What happens when your loved one needs nursing home care, but there isn’t enough money to pay for it?
With nursing home costs in the thousands each month, even families who have planned ahead and saved for retirement can find themselves worried about running out of money. But a lack of funds doesn’t mean you have to choose between paying for care and keeping your loved one safe.
Learn more about how to pay for a nursing home on a budget, how to qualify for Medicaid without losing your house and financial assistance resources for nursing home care.
[READ: Caregiver Tax Checklist 2026: Deductions & Credits for Family Caregivers]
Understanding Nursing Home Costs and Care Needs
A nursing home is a residential facility that provides 24-hour care and supervision for those who need help with multiple activities of daily living (ADLs), such as grooming, dressing and eating, and ongoing medical care. Nursing homes provide a higher level of hands-on care compared to a lower level of care, such as independent or assisted living. Some nursing homes offer specialized memory care for residents with Alzheimer’s disease or dementia.
The average monthly cost for a nursing home ranges between $9,581 for a semi-private room and $10,798 for a private room, according to CareScout’s Cost of Care survey.
[READ: Must-Ask Questions When You’re Choosing a Nursing Home.]
Government Benefits and Assistance Programs
Who pays for a nursing home if you have no money or a limited income? Here’s what to know about coverage for nursing home care.
Does Medicare pay for long-term nursing home care?
No, Medicare, as well as most Medicare Advantage and Medigap plans, do not cover long-term nursing home care, particularly “custodial care” services, or supportive care for ADLs.
Medicare Part A, however, does cover skilled nursing care under some circumstances. Skilled nursing care involves a short-term skilled nursing need, such as wound care or IV medications, and usually takes place right after a hospital discharge. After 100 days of skilled nursing care, you pay all of the associated skilled nursing costs until the end of your benefit period.
How Medicaid covers long-term skilled care
If a nursing home is Medicaid-certified (meaning it meets specific standards from the state and federal government to participate in Medicaid), Medicaid will cover all of the associated costs. Residents may still be responsible for personal expenses or services deemed nonmedically necessary.
However, qualifying for Medicaid isn’t a given, and you need to know about eligibility rules and limitations several years in advance to avoid potential financial pitfalls.
Eligibility requirements
Some Medicaid eligibility criteria vary by state. Eligibility can be based on:
— Age or disability: You must be at least 65 years old or have a qualifying condition.
— Residency: You have to apply for the program in your state of residence and be a U.S. citizen or qualifying immigrant.
— Level of care: You must have a demonstrated need for long-term care at the nursing home level.
— Income limits: You need to earn a monthly income under the Medicaid limit. Income limits vary by state and eligibility category. For certain Medicaid long-term care programs, the limit is tied to 300% of the federal supplemental security income (SSI) benefit rate, totaling $2,982 for 2026.
— Asset limits: Your countable assets are generally limited to $2,000, depending on the state, according to the Centers for Medicare & Medicaid Services. Other assets, such as a 401(k) plan or individual retirement account, may be exempt in some states, but not others.
Medicaid spend-down and the five-year look-back rule
If you don’t qualify for Medicaid due to having excess assets, you can attempt a Medicaid spend-down. During this process, you can use ethical and legal strategies to preserve as many assets and as much money as possible while meeting Medicaid eligibility criteria, says Evan Farr, a certified elder law attorney and retirement planner at Farr Law Firm P.C. in Virginia, Maryland and Washington, D.C.
For instance, you could spend excess assets on qualifying expenses such as:
— Paying down mortgages or other debts
— Prepaying funerals or establishing burial accounts
— Making home modifications or purchasing exempt assets like automobiles
[READ: Nursing Home Requirements: Who’s Eligible?]
VA Aid and Attendance benefits for wartime veterans
Some individuals use veterans benefits to pay for nursing home care. In general, you need to enroll in VA health care, meet the income eligibility requirements and have a disability that resulted from your military service. The Department of Veterans Affairs pays for some nursing home care, but you may have a copay for those services, which could be up to about $97 per day, according to the VA.
Social Security to pay for long-term care
You can choose to offset nursing home costs using your Social Security benefits, though Social Security monthly income averages around $1,000 to $2,000, far less than the average monthly nursing home cost.
Also, note that if Medicaid pays for your nursing home, the Supplemental Security Income (SSI) portion of Social Security benefits may be affected. Because SSI is a needs-based program, qualifying for Medicaid could result in a reduction of your SSI benefits, depending on your length of stay and how much Medicaid was paying.
Medicaid waiver programs
Medicaid waiver programs and services can vary considerably by state, but some are designed to delay nursing home care until absolutely necessary. These waivers can help cover some services within long-term care, such as home health aides or memory care, but they do not pay for room and board.
[SEE: 8 Nursing Home Alternatives: 2026 Costs and Care Guide]
Financial Options for Funding Long-Term Care
In addition to government assistance programs, there are several ways to privately fund long-term care. Families may choose to use a combination of these resources.
Comparison of long-term care payment methods
The table below compares some of the common options for funding long-term care.
| Option | What you access | Best for | Main drawback |
| Long-term care insurance | Policy benefits for eligible long-term care | Those still healthy enough to qualify for a policy | Benefits have limits and eligibility requirements. |
| Life insurance | Policy’s cash value or death benefit | Those with an existing policy | This option reduces beneficiary inheritance. |
| Tax-optimized retirement withdrawals | IRA/401(k) funds offset by itemized medical tax deductions (Schedule A) | Families with high out-of-pocket care bills and traditional retirement accounts | Distributions increase taxable income if deductions don’t fully offset withdrawals. |
| Home equity loan | Home equity as a lump sum | Paying for a known, upfront expense | These loans require monthly payments. |
| Reverse mortgage | Home equity | Homeowners who want to remain in their home | This strategy reduces available home equity. |
| HELOC | Home equity as needed | Paying for ongoing or unpredictable expenses | Interest rates can change. |
| Bridge loan | Short-term borrowed funds | Covering costs during a transition or while waiting for another financial plan to occur | These loans have higher costs and interest rates and are a temporary solution. |
Using long-term care insurance effectively
Long-term care insurance isn’t for everyone, but it can cover long-term services that health insurance and Medicare generally don’t cover. Some plans also offer inflation riders for an additional cost, so your total benefit amount grows with inflation each year to protect your purchasing power.
Start the claims process as soon as possible, advises Thomas C. West, McLean, Virginia-based managing senior partner at Signature Estate & Investment Advisors.
“Most policies have waiting periods or elimination periods during which care must be paid for over a specified number of days before the benefits kick in,” he explains. “It almost never makes sense to defer long-term care insurance claim support the moment it becomes available.”
Converting or selling life insurance policies
If you have a life insurance policy, you may be able to surrender your policy for cash value, sell it through a life settlement, use an accelerated death benefit or living benefit rider or a chronic illness rider to access part of the death benefit.
“In cases where life expectancy is very likely to be shortened, policies could also be effectively sold through a life settlement option. Remember that each of these options will have different tax and estate planning consequences,” West says.
Tax-optimized retirement withdrawals
An often underused tip is evaluating the impact of Itemized Medical Expense Schedule A deductions.
“I always check the impact of deductible expenses to see if they are sufficient to turn off tax withholding from pensions or SSI,” West says.
For example, in cases where medical expenses are high, it might make sense to intentionally withdraw more from a retirement account than the minimum.
“If excess deductions can offset the taxes associated with taking higher individual retirement account (IRA) distributions, that often leaves the family in a better financial position than drawing from cash,” West explains.
Home equity and borrowing options
You can borrow against your home’s equity or use the proceeds from selling your home to fund your care, though using home equity may affect your Medicaid eligibility.
“Home equity should be considered when the problem is timing more than affordability,” West says. “If a home is going to be sold in a few months, it could provide temporary liquidity.”
— Reverse mortgage: This option allows homeowners age 62 and older to access part of their home equity without selling their home. The loan then becomes due when the borrower dies, moves out permanently or sells the home. However, “Pay close attention to the occupancy rule,” West says. “Sometimes, if the owner leaves the home, the reverse mortgage loan amount could become due.” A reverse mortgage can also impact the equity to heirs of your estate, so it may make more sense to leave as much equity in the home as possible.
— Home equity loans and home equity lines of credit (HELOCs): These options allow you to borrow against your equity, either as a fixed lump sum (home equity loan) or a revolving line of credit (HELOC), though both put your home at risk if you are unable to make the payments.
— Bridge loan: This type of loan can provide temporary funds when a family needs to pay for care before another source of money is available. For example, a bridge loan can help you cover nursing home expenses while your home is being prepared for sale. These shorter-term loans often carry higher interest rates or fees and are intended as a temporary solution.
Creative Strategies to Cut Out-of-Pocket Expenses
When it’s clear that you or a loved one needs a nursing home, there are ways to reduce monthly nursing home expenses. Looking into lower-cost nursing homes is an obvious one, though you want to make sure the facility offers good-quality care. Start by researching long-term care facilities in your location of interest.
Once you’ve narrowed down your choices, toured and selected nursing homes in your area, explore other ways to economize.
Opt for semi-private accommodations
The cost difference between a private room and a semi-private room — a shared room that usually has a curtain or other divider between roommates — is considerable.
| Type of Room | Cost Per Day | Cost Per Year |
| Semi-private | $315 | $114,975 |
| Private | $355 | $129,575 |
Source: CareScout
Audit care contracts for hidden fees
Before signing a contract, review it for additional fees beyond the daily room rate.
Ask for:
— An example of an itemized bill
— A list of additional possible fees outside of the daily room rate
— A schedule for rate increases, as well as how much rates are expected to increase
Review the contract with an elder law attorney or another trusted professional, if possible.
Consult an elder law attorney or financial planner
When you consult with elder law attorneys or financial planners, they may discuss asset-protection strategies, including:
Property and real estate transfers
— Disabled or minor child transfer: Transferring a home to a minor child or to an adult child with a disability
— Child caregiver exception: Transferring home ownership to a parent’s grown caregiver child who lives with the parent, thus delaying the parent going into a nursing home. That child must live in the home with that parent for at least two years immediately prior to the parent’s admittance to a nursing home or assisted living community.
— Sibling co-owner transfer: Transferring home ownership to a co-owner sibling. Typically, this person must be biological or adopted and not a step-related sibling. The sibling must have lived in the home with the applicant for at least one year before the applicant receives Medicaid-covered long-term care.
Specialized trusts
— Special needs trusts: Setting up a special needs trust for an individual under 65 who is disabled, whether they are related or not
— Pooled charitable trusts: Depositing excess resources and assets into a trust managed by a charitable organization. In most states, you must be under age 65, or there is a transfer penalty.
— Irrevocable Medicaid trusts: Placing assets into a trust where others, usually children, are named as trustees or “lifetime beneficiaries.” Trustees or beneficiaries cannot be the spouse.
Financial contracts and income tools
— Personal care arrangements: Establishing a formal agreement to compensate a family caregiver, though it typically cannot be the spouse.
— Medicaid-compliant annuities: Converting countable cash reserves into an irrevocable monthly income stream that complies with Medicaid requirements.
— Medicaid-compliant promissory notes: Structuring a loan with specific, interest-bearing repayment terms that follows Medicaid requirements.
Arrangements like these have intricate rules that you need to understand before moving ahead, so it’s safer to consult with an expert than to DIY with online legal forms.
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How to Pay for a Nursing Home With No Money originally appeared on usnews.com
Update 08/19/26: This story was published at an earlier date and has been updated with new information.
