When families begin exploring senior care options, one of the first questions that arises is whether insurance will help pay for the costs. It’s a reasonable assumption: We’re accustomed to health insurance covering doctor visits, hospital stays, and medical treatments, so shouldn’t it also cover the care someone needs as they age?

Unfortunately, the answer is more complicated than many families expect. Most traditional health insurance, including Medicare, is designed to cover medical care rather than the day-to-day personal assistance that most seniors need. Understanding which types of insurance might be beneficial and what gaps typically remain is essential for realistic financial planning.

What senior care means and why it’s not always covered by insurance

Senior care is a broad term that encompasses various services and settings designed to help older adults who can no longer fully manage daily life independently. This includes:

• Home care services where caregivers come to the home.
• Assisted living communities that provide residential support.
• Memory care for those with dementia.
• Nursing homes that offer the highest level of institutional care.

What these settings have in common is that they primarily address personal care needs, also called custodial care. Personal or custodial care refers to assistance with activities of daily living, including:

• Bathing.
• Dressing.
• Grooming.
• Eating.
• Toileting.
• Moving around safely. 

Custodial care can also include supervision, medication reminders, meal preparation, and housekeeping. This type of care helps people maintain quality of life and safety when they can no longer fully care for themselves, but it’s not medical treatment.

This distinction matters because typical health insurance, including standard Medicare, is designed to cover medical needs, such as the diagnosis and treatment of illnesses or injuries, physician services, hospital care, surgery, prescription medications, and rehabilitation therapies aimed at recovery or improvement. Health insurance generally does not cover ongoing assistance with daily living activities that aren’t medically therapeutic.

There are important exceptions to this rule. Long-term care insurance is specifically designed to cover custodial care. Medicaid, unlike Medicare, does cover long-term personal care for those who qualify based on income and assets. And certain Medicare benefits provide limited skilled nursing coverage under specific circumstances. Understanding these distinctions helps clarify what you can realistically expect from different insurance types.

Does Medicare pay for senior care?

Medicare is the federal health insurance program for people 65 and older, and it’s often the first place families look when care needs arise. However, Medicare’s coverage of senior care is extremely limited and often misunderstood.

Medicare coverage of skilled nursing care

Medicare will cover short-term stays in a skilled nursing facility, but only under very specific conditions. To qualify, the person must:

• Have had a qualifying hospital stay of at least three days.
• Be admitted to a Medicare-certified skilled nursing facility within 30 days of leaving the hospital.
• Need daily skilled nursing care or rehabilitation therapy related to the hospital stay. 

The focus is on recovery and rehabilitation, not long-term maintenance care.

When these conditions are met, Medicare coverage works as follows:

• Days 1 to 20: fully covered.
• Days 21 to 100: covered except for a daily coinsurance.
• After day 100: no coverage.

Importantly, Medicare does not cover what it considers “custodial care” in a nursing home, which refers to long-term assistance with daily activities when no skilled medical care or active rehabilitation is required. Since most people in nursing homes or assisted living need primarily custodial care rather than skilled nursing or therapy, Medicare doesn’t help with these long-term costs.

What about room and board?

Even when Medicare does cover skilled nursing services, it doesn’t cover room and board in senior living settings like assisted living or memory care. These residential communities provide housing, meals, and personal care assistance, but not the skilled medical services Medicare requires for coverage. Medicare also doesn’t cover the room and board portion of long-term nursing home stays once skilled care is no longer needed.

Medicare Advantage vs. original Medicare

Some people have Medicare Advantage plans (Part C) instead of original Medicare. These private insurance plans must cover everything original Medicare covers, but they may also include additional benefits. Some Medicare Advantage plans offer limited coverage for things like dental, vision, hearing aids, or even some care coordination services that original Medicare doesn’t cover.

However, even Medicare Advantage plans follow the same basic rules around long-term care: They don’t cover extended custodial care in assisted living, memory care, or nursing homes. While a Medicare Advantage plan might offer some extra support services or short-term benefits beyond original Medicare, it still won’t pay for the ongoing personal care assistance that represents the bulk of senior care costs.

Does Medicaid pay for senior care?

Unlike Medicare, Medicaid can cover long-term senior care, including custodial care. Medicaid is a joint federal and state program that provides health coverage to eligible individuals with limited income and assets, and it’s the largest payer of long-term care services in the United States.

Medicaid will fully cover nursing home care for those who meet both financial and medical eligibility requirements. This includes room and board as well as all care services, making it the most comprehensive insurance option for long-term nursing home care.

Beyond nursing homes, many states offer Medicaid coverage through home- and community-based services (HCBS) waiver programs that can help cover care in other settings. These waivers allow Medicaid funds to pay for services in assisted living communities, memory care facilities, or the person’s own home through home care agencies. However, this coverage varies significantly by state. Some states have robust waiver programs; others offer limited options or maintain long waiting lists.

When Medicaid does cover care in settings other than nursing homes, it typically pays for services such as personal care assistance, medication management, and care coordination, but not room and board. Residents usually need to use their own income to cover housing costs.

Eligibility for Medicaid requires meeting strict income and asset limits, which vary by state but generally require having very limited financial resources. The application process requires substantial documentation and can take time. Additionally, Medicaid has look-back rules that review financial transactions over the previous five years to ensure assets weren’t improperly transferred to qualify.

While Medicaid eligibility requirements are stringent, it remains the primary safety net for seniors who have exhausted other resources and need long-term care.

Does long-term care insurance pay for senior care?

Long-term care insurance (LTCi) is the one type of insurance specifically designed to cover custodial care, and it can pay for senior care across multiple settings.

How it works: When a policyholder needs help with activities of daily living (typically two or more activities, depending on the policy terms), the insurance begins paying benefits. Policies usually pay a set daily or monthly amount toward covered care costs, and benefits continue until either the person no longer needs care or the policy’s maximum benefit is exhausted.

What it covers: Most long-term care insurance policies cover personal care assistance regardless of where it’s provided. This flexibility means the policyholder can choose home care if they prefer to stay at home, or they can use the benefits toward assisted living or nursing home costs. Some policies also cover care coordination services, caregiver training, modifications to the home for safety, and adult day care programs.

Coverage limits: Policies have specific parameters including a daily or monthly benefit amount (for example, $150 per day or $4,500 per month), a benefit period indicating how long benefits will be paid (such as three years, five years, or lifetime coverage), and an elimination period, which is a waiting period before benefits begin (commonly 30, 60, or 90 days).

The value of LTCi: For those who purchased policies years ago, long-term care insurance can make an enormous difference in affording quality care while preserving assets for a spouse or heirs. However, these policies can be expensive, and not everyone has one. Most people buy long-term care insurance in their 50s or early 60s, before health conditions make coverage unaffordable or unavailable.

If you or your loved one has a long-term care insurance policy, reviewing it carefully with the insurance company or a qualified advisor is essential to understand exactly what’s covered, how to file claims, and how to maximize the benefits available.

Planning for what insurance won’t cover

For most families, insurance will not cover all senior care costs. Medicare offers minimal help except for short-term skilled nursing. Medicaid provides comprehensive coverage, but only for those with very limited resources. Long-term care insurance offers valuable protection for those who have it, but many seniors don’t have policies.

This means families often need to plan for significant out-of-pocket expenses. Families often rely on:

• Retirement savings.
• Social Security income.
• Pensions.
• Personal savings or assets.
• Proceeds from a home sale.

Understanding what insurance does and doesn’t cover allows for more realistic planning.
If you’re navigating these questions and need help understanding how to pay for care or which communities work with different payment sources, your local Oasis Senior Advisor can provide guidance tailored to your situation. Find your local advisor to get support as you explore your options and make informed decisions about senior care.