39% of middle-class households wrongly expect Medicare to cover long-term care

Medicare covers only limited skilled nursing care after a qualifying hospital stay, yet 39% of middle-class households expect the federal program to fund their long-term care, according to an August survey from the American Council of Life Insurers, an insurance industry trade group.

"People assume Medicare is their long-term care plan," said Jeff Judge, a certified financial planner and managing partner at Chesapeake Financial Planners in Forest Hill, Maryland. "It isn't, and finding that out during a crisis is the worst possible time."

The survey of 1,404 households earning $50,000 to $150,000 found nearly 20% plan to self-fund long-term care expenses. But the middle class is effectively priced out of nursing home care nationwide, with home care costs up 39% since 2021, according to a March report from the AARP Public Policy Institute. A semi-private nursing home room costs $114,975 annually based on the national median daily rate of $315, per a 2025 CareScout survey.

Someone turning 65 has a nearly 70% chance of needing some type of long-term care services, according to 2020 Department of Health and Human Services data. With three payment pathways — Medicaid, insurance, or self-funding — households that delay planning risk exhausting retirement savings at a moment when care costs are rising faster than overall inflation.

Medicare's narrow coverage window

Medicare will pay for up to 100 days of skilled nursing facility care following a qualifying inpatient hospital stay of at least three consecutive days, according to KFF, a nonprofit health policy research group. The program spends more than $100 billion annually on long-term services and supports, exceeding what households pay out of pocket, Andrew Biggs, a senior fellow at the American Enterprise Institute, wrote in July.

Yet Medicare will not cover custodial nursing facility care or ongoing long-term care that does not follow a qualifying hospital stay. KFF polling finds 4 in 10 people still incorrectly identify Medicare as the main source of coverage for low-income nursing facility residents. That role belongs to Medicaid, the federal health program for low-income households, which serves as the primary payer for nursing facility care for low-income people.

"People often confuse Medicare with Medicaid when it comes to long-term care," said Carolyn McClanahan, a physician, certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. "Medicaid covers long-term care. Medicare covers some initial skilled care, but not ongoing long-term care."

Planning before the crisis

Medicaid eligibility is not automatic. Every state sets different income limits and asset thresholds, and coverage is generally available only after households exhaust their financial resources, McClanahan said. Households that do not expect to self-fund care should learn their state's Medicaid rules before they need them.

For those who can afford premiums, long-term care insurance purchased in a person's 50s or 60s costs less than policies bought later, Judge said. Earlier purchase also allows selection of riders such as cost-of-living adjustments that increase daily or monthly benefit amounts to keep pace with inflation — features that may become unaffordable at older ages.

"People are worried about outliving their money, but also probably don't have a good understanding about what's involved with long-term care and what they can do about it," said David Chavern, president and CEO of ACLI.

Even affluent retirees face risk. "It's amazing how fast you can blow through your resources" paying for care, McClanahan said. Medicare and Medicaid rules vary by state and can change; households should verify current coverage details against the latest official announcements from the Centers for Medicare & Medicaid Services before making planning decisions.

This article is for informational purposes only and does not constitute professional advice.