How to Pay for Long-Term Care Without Insurance

If you don’t have long-term care insurance, you pay for care by combining five sources: personal income and savings, home equity, an existing life insurance policy, Medicaid, and VA benefits for eligible veterans. Most families end up using more than one. Knowing how to pay for long-term care without insurance starts with a hard fact about what Medicare will and won’t do, because that gap is what forces the rest of the plan.

Care in the United States runs roughly $5,000 to $12,000 or more per month depending on the setting and the state. About 70 percent of adults who reach 65 will eventually need serious care, and roughly half will pay for professional help at some point.¹

What Medicare Will and Won’t Cover

Medicare and most health insurance plans do not pay for long-term care, meaning the ongoing help with bathing, dressing, and eating that defines custodial care.² Medicare Part A covers a skilled nursing facility stay only after a qualifying hospital admission, only when skilled care such as therapy or wound treatment is needed, and only for up to 100 days per benefit period.³ Medicare home health coverage is similarly narrow: you must be homebound and need intermittent skilled nursing or therapy ordered by a physician, and it will not pay for an aide who only helps with meals and housework.⁴ Everything past those limits is on you.

Start With Income and Savings

Almost every plan begins by pooling regular income. Social Security is the base for nearly every retiree, with the average monthly retirement benefit reaching about $2,071 in January 2026.⁵ Pensions add to that if you have one. On their own, these rarely cover a full nursing home or assisted living bill, so most people also draw from retirement accounts.

Distributions from a 401(k) or traditional IRA are subject to income tax but carry no early-withdrawal penalty after 59½. If you’re younger, you can still avoid the 10 percent penalty on withdrawals used to pay unreimbursed medical expenses above 7.5 percent of your adjusted gross income.⁶ Starting at 73, the IRS requires minimum distributions from most retirement accounts each year, and those can be directed straight to care bills.⁷

Savings accounts, money market funds, and CDs fill the gap between income and the monthly bill. The risk is spending faster than you’d planned. Before you commit to a facility or a care level, build a realistic projection of how many months or years your combined resources will actually sustain that cost.

Turn Home Equity Into Care Dollars

A home is often the single most valuable asset older adults own, and there are three ways to convert it.

Reverse Mortgage

A Home Equity Conversion Mortgage (HECM) is a federally insured loan for homeowners 62 and older.⁸ You can take proceeds as a lump sum, a line of credit, or monthly payments, with no monthly mortgage payment due. The balance comes due when the last surviving borrower or eligible non-borrowing spouse dies, sells the home, or stops using it as a primary residence.⁹

That last trigger matters for care planning. If you move into a facility and no co-borrower or eligible non-borrowing spouse remains in the house, the loan typically comes due after you’ve been away for 12 consecutive months. The loan can also be called if you fall behind on property taxes, insurance, or maintenance. A non-borrowing spouse who was married to the borrower when the HECM was issued can generally stay in the home even after the borrower moves out, as long as the spouse continues to live there and taxes and insurance stay current.

HELOC

A home equity line of credit works like a credit card secured by the property.¹⁰ You draw only what you need and pay interest only on what you draw. It requires monthly payments, so you need the income to service it.

Selling the Home

If you’re moving into full-time care and won’t return, an outright sale usually produces the largest single infusion of cash. You can exclude up to $250,000 of capital gain on the sale of a primary residence, or $500,000 for a married couple filing jointly, provided you owned and lived in the home for at least two of the five years before the sale.¹¹

Cash Out a Life Insurance Policy

If you own permanent life insurance, the policy itself can pay for care.

Life and Viatical Settlements

A life settlement is a sale of the policy to a third-party buyer. The buyer pays you a lump sum, generally more than the cash surrender value but less than the death benefit, takes over the premiums, and collects the death benefit later.¹² A viatical settlement is the same transaction when the policyholder has a terminal or chronic illness. Proceeds from a viatical settlement paid to a terminally ill individual are generally excluded from taxable income, while a standard life settlement to someone who is not terminally or chronically ill is partially taxable.¹³

Accelerated Death Benefit

Many policies include an accelerated death benefit rider that lets you collect part of the death benefit while alive. It usually requires a physician’s certification of terminal illness, a chronic condition requiring long-term care, or permanent nursing home confinement. Insurers pay out anywhere from 25 to 100 percent of face value depending on the policy, and the death benefit for your beneficiaries is reduced by the same amount. When paid to someone terminally or chronically ill, accelerated benefits are generally tax-free to the same extent as benefits under a qualified long-term care insurance contract.¹³ Check your policy documents or call the insurer to see whether you have this rider and what triggers it.

Qualify for Medicaid

Medicaid is the largest single payer for long-term care in the country, but it is needs-based. You have to be nearly out of resources to qualify.

Asset and Income Limits

In most states, a single applicant can keep no more than about $2,000 in countable assets, and married couples living together can generally keep about $3,000.¹⁴ Several assets don’t count:

Your primary residence, as long as it remains your principal residence or your spouse lives there, subject to a state home equity cap commonly between about $752,000 and $1,130,000.
One vehicle used for household transportation.
Personal belongings and household furnishings.
Irrevocable funeral trusts and up to $1,500 in designated burial funds.
Life insurance policies with a face value under $1,500.¹⁴

If your assets exceed the limit, you’ll need to spend down by paying for care, making home modifications, buying an irrevocable funeral trust, or paying off debt until countable assets fall below the threshold. States also set income limits. In roughly half of them, sometimes called income cap states, applicants over the cap can still qualify by depositing income each month into a Qualified Income Trust, often called a Miller Trust. Income placed in the trust doesn’t count for eligibility, but it is used to calculate what you owe the facility.

The 60-Month Look-Back

Federal law requires states to examine your financial transactions for the 60 months before you apply. Gifts or sales for less than fair market value during that window trigger a penalty period during which Medicaid won’t pay. The penalty is calculated by dividing the total value of the improper transfers by the average monthly cost of nursing home care in your state.¹⁵ A $100,000 gift in a state with a $10,000 monthly average produces a 10-month penalty, and you cover care yourself during that time. Keep records of every meaningful transaction during the five years before you apply.

Protecting a Community Spouse

When one spouse needs Medicaid-funded care and the other stays at home, federal rules prevent the healthy spouse, known as the community spouse, from being impoverished. Two 2026 figures matter:

Community Spouse Resource Allowance: the spouse at home can keep between $32,532 and $162,660 in countable assets, depending on the state’s calculation method.¹⁶
Minimum Monthly Maintenance Needs Allowance: the community spouse can receive up to $2,643.75 per month from the couple’s combined income for living expenses.¹⁶

Because the application requires bank statements, deeds, and income records reaching back five years, many families work with an elder law attorney on the filing.

VA Aid and Attendance for Veterans

Veterans and surviving spouses may qualify for Aid and Attendance, a supplemental pension that adds to monthly income to cover care.¹⁷ You have to already receive a VA pension and meet at least one of the following:

You need help from another person with daily activities such as bathing, dressing, or eating.
You are bedridden or spend most of the day in bed due to illness.
You are a nursing home patient because of a disability-related loss of mental or physical ability.
Your eyesight is severely limited, 5/200 or less in both eyes, or visual field of 5 degrees or less.¹⁷

From December 2025 through November 2026, a single veteran with no dependents who qualifies can receive up to roughly $2,424 per month, and a veteran with one dependent up to about $2,874 per month. Financial eligibility requires that total net worth, meaning assets plus annual income and excluding your primary home and one vehicle, not exceed $163,699.¹⁸ You also need active-duty service during a recognized period of war, documented by DD-214 discharge papers; surviving spouses provide marriage and death certificates.

The VA runs a 36-month look-back on asset transfers. Transfers below fair market value during that window can trigger a penalty of up to five years during which the pension is withheld.¹⁹ Claims often take months to process, so applying before care needs become urgent gives you a better chance of having benefits in place when you need them.

The Tax Deduction That Applies to Almost Any Strategy

Whichever mix you use, qualified long-term care expenses count as medical expenses for federal income tax. Nursing home fees, home health aide costs, and personal care services prescribed by a physician all qualify. You can deduct the portion of your total medical expenses that exceeds 7.5 percent of your adjusted gross income, and you have to itemize on Schedule A to claim it.²⁰ For someone paying out of pocket over a full year, that deduction alone can be substantial, and it’s worth tracking every qualified expense with receipts as you go.

1
Office of the Assistant Secretary for Planning and Evaluation (ASPE). What Is the Lifetime Risk of Needing and Receiving Long-Term Services and Supports?
2
Medicare.gov. Long Term Care Coverage
3
Medicare.gov. Skilled Nursing Facility Care
4
Centers for Medicare & Medicaid Services. Home Health Services
5
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
6
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
7
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
8
U.S. Department of Housing and Urban Development. HUD FHA Reverse Mortgage for Seniors (HECM)
9
Consumer Financial Protection Bureau. When Do I Have to Pay Back a Reverse Mortgage Loan?
10
Federal Trade Commission. Home Equity Loans and Home Equity Lines of Credit
11
Internal Revenue Service. Topic No. 701, Sale of Your Home
12
FINRA. What You Should Know About Life Settlements
13
Internal Revenue Service. Life Insurance and Disability Insurance Proceeds
14
Administration for Community Living. Medicaid Eligibility
15
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
16
Centers for Medicare & Medicaid Services. 2026 SSI and Spousal Impoverishment Standards
17
Veterans Affairs. VA Aid and Attendance Benefits and Housebound Allowance
18
U.S. Department of Veterans Affairs. Current Pension Rates for Veterans
19
eCFR. 38 CFR 3.276 – Asset Transfers and Penalty Periods
20
Internal Revenue Service. Publication 502, Medical and Dental Expenses