It’s important to understand that standard health insurance does not cover long-term disabilities, such as Alzheimer’s disease. Many seniors are surprised to learn that once a person needs ongoing custodial care — assistance with daily activities like bathing, dressing, eating and supervision for safety — these services are considered non-medical.
As a result, individuals and families must arrange and pay for long-term care themselves. Whether this care is provided at home, in an assisted living facility or in a nursing home, it is expensive. Families pay for these costs with personal funds, long-term care insurance (if they have a policy) or state programs (e.g., Medicaid) for those who qualify. Often, it’s a combination of a few resources.
Medicare vs. Medicaid
Medicare and Medicaid are both government health insurance programs, but they serve different populations and cover different types of care.
| Medicare | Medicaid |
|---|---|
| Who it’s for | Who it’s for |
| • People age 65+ | • People with limited income and assets |
| • Younger people with certain disabilities or serious medical condition | • Includes many older adults and individuals needing long term care |
| Eligibility | Eligibility |
| • Based on age or disability, not income | • Based on income, assets and level of care needed |
| • Coverage is time limited for post hospital care | • Rules and benefits vary by state |
| What it covers | What it covers |
| • Hospital care and doctor visits | • Long-term nursing home care |
| • Limited skilled nursing facility care (short term only) | • In-home and community-based services |
| • Prescription drugs (Part D) | • Personal care and supervision |
| • Preventive and outpatient services | • Medical care, prescriptions and therapies |
| What it does not cover | What it does not cover |
| • Long-term custodial care (help with bathing, dressing, supervision) | • Room and meals in assisted living facilities or at home. (i.e., Medicaid helps pay for care, not the place you live, outside of nursing homes) |
| • Extended nursing home stays | • A private room in a nursing home, unless it is medically necessary. |
| • Most in-home personal care |
How they work together
- Many people qualify for both programs (“dual eligibles”).
- Medicare pays for medical care.
- Medicaid pays for long-term care and services that Medicare does not cover, but only if you have limited assets.
Learn More
Consult with an elder law attorney or visit:
- Medicare (medicare.gov)
- Medicaid (medicaid.gov)
- National Council on Aging (ncoa.org)
Note: If someone other than the policyholder will need to access an account, the policyholder must sign a special form designating that person as their representative.
This is another reason why early planning is so important. It is best to establish a representative while the person with dementia still has the legal capacity to make that designation.
How to Manage Care Costs
Medicare GUIDE Program: Free Dementia Services
The Guiding an Improved Dementia Experience (GUIDE) program is a new Medicare initiative that provides free dementia care navigation and support services for eligible patients and their caregivers. This nationwide pilot began in July 2024 and will run for eight years, but it is not available in all locations.
Eligibility
- A dementia diagnosis
- Enrolled in Medicare Parts A and B
- Cannot reside in a long-term nursing home
- Cannot be enrolled in Medicare hospice or PACE
- Must live in a ZIP code within service area
Services provided
- 24-hour phone access to care navigators to help coordinate service needs
- Up to $2,500 annually in respite care to allow caregivers time to manage other responsibilities
- Education about the disease
Visit the Centers for Medicare & Medicaid Services: https://www.cms.gov/priorities/innovation/innovation-models/guide
Program of All-Inclusive Care for the Elderly (PACE)
PACE is a combined Medicare and Medicaid program that provides comprehensive care and services to individuals who might otherwise need nursing home care, available in select states and communities.
How it works
- Provides medical care, social services and long-term care support
- Designed to help individuals continue living at home
Coverage options
- Available in select states and communities
- Services are coordinated through a local PACE organization
- Eligibility is based on age, health needs and ability to live safely in the community
Contact Medicare at 800-663-4227 or visit the PACE page on Medicare.gov.
State Health Insurance Assistance Program (SHIP)
SHIP is a national program available in every state that provides free, one-on-one counseling and assistance with health insurance questions.
How it works
- Offers personalized guidance on Medicare, Medicaid and Medigap coverage
Services include
- Assistance with eligibility and enrollment
- Support with claims, billing issues and appeals
- Guidance tailored to your family’s specific needs
Visit SHIP: https://www.shiphelp.org/SHIPs
Or call 877-839-2675.
Department of Veterans Affairs (VA)
The U.S. Department of Veterans Affairs (VA) offers healthcare and long-term care services to eligible veterans.
How it works
- Provides coverage for care in a facility or at home
- Services may include nursing home care, assisted living and in-home support
- Eligibility is based on military service, health needs and other factors
Services include
- Long-term care in VA facilities or approved community settings
- Home- and community-based services
- Care coordination through VA medical centers
Contact VA Health Care Benefits, 877-222-8387
(va.gov/health)
National Council on Aging (NCOA)
The NCOA offers a free service called Benefits CheckUp to help older adults find federal and state programs that may assist with everyday expenses.
How it works
- Complete a brief questionnaire about the person who needs care
- Receive a personalized list of benefit programs to explore
- Programs may help with prescription drugs, heating bills, housing, meals and legal services
Go to NCOA’s benefitscheckup.org. For additional federal, state and local benefits, go to benefits.gov or call 800-FED-INFO (800-333-4636).
Social Security Administration
The Social Security Administration offers financial assistance through two programs: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).
How it works
Social Security Disability Insurance (SSDI)
For individuals under 65 who meet the SSA’s definition of disability, have worked in a Social Security-covered job and have a medical condition expected to last at least a year or result in death.
Supplemental Security Income (SSI)
Provides monthly payments to adults 65 and older (or younger adults with disabilities) who meet income and resource limits.
Key features
- SSDI applications can take 3–5 months
- “Compassionate allowances” expedite benefits for serious conditions, including early-onset Alzheimer’s and other dementias
- SSI and SSDI help cover living and medical expenses for those with disabilities
Contact the Social Security Administration (ssa.gov), 800-772-1213 (TTY: 800-325-0778).
Life Insurance
Some life insurance policies can help pay for long-term care, offering financial flexibility when care needs arise.
Contact your life insurance professional or the National Association of Insurance Commissioners (NAIC) at content.naic.org.
Long-Term Care Insurance
Long-term care insurance helps cover the cost of services and support for individuals who need assistance with daily activities or ongoing care.
What it covers
- Help with activities of daily living (such as bathing, dressing and eating)
- In-home care services, assisted living facilities, nursing home care and palliative and hospice care
Contact the National Association of Insurance Commissioners (content.naic.org), the National Council on Aging (ncoa.org) or the National Institute on Aging (nia.nih.gov).
Trusts
Trusts are legal tools that allow you to set aside and manage assets for future needs, including long-term care.
How they work
- You transfer assets (such as savings or a home) into a trust
- A trustee manages those assets according to your instructions
- Funds can be used to help pay for care or preserved for loved ones
- Some trusts may help you qualify for programs like Medicaid
Things to consider
- 5-year Medicaid look-back period on asset transfers
Contact your elder law attorney or financial advisor.
Reverse Mortgages
A reverse mortgage is a special type of home loan that allows homeowners to turn part of their home’s equity into cash — without having to sell their home.
How it works
- No monthly payments are required
- Loan is repaid when the homeowner sells the home, moves out or passes away
- Funds received are generally tax-free
- Money can be used for any purpose, including long-term care expenses
Other options
- Home equity loan
- Refinancing your current mortgage to lower monthly payments
Visit the Consumer Financial Protection Bureau (consumerfinance.gov) or call 855-411-2372, or contact the National Reverse Mortgage Lenders Association (nrmlaonline.org).
Annuities
An annuity is a contract with an insurance company that converts your savings into a steady income, helping cover living and long-term care expenses.
Contact your financial advisor or the U.S. Securities and Exchange Commission:
You may want to seek the counsel of an elder law attorney, financial planner or investment advisor.
Learn more at:
- U.S. Securities and Exchange Commission (SEC): https://www.investor.gov
- National Association of Personal Financial Advisors (NAPFA): https://www.napfa.org
- FPA Planner Search: https://www.plannersearch.org
Source: NIA.NIH.gov