Don't Rely on Medicare or Medicaid for Your Long-Term Care

Takeaways

• Many Americans misunderstand Medicare and Medicaid's limited coverage for long-term care, often overestimating their reliance on these programs.
• The cost of long-term care insurance is also frequently overestimated, leading many to forgo crucial coverage.
• Proactive planning, including exploring private insurance, home modifications, and consulting professionals, is essential for addressing future long-term care needs.

Americans are living longer than ever, and this trend is expected to continue. According to the U.S. Census Bureau, the number of Americans aged 100 and older is expected to quadruple over the next 30 years, from an estimated 101,000 in 2024 to about 422,000 in 2054.

With this increase in longevity comes an increase in the need for long-term care, as well as the need for it for a longer period of time. Though long-term care services are often associated with nursing homes and assisted care facilities, they can help seniors live in their homes longer, which most prefer to do.

Long-Term Care Services

Long-term care (LTC) services can include assistance with activities of daily living (ADLs) such as bathing and dressing but can also include help with medical-related tasks, such as managing complex daily health care regimes. Older adults often use LTC services for housekeeping tasks as well, such as doing laundry, cooking, and shopping. LTC services are often essential for many older adults who want to continue living on their own and can help delay or avoid institutionalization in a nursing home.

Paid professionals or unpaid family members or friends may provide LTC services. Most older adults rely heavily, or exclusively, on unpaid support.

Although some people who need LTC services rely on them for a short time, such as when recovering from surgery, many older adults rely on them for an average of three years, with 20 percent needing them for more than five years. Even though many older adults rely on unpaid LTC provided by family members or friends, many others must rely on paid help for some or all of their long-term care services.

Counting on the Wrong Safety Net for LTC

The 2025 Nationwide Retirement Institute Long-Term Care survey reveals the startling misconception that 58 percent of Americans believe Medicare will cover the costs of long-term care—despite it covering only limited, skilled or post-hospitalization care for up to 100 days. Medicare doesn’t pay for extended custodial care, which includes activities like bathing and dressing that older adults often need, and daily co-pays begin after just 20 days.

As a result of the increasing cost of LTC, 59 percent of survey respondents said they think they will rely on Medicaid to help pay for LTC expenses. This suggests that either some people don’t fully understand the requirements for qualifying for Medicaid or they intend to spend down their savings to poverty level so they will qualify for Medicaid. Unfortunately, funding for Medicaid is under threat.

The Threat to Medicaid

The Trump Administration’s budget, dubbed the "One Big Beautiful Bill," proposes nearly $800 billion in Medicaid cuts over the next decade. This would not only reduce Medicaid spending but would also result in 10.3 million fewer people enrolled in Medicaid by 2034, including 1.3 million people who are also eligible for Medicare.

Nursing home operators warn that Medicaid cuts could force nursing homes to lay off staff members or close their doors. These drastic measures would reduce the quality of care or, potentially, remove this care option from some areas. This means that individuals planning to rely on Medicaid for long-term care in a nursing home may find that safety net significantly undercut.

The Coverage Gap: Long-Term Care Insurance

According to Nationwide’s survey, 22 percent of Americans 29 years old and older say they have long-term care insurance (LTCI). However, data show that actual ownership of such coverage is much lower. People often mistakenly believe their health insurance or long-term disability insurance will cover any long-term care costs they incur. Alarmingly, it is estimated that only 3 to 4 percent of Americans aged 50+ have actual long-term care insurance.

Many people cite cost as a barrier to purchasing LTCI. Of those surveyed, 38 percent said the perceived high cost was the main deterrent to getting LTCI. However, many overestimate LTCI premiums. Nearly two‑thirds of those surveyed believe it costs more than it actually does.

Aging in Place vs. Moving

In addition to wanting to age in their own homes, many people view staying in their homes for as long as possible as a way to save money. Though 77 percent of Americans would prefer to receive long-term care in their homes, 41 percent think their current home is probably not safe or accessible enough for them to age in place. Nearly half of those surveyed think that modifying their home so that they can age in place safely would be too expensive.

Moving to a home that would be better suited for aging in place seems like a viable option, but this path can also have obstacles. Fifty-four percent of those surveyed believe the current real estate market makes it too difficult to move or find an ideal home for retirement. Based on the survey, it can be projected that Americans 61 and older are planning to remain in their current homes without making aging-related modifications after they retire, despite the risks involved.

Strategies for LTC Planning

Some things you can do to plan to cover your long-term care needs include the following.

• Get clear on Medicare: Medicare does not cover long-term custodial care. Think of it as a short-term post-acute solution rather than a long-term care solution.
• Consider getting private LTC insurance early: Premiums are more affordable and coverage more accessible before health issues arise. A good age range to start a long-term care insurance policy is 50 to 55.
• Explore hybrid solutions: Some life-insurance and annuity products come with LTC riders that offer flexibility while addressing both retirement income and long-term care funding.
• Tap home equity sensibly: Reverse mortgages or home equity lines of credit can help fund home modifications or in-home care, but they come with risks. Consult with an advisor before borrowing against your home.
• Boost savings and diversify: Maximize retirement contributions early, build emergency funds, and diversify across account types (taxable, Roth, HSA) for flexibility.
• Delay retirement: Working longer improves income and care options, reducing reliance on savings.
• Remodel for safety early: Investing in accessible home features such as ramps and no-step showers now can avoid future major expenses.
• Consult professionals: Proactive planning with a financial planner and an attorney experienced in elder law and estate planning can prevent pitfalls and extra costs.

Start Planning for Long-Term Care Now

Consider it likely that you will need long-term care at some point in your life. The sooner you start planning for it, and especially how you will pay for it, the better. You shouldn’t rely on Medicare or even Medicaid to cover your LTC costs.

For additional reading about Medicare, Medicaid, and long-term care planning, check out the following articles:

• Turning Age 65? What to Know About the 4 Parts of Medicare
• Medicare Coverage Basics: What You Need to Know
• Understanding Medicaid: What Does the Medicaid Program Cover?
• Cuts to Medicaid Benefits May Harm Millions of Older Adults
• What You Should Know About Long-Term Care