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Paying for Long-Term Care

Many caregivers and older adults worry about the costs of long-term care. These expenses can use up a significant part of monthly income, even for people who thought they had saved enough. How people pay for long-term care depends on their financial situation and the kinds of services they use.

Some people believe that their current health or disability insurance will pay for their long-term care needs, but most of these insurance policies include limited, if any, long-term care benefits. In most cases, people must find other means of paying for long-term care. They may rely on a variety of payment sources, including personal funds, federal and state government programs, and private financing options. Read on to find out more about each of these options.

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Personal funds

Many older adults pay for part or all long-term care with their own money, also known as personal or “out of pocket” funds. They may use personal savings, a pension or other retirement fund, income from investments, or proceeds from the sale of a home. 

Initially, family and friends often provide personal care and other services, such as transportation, for free. But as a person’s needs increase, paid services may be needed.

Many older adults also pay out of pocket for adult day care programs, meals, and other community-based services that help them remain in their homes. In some cases, these services are provided for free or at low cost by local governments and nonprofit groups. Professional care in assisted living facilities and continuing care retirement communities is almost always paid for out of pocket. In some states, Medicaid may cover some costs for people who are eligible. Find more information on Medicaid and other government programs below.

Government programs

Older adults may be eligible for some government health care benefits. Caregivers can help by learning more about possible sources of financial help and assisting older adults in applying for aid as appropriate.

Several federal and state programs provide help with health care-related costs. Over time, the benefits and eligibility requirements of these programs can change, and some benefits differ from state to state. Check with the individual programs directly for the most recent information.


This federal government health insurance program helps pay some medical costs for people age 65 and older, and for people under 65 with certain disabilities and serious health conditions. Covered services include hospital stays, doctor visits, some home health care, hospice care, and preventive services such as vaccinations. The program does not cover assisted living or long-term care. Parts of Medicare include Part A (Hospital Insurance), Part B (Medical Insurance), and Part D (Drug Coverage). Medicare also offers another way to get your Part A and Part B coverage through Medicare Advantage Plans.

Call Medicare at 800-633-4227 or visit for more information about its programs and coverage options.


Some older adults qualify for Medicaid, a combined federal and state program for low-income people. This program covers the costs of medical care and some types of long-term care for people who have limited income and meet other eligibility requirements. Who is eligible and which services are covered vary from state to state. 

To learn more, visit, call 877-267-2323, or contact your state health department. For a state-by-state list of Medicaid programs, visit Medicaid’s State Overviews page.

Program of All-Inclusive Care for the Elderly (PACE)

Some states offer PACE, the Program of All-Inclusive Care for the Elderly. It is a combined Medicare and Medicaid program that provides services to people who otherwise would need care in a nursing home. PACE enables most people who qualify to continue living at home instead of moving to a long-term care facility. The program helps cover the costs of medical care, social services, and long-term care for frail older adults. Participants receive coordinated care from a team of health care professionals. 

You will need to find out if the person who needs care qualifies for PACE and if there’s a PACE program near you. PACE is available only in certain states and in specific locations within those states. There may be a monthly charge. 

To find out more, contact Medicare at 800-633-4227 or visit Medicare’s PACE page. You can also search for local programs by state using PACEFinder, an online service of the National PACE Association.

State Health Insurance Assistance Program (SHIP)

This national program has offices in each state. It provides one-on-one counseling and assistance with Medicare, Medicaid, and related programs to individuals and caregivers. SHIP can help navigate eligibility, coverage, appeals, and out-of-pocket costs, and answer questions about your family’s unique situation and needs.

To find contact information for SHIP in your state, visit the SHIP website or call 877-839-2675.

Department of Veterans Affairs (VA)

The VA provides coverage for long-term care at a facility or at home for some veterans. If your family member or relative is eligible for veterans’ health care benefits, check with the VA or get in touch with the VA medical center nearest you. There could be a waiting list for VA nursing homes. 

For information about services for older veterans and their caregivers, visit the VA’s website for older veterans or the VA Caregiver Support Program, or call 877-222-8387. The VA also provides information for veterans about paying for long-term care.

Social Security Administration Programs

Social Security is a program that provides financial benefits to retired people and to those with disabilities. Social Security Disability Insurance (SSDI) is for people with a medical condition that meets the Social Security Administration’s definition of “disability.”

For a person to qualify for SSDI, they must be able to show that:

  • They worked in jobs covered by Social Security.
  • They are unable to work.
  • The condition will last at least a year or is expected to result in death.

Supplemental Security Income (SSI) is another program that provides monthly payments to people whose income and resources are under certain limits.

Social Security has “compassionate allowances” to help people with early-onset Alzheimer’s disease, some other forms of dementia, and certain other serious medical conditions get disability benefits more quickly.

For details about SSDI and SSI, including eligibility, benefits, and the application process, visit the Social Security Administration or call 800-772-1213.

Find out more about benefits

Do you wonder which benefit programs would be most helpful for you or a family member? Do you have questions about eligibility? Do you need to learn how to sign up? is the federal government’s official benefits website. It offers numerous state and local resources for health care and financial assistance. The Benefit Finder questionnaire can help you find specific benefits and learn where to apply for them. You can also call 800-FED-INFO (800-333-4636) for information about government benefits.

The National Council on Aging’s free service called BenefitsCheckUp can help you find public and private benefit programs by location, category, and eligibility. This service can help you learn more about benefits programs before applying and find contact information for the agency that offers each program.

Are you worried about paying for medications? Even with private health insurance or Medicare, people may have to pay part of the costs for prescription medications themselves. If you have limited resources or are caring for an older adult who needs assistance, help may be available. Your health care professional may have suggestions or resources to share. Read frequently asked questions about medications and older adults, including ways to save money on medicines.

Private financing options

In addition to personal funds and government programs, there are several private payment options, including long-term care insurance, reverse mortgages, certain life insurance policies, annuities, and trusts. Which option is best depends on many factors, including the person’s age, health status, and financial situation.

Long-term care insurance

This type of insurance covers services and support for people needing long-term care, including help with the activities of daily living. Policies cover a wide range of benefits in a variety of settings, including the person’s home, an assisted living facility, or a nursing home. The exact coverage depends on the type of policy and the services it includes. Make sure you understand what your policy does and does not cover, and how long benefits last.

Many companies sell long-term care insurance. Costs and benefits vary, so it’s a good idea to shop around and compare policies. The cost of a policy is based on the type and amount of services, how old the person is when they buy the policy, and any optional benefits. Some employers are starting to offer group long-term care insurance programs as a benefit. It may be easier to qualify for long-term care insurance through an employer-sponsored program, and group rates may be cheaper than the cost of an individual policy.

Buying long-term care insurance can be a good choice for younger, relatively healthy people at low risk of needing long-term care in the next 25 years. Costs go up for people who are older, have health problems, or want more benefits. Someone who is in poor health or already receiving end-of-life care services may not qualify for long-term care insurance.

For more information about long-term care insurance, visit your state’s insurance administration.

Reverse mortgages

A reverse mortgage is a special type of home loan that lets a homeowner convert part of the ownership value in their home into cash without having to sell the home. Unlike a traditional home loan, no repayment is required until the borrower sells the home, no longer uses it as a main residence, or dies.

There are no income or medical requirements to get a reverse mortgage, but this option is only available to those age 62 or older. The loan amount is tax-free and can be used for any expense, including long-term care. However, if the person has an existing mortgage or other debt against their home, they must use the funds to pay off those debts first.

If you are thinking about a reverse mortgage, talk to an expert. A reverse mortgage can be complicated, and other borrowing options may be available. These might include a home equity loan or refinancing an existing mortgage to lower the monthly payments. Like a reverse mortgage, these options can free up cash for covering long-term care expenses.

Additional information about reverse mortgages and other borrowing options is available from the Consumer Financial Protection Bureau or by calling 855-411-2372.

Life insurance policies

Some life insurance policies can help pay for long-term care. Companies are starting to offer a combination product that includes both life insurance and long-term care insurance.

Policies with an “accelerated death benefit” provide tax-free cash advances while a person is still alive. The cash advance is subtracted from any proceeds that beneficiaries receive after the person dies. A person can get an accelerated death benefit if they live permanently in a nursing home, need long-term care for an extended time, are terminally ill, or have a life-threatening diagnosis. Check the life insurance policy to see exactly what it covers and when the older person can access the benefits.

Selling a life insurance policy for its current value can be another way to raise cash. This option, known as a “life settlement,” is usually available only to women age 74 and older and men age 70 and older. The proceeds are taxable and can be used for any reason, including paying for long-term care.

A similar arrangement, called a “viatical settlement,” allows a terminally ill person to sell their life insurance policy to an insurance company for a percentage of the death benefit on the policy. This option is typically used by people who are expected to live two years or less. A viatical settlement provides immediate cash and is tax-free, but they can be difficult to obtain. Companies decline more than half of the people who apply.

Keep in mind that if a person chooses to take life insurance benefits early or to sell their policy, there will be little or no money left from the policy to pass on to heirs. For more information about using life insurance to pay for long-term care, visit your state’s insurance administration.


An annuity is a contract with an insurance company that can help pay for long-term care services. In exchange for a lump sum contribution or series of contributions, the insurance company will provide regular payments over a specified period. For example, the annuity can provide monthly income to cover long-term care costs. These payments, however, may not be enough to cover all of a person’s expenses.

Annuities can have complicated effects on a person’s taxes, so speak with a tax professional before buying one.


A trust is a legal arrangement that allows a person to transfer assets (such as cash, property, or insurance benefits) to another person, called the trustee. The trustee then manages the assets for that person’s benefit. A trust can provide flexible control of assets for an older adult or a person with a disability.

Can a person get paid to take care of a family member?

Family caregivers make a lot of sacrifices to care for older, sick, or disabled relatives. Some even quit their jobs to care for the person full-time. There are many costs involved in caregiving; for example, covering travel expenses, paying bills, and buying household essentials. These costs can add up to create a significant financial burden for caregivers.

Many states offer some form of pay for family caregivers. But the laws, eligibility, and funding for this support vary by state. The most common source of assistance is Medicaid, which offers several state-based programs to people who are eligible based on income or disability. These programs include home- and community-based services, adult foster care, and Medicaid personal care services. Contact your state Medicaid agency to learn more.

Veterans and people living with certain diseases may also be eligible for financial assistance through federal and state agencies or private organizations. Information is available by visiting the Eldercare Locator or by calling 800-677-1116.

Long-term care insurance usually provides coverage for care at home. However, policies differ regarding who can deliver that care. In some cases, only a professional service will be paid for long-term care. In other cases, the policy will pay for a family member to provide care. Contact your long-term care insurer to find out the details of your policy.

  • Finding a financial professional

    Navigating the details of paying for long-term care can be challenging. Some options can have implications for a person’s taxes and any inheritance they want to leave to their heirs. It may be useful to speak with a financial professional when you’re considering how to proceed.

    Helpful professionals may include:

    • Accountants
    • Financial planners
    • Investment advisors
    • Tax preparers
    • Attorneys

    Check out for more information about finding, choosing, and working with a financial professional.

You may also be interested in

For more information about paying for long-term care

Department of Veterans Affairs

866-226-1819 (TTY)

800-633-4227 (1-800-MEDICARE)
877-486-2048 (TTY)

Social Security Administration
800-325-0778 (TTY)

SHIP (State Health Insurance Assistance Programs)

This content is provided by the NIH National Institute on Aging (NIA). NIA scientists and other experts review this content to ensure it is accurate and up to date.

An official website of the National Institutes of Health