wants to plan for three years of assisted living starting around 80.
| Assisted living today | $74,400 a year |
| Grown at an assumed 3% a year for 20 years | about $134,400 a year |
| Three years at that price | about $403,000 |
| Minus Rosa’s income during care (Social Security and pension, assumed $36,000 a year) | −$108,000 |
| Gap to cover from savings, home equity or insurance | about $295,000 |
If Rosa’s savings could absorb that without leaving her spouse short, she might self-fund. If not, insurance or a plan to use home equity enters the picture.
The ways people pay
| Option | How it works | Watch for |
|---|---|---|
| Savings and home equity | Pay as you go; sell or borrow against a house | A long stay can drain a couple’s savings and leave the healthy spouse short |
| Traditional LTC insurance | Pays a daily or monthly amount once you cannot do 2 of 6 daily activities or have severe cognitive impairment | Premiums can rise later with state approval; unused premiums are not returned |
| Hybrid life and LTC policy | Life insurance or an annuity whose benefit can be drawn early for care; what is not used goes to heirs | Higher upfront cost; features differ widely |
| Accelerated death benefit | A tax-free advance on a life policy’s death benefit while you are alive | Often capped at about half the death benefit; heirs get less |
| Medicaid | Pays for nursing homes and, in many states, home care, once income and assets are low enough | Look-back on gifts, estate recovery, and fewer choices of facility |
| VA benefits | Aid and Attendance adds to a VA pension for veterans or survivors who need help with daily activities | Must qualify for the VA pension first |
Medicaid basics: look-back and recovery
- Each state sets its own income and asset limits, with protections for a spouse who stays at home.
- Gifts or transfers for less than fair value in the 60 months before applying can trigger a penalty period with no Medicaid coverage for care. Giving the house to the kids just before applying usually backfires.
- States must try to recover long-term care costs from the estate of someone who received Medicaid at 55 or older, after death. Nothing is recovered while a spouse is alive, and heirs can ask for a hardship waiver.
- Many states have Partnership long-term care policies. Each dollar such a policy pays out can let you keep a dollar of assets above the normal Medicaid limit and shield it from estate recovery.
Medicaid planning rules are technical and state-specific, so an elder law attorney is worth paying for before any big transfer.
If you shop for a policy
- Price policies in your 50s; premiums climb with age, and health problems can make you uninsurable.
- Compare the daily benefit, elimination period, benefit period or pool of money, and inflation protection. A policy with no inflation protection may buy far less care in 25 years.
- Check whether the policy is tax-qualified and whether your state offers Partnership policies.
- Qualified LTC premiums count as medical expenses, up to an age-based limit (for 2025, $1,800 at ages 51 to 60 and $4,810 at 61 to 70).
- Ask your parents about their plans too: see helping aging parents with money.
- Does Medicare pay for a nursing home stay that is only custodial care? Answer: No.
- What does a skilled nursing day cost under Medicare in days 21 to 100 in 2026? Answer: $217 a day.
- How far back does Medicaid look at gifts and transfers? Answer: 60 months.
- What happens to unused benefits in a hybrid life and LTC policy? Answer: They pass to heirs as a death benefit.