Nursing home care averages over $9,000 a month in the United States, and most people don’t have that kind of money saved. But there are real pathways to pay for it, even with little or no savings. The key is understanding which programs exist, what they require, and how to position yourself or your loved one to qualify.
Medicare Covers the First 100 Days, With Limits
Medicare is not a long-term solution, but it can buy you time. If someone has a qualifying inpatient hospital stay of at least three consecutive days, Medicare will cover skilled nursing facility care for up to 100 days per benefit period. Days 1 through 20 cost nothing after a one-time deductible of $1,736 (in 2026). Days 21 through 100 require a daily co-insurance payment of $217. After day 100, Medicare pays nothing.
There are important catches. Time spent in the emergency room or under “observation status” does not count toward the three-day hospital stay requirement, even if the person stays overnight. And the care must be skilled nursing or rehabilitation, not just custodial help with daily tasks like bathing or eating. Once someone only needs custodial care, Medicare coverage ends regardless of how many days remain in the benefit period.
Still, those first weeks of Medicare coverage can be critical. They give families time to apply for Medicaid or explore other funding options without facing the full private-pay rate.
Medicaid Is the Primary Safety Net
Medicaid pays for more nursing home care in the United States than any other source. It covers the full cost of a nursing home for people who meet income and asset requirements, which are deliberately set very low. For an individual, countable assets must be $2,000 or less. For a couple, the limit is $3,000. Monthly income limits are roughly $2,982 for an individual.
Not everything you own counts as an asset. Your primary home is typically excluded (up to a certain equity value), along with one vehicle, household goods, personal belongings, and burial funds. The goal of these exemptions is to prevent total destitution, not to allow people to shelter wealth.
If your income exceeds the limit but you have high medical expenses, many states allow a “spend-down” process. You can deduct health insurance premiums, Medicare enrollment fees, copayments, deductibles, and expenses for necessary medical services. Once those deductions bring your countable income below the threshold, you qualify.
The Spend-Down Process for Assets
If you have too many assets to qualify for Medicaid but not nearly enough to pay for years of nursing home care, you’ll need to “spend down” to the asset limit. This doesn’t mean giving money away. It means spending it on allowable things. You can pay off your mortgage, make home repairs, buy a prepaid burial plan, pay off debt, replace a vehicle, or cover medical expenses. The purchases need to be for fair market value and for your own benefit.
What you cannot do is simply transfer assets to family members to get below the limit. Medicaid has a five-year look-back period. When you apply, the state reviews every financial transaction from the previous 60 months. Any gifts, transfers below fair market value, or suspicious moves will trigger a penalty period during which Medicaid will not pay for your nursing home care. There is no cap on how long that penalty period can last. It’s calculated by dividing the total transferred amount by the average monthly cost of nursing home care in your state.
Exceptions to the Look-Back Rule
Federal law carves out specific exceptions where asset transfers will not trigger a penalty. You can transfer assets to a spouse. You can transfer assets to a child who is permanently disabled or legally blind. You can transfer your home to a child under 21, or to a sibling who co-owns the home and has lived there for at least one year before you entered the nursing home.
There’s also a caregiver child exemption. If an adult child served as the primary caregiver for a parent for at least two years immediately before the parent moved into a nursing home, and that caregiving delayed the need for institutional care, the home can be transferred to that child without penalty.
If a penalty period has already been imposed and the situation is truly dire, you can apply for an undue hardship waiver. This isn’t granted for inconvenience or a reduced lifestyle. It requires showing that the penalty would leave the person without food, clothing, shelter, or necessary medical care, essentially putting their life at risk. Common grounds include situations where the person who received the transferred assets can’t be located, refuses to return them, or where pursuing the assets would cause physical harm. The state must respond to a hardship waiver request within 30 days, and the nursing home itself can file the waiver on a resident’s behalf with consent.
Protections for a Spouse Who Stays Home
Medicaid rules are designed so that a married couple doesn’t have to become completely impoverished when one spouse enters a nursing home. The spouse who remains in the community can keep a protected share of the couple’s combined assets, called the Community Spouse Resource Allowance. In 2025, this ranges from a minimum of $31,584 to a maximum of $157,920, depending on the state and the couple’s total resources. The home, one car, and personal belongings are excluded from this calculation entirely.
The community spouse also receives a monthly income allowance. The minimum is $2,643.75 per month in most states ($3,303.75 in Alaska, $3,040 in Hawaii). If the community spouse’s own income falls below this floor, a portion of the nursing home spouse’s income is redirected to make up the difference before it goes toward the cost of care. These protections exist specifically so that one spouse needing a nursing home doesn’t leave the other destitute.
VA Benefits for Veterans and Surviving Spouses
Veterans who receive a VA pension may qualify for an additional monthly benefit called Aid and Attendance. This benefit is specifically for people who need help with daily activities like bathing, dressing, and feeding, or who are confined to a nursing home due to a disability. It also covers veterans who are bedridden for a large portion of the day due to illness, or who have severely limited eyesight.
Surviving spouses of veterans may also be eligible. The Aid and Attendance benefit can significantly supplement what Medicaid covers, or help pay for care while a Medicaid application is pending. It’s worth applying even if you think your income is too high, because medical expenses can be deducted from countable income for VA pension purposes.
Using Life Insurance to Pay for Care
If you or your loved one has a life insurance policy, it may be worth more alive than dead. There are several ways to convert it into nursing home funding.
- Accelerated death benefits: Some policies allow you to draw a tax-free advance on the death benefit while still living. This is typically available if you need long-term care for an extended period or are permanently confined to a nursing home. The advance is usually capped at 50 percent of the death benefit, though some policies allow the full amount. For policies that cover long-term care, the monthly benefit for nursing home care is typically two percent of the policy’s face value.
- Life settlements: You sell the policy outright for its present cash value. This option is generally available to women 74 and older and men 70 and older. You receive a lump sum and can use it for any purpose, including nursing home bills.
- Viatical settlements: Similar to a life settlement but available only to people who are terminally ill with a life expectancy of two years or less. The payout is higher because the buyer expects a shorter wait. National guidelines set minimum payouts based on life expectancy: 80 percent of the death benefit for someone with one to six months to live, 70 percent for six to twelve months, and 60 percent for eighteen to twenty-four months.
Before surrendering or selling a policy, check whether it has a long-term care rider or combination benefit you might not know about. An insurance agent or elder law attorney can help you understand what your specific policy allows.
PACE Programs as a Nursing Home Alternative
The Program of All-Inclusive Care for the Elderly (PACE) is a lesser-known option that can eliminate the need for a nursing home entirely. PACE serves people who are clinically eligible for nursing home care but can still live safely in the community. It becomes the sole source of both Medicare and Medicaid benefits, and in return, it provides everything the person needs: medical care, prescriptions, physical therapy, social services, transportation, and home health aides.
PACE is available in many states but not all, and you must live in a PACE service area. For people who qualify for both Medicare and Medicaid, there’s typically no monthly premium. For those who qualify for Medicaid only, or who pay privately, costs vary. The advantage is that PACE programs have a financial incentive to keep people healthy and out of nursing homes, which often translates to more personalized, coordinated care than someone would receive navigating the system alone.
Practical Steps When You Need Care Now
If a nursing home admission is imminent and money is short, the most important step is to apply for Medicaid immediately. Many families delay because they assume they won’t qualify or because the paperwork feels overwhelming. But Medicaid can be approved retroactively in some cases, and many nursing homes will accept residents with a Medicaid application pending, especially if they can show Medicare coverage for the initial stay.
Gather financial records going back five years: bank statements, property deeds, life insurance policies, retirement account statements, and any records of gifts or transfers. The Medicaid application will require all of it. An elder law attorney or your local Area Agency on Aging can help navigate the process, often at low or no cost. Many states also have Medicaid planning assistance programs specifically designed for people in crisis situations.
The system is complicated by design, but the safety net is real. Medicaid cannot turn away someone who meets the eligibility requirements, and nursing homes that accept Medicaid patients are legally required to provide the same quality of care as they do for private-pay residents.