Does Medicare pay for long-term care? Many people misunderstand

Thirty-nine percent of middle-class households expect to rely on Medicare to pay for long-term care, which may be the biggest expense in retirement, according to a new study from the American Council of Life Insurers, an insurance industry group.

But there’s one problem with this plan. Medicare typically does not cover costs associated with long-term care, including medical and non-medical care, for people with chronic illnesses or disabilities.

Experts say there are typically three options for paying for long-term care: Medicaid, insurance, or self-funding.

“People assume Medicare is their long-term care plan,” said Jeff Judge, a certified financial planner and managing partner at Chesapeake Financial Planners in Forest Hill, Maryland.

“That’s not the case, and there’s no better time to find out than during a crisis,” the judge said.

Nearly 20% of middle-class households plan to pay for long-term care out of pocket, according to an August survey based on responses from 1,404 middle-class households with annual household incomes between $50,000 and $150,000.

But data shows that middle-income households may not have the resources to cover those costs out of pocket.

The affordability of long-term care for middle-class Americans is worsening, according to a March report from the AARP Institute for Public Policy, the policy research arm of senior citizen advocacy group AARP.

The AARP report found that the nation’s middle class has effectively “priced out” nursing home care, while the cost of home care has increased 39% since 2021, outpacing the overall rate of inflation.

ACLI President and CEO David Chavern said people are worried about the costs for both immediate and long-term needs.

“People are worried about outliving their money, but they also probably don’t really understand what long-term care involves or what they can do about it,” Chaburn said.

According to 2020 data from the Department of Health and Human Services, people who turn 65 have a nearly 70% chance of needing some type of long-term care service.

According to KFF, a nonprofit health policy research group, Medicare typically does not cover long-term care services.

However, in certain circumstances, Medicare will be enhanced to help pay for covered long-term care. Andrew Biggs, a senior fellow at the Washington-based conservative think tank American Enterprise Institute, wrote in July that the program spends more than $100 billion each year on long-term services and support. This is more than the total amount households would pay out of pocket, he wrote.

According to KFF, Medicare may cover up to 100 days of skilled nursing facility care after a qualifying hospitalization.

However, according to KFF, Medicare does not cover certain types of care that do not involve a covered hospitalization, such as long-term care facility care, residential care facility care, and nursing home care. For example, Medicare only covers skilled nursing facility care following a covered inpatient hospitalization for at least three consecutive days.

However, the KFF poll found that 4 in 10 people still incorrectly believe that Medicare is the primary source of coverage for low-income residents of nursing homes.

Instead, another federal program, Medicaid, the federal health care program for low-income families, is the primary payer for nursing home care for low-income people, according to KFF.

“When it comes to long-term care, people often confuse Medicare and Medicaid,” says Carolyn McClanahan, a physician and certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.

“Medicaid covers long-term care,” said McClanahan, a member of CNBC’s Financial Advisory Council. “Medicare covers some initial skilled care, but not ongoing long-term care.”

Obtaining Medicaid insurance for long-term care is not easy.

“Medicaid is only available if you no longer have the means to pay for long-term care,” McClanahan said.

Additionally, each state has different Medicaid rules regarding both income limits and assets a household can own to qualify, McClanahan said. That’s why it’s important to know your state’s rules, she said.

Families who can’t afford to pay for long-term care may want to know about Medicaid before they need it so they can plan properly, she says.

McClanahan said other retirees may choose to either buy long-term care insurance if they can afford the premiums, or to buy long-term care insurance on their own once they reach that point.

Even for people with a lot of money, “it’s amazing how quickly you can deplete your resources” by paying for medical care, she says.

Long-term care costs can be significant. According to the 2025 Long-Term Care Cost Survey from CareScout, a subsidiary of , a semi-private room in a nursing home can cost $114,975 per year, based on the national median daily rate of $315 per day. Genworthis an insurance company that helps seniors find care.

People should start planning for long-term care in their 50s or 60s, not in their 70s, the judge said.

“I would tell people, if you have the means, do it sooner (but),” he said.

The judge said that early consideration of insurance policies can lead to lower premiums. It may also allow options for add-ons, known as “riders,” to insurance policies that may become unaffordable later on, such as cost-of-living adjustments, he said. COLA increases your daily or monthly benefits to match inflation.