Long-term care
How to Pay for Long-Term Care: Savings, Insurance, Medicare, and Medicaid
Most families pay for long-term care with a mix of savings, insurance, and, once assets run low, Medicaid. Medicare and regular health insurance don’t cover custodial care. Planning early gives you more options, because insurance is easier to qualify for while you’re healthy and Medicaid has strict rules on income, assets, and gifts.
This guide compares the main ways to pay for care, explains Medicare’s limits and Medicaid’s rules, and walks through 2026 protections for spouses.
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Your main options
| Option | How it helps | Watch for |
|---|---|---|
| Savings and income | Pays for any care you choose | Can drain retirement savings quickly |
| Traditional LTC insurance | Pays a daily or monthly benefit | Premiums can rise; must qualify medically |
| Hybrid life/LTC | Care benefits plus a death benefit | Large up-front premium |
| Life insurance riders | Accelerates part of the death benefit | Reduces what heirs receive |
| Medicaid | Pays for care once you qualify | Strict income, asset, and transfer rules |
| Veterans benefits | Aid and Attendance and VA care | Service and financial requirements |
What Medicare covers
Medicare doesn’t provide long-term or custodial care unless medical care is needed (Medicare.gov). It can cover a skilled nursing facility for up to 100 days after a qualifying hospital stay, with a 2026 coinsurance of $217 a day for days 21 through 100 (CMS). Medicare also covers some short-term home health care if you need skilled care, but not ongoing help with daily activities.
How Medicaid pays for long-term care
Medicaid is the largest payer of long-term care in the U.S., but you must have limited income and assets. Many states set the asset limit for a single person at about $2,000, and most review transfers of assets made in the five years before you apply. Gifts in that period can delay eligibility. Each state runs its own program; in Arizona it’s called the Arizona Long Term Care System (ALTCS).
Protections for a spouse at home
Federal spousal impoverishment rules protect part of a couple’s assets and income for the spouse who stays at home. For 2026, states protect between $32,532 and $162,660 in assets for the community spouse, and the minimum monthly income allowance is $2,643.75 in most states, up to a maximum of $4,066.50. Home equity limits for the applicant range from $752,000 to $1,130,000, depending on the state (CMS informational bulletin).
Example: a couple planning ahead
Illustrative only: a married couple in their early 60s has $600,000 in savings and a paid-off home. They decide they could self-fund about two years of care each, but worry about a longer need. They buy two traditional partnership-qualified policies with a shared benefit pool, keep their emergency savings, and update their wills and powers of attorney. If one spouse later needs a nursing home and the policy runs out, the partnership protection and spousal rules help preserve assets for the spouse at home.
Using insurance to protect savings
- Traditional long-term care insurance: the most care benefit per premium dollar, but premiums can rise.
- Partnership policies: qualifying policies let you protect extra assets from Medicaid spend-down.
- Hybrid policies: care benefits plus a death benefit if care isn’t needed.
- Riders: see LTC riders vs. standalone coverage.
Other sources to consider
- Veterans benefits: eligible veterans and surviving spouses may qualify for VA long-term care services or the Aid and Attendance pension; see VA life insurance for related VA coverage.
- Home equity: some homeowners sell or use a reverse mortgage to pay for care. Compare costs and risks first, and talk with a HUD-approved counselor before a reverse mortgage.
- Family caregiving: some state Medicaid programs and long-term care policies can pay family caregivers; ask how your state or policy handles it.
Tax breaks
Premiums for tax-qualified long-term care insurance can count as medical expenses, up to age-based limits. For 2026, the limits are $500 for ages 40 and under, $930 for 41 to 50, $1,860 for 51 to 60, $4,960 for 61 to 70, and $6,200 for 71 and older (ElderLawAnswers). Benefits from qualified policies are generally tax-free, with per diem payments excluded up to $430 a day in 2026 (LTC News).
A planning checklist
- Estimate likely care costs where you live; see long-term care costs.
- Decide how much you could self-fund.
- Compare insurance options while you’re healthy.
- Talk with an elder law attorney before moving assets, because of the Medicaid look-back.
- Put powers of attorney and health care directives in place.
Paying for long-term care FAQs
Does Medicare pay for long-term care?
No. Medicare doesn’t cover custodial care, though it can cover short skilled nursing stays.
When does Medicaid pay for long-term care?
When your income and assets are below your state’s limits and you meet care-need rules.
What is the Medicaid look-back period?
Most states review asset transfers made in the five years before you apply.
Will my spouse lose everything if I go on Medicaid?
No. Spousal rules protect between $32,532 and $162,660 in assets for 2026, plus an income allowance.
Is long-term care insurance tax-deductible?
Premiums for qualified policies can be deducted as medical expenses, up to age-based limits.
What is ALTCS?
Arizona’s Medicaid long-term care program, the Arizona Long Term Care System.
Can life insurance pay for long-term care?
Some policies have riders that let you use part of the death benefit for care.
Related guides
Important information
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Cost and program figures. Care costs, Medicare and Medicaid amounts, and tax limits are cited from the sources named, for the years shown, and change regularly. Examples are illustrative, not quotes; your price depends on the insurer, your age, health, and the coverage you choose.
Not tax, legal, or Medicaid planning advice. Rules summarized here are general information as of November 2026. Talk with a tax professional or elder law attorney about your situation.
Availability. Coverage, prices, discounts, and eligibility vary by insurer, state, and applicant, and are subject to underwriting. The issued policy controls.
Your next step
Tell us about your plans, and a licensed agent will compare ways to protect your savings from long-term care costs.
