The price of a year in a nursing home has climbed to a level that can drain a lifetime of savings, and the coverage most older Americans count on will not touch it. Recent cost data puts the median nursing-home room well above $100,000 a year, a figure that surprises families who assume Medicare stands behind long-term care. It does not, and the gap between what people expect and what the program actually pays is one of the most expensive misunderstandings in retirement.
What the 2025 Cost of Care Survey found
The most widely cited measure of long-term-care prices is the CareScout Cost of Care Survey, produced by Genworth. Its 2025 results put the median private room in a nursing home at roughly $355 a day, which works out to about $129,575 a year. A semi-private room, the shared option, runs near $114,975 annually. Both figures sit comfortably past the $100,000 mark at the national median, and local costs in higher-priced regions can run considerably higher still.
Those are median numbers, meaning half of facilities cost more. A multi-year stay, which is common when a resident enters for dementia or after a disabling event, can therefore reach several hundred thousand dollars. For a household that spent decades building a nest egg, a single extended nursing-home stay can consume the bulk of it.
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Why Medicare will not pay the nursing-home bill
The heart of the problem is a distinction between two kinds of care. Medicare covers medical and skilled care, but long-term custodial care, the day-to-day help with bathing, dressing, eating, and moving that most nursing-home residents actually need, falls outside the program. Medicare.gov states plainly that Medicare does not cover long-term care when that is the only kind of care a person requires.
Medicare Part A does pay for a stay in a skilled nursing facility, but only under narrow conditions and only for a short time. Coverage generally requires a qualifying inpatient hospital stay first, applies to skilled rehabilitation or nursing rather than custodial help, and is capped at up to 100 days per benefit period, with the resident owing a daily coinsurance after the first 20 days. Once the skilled need ends or the days run out, Medicare stops, and the far larger cost of ongoing custodial care becomes the family’s responsibility.
Where the money actually comes from
With Medicare out of the picture for long-term stays, families rely on a small set of options. Many pay out of pocket, drawing down savings and selling assets until the money is gone. Others hold long-term-care insurance purchased years earlier, though those policies have grown more expensive and harder to find. The third path is Medicaid, the joint federal-state program that does cover long-term custodial care, including nursing-home stays, for those who qualify.
Medicaid, however, is means-tested. A resident generally must spend down assets to a low threshold before the program pays, and the long-term services and supports Medicaid provides come only after that eligibility bar is met. States also apply a look-back period that reviews asset transfers made in the years before an application, which can delay coverage for someone who gave money or property away to qualify. The result is that Medicaid becomes the payer of last resort, stepping in largely after a person’s own resources are exhausted.
Planning for a cost that dwarfs most savings
The size of the number is the reason this belongs in every retirement plan rather than in the category of remote risks. A cost that can exceed $129,000 a year, with no cap on how long a stay lasts, outruns the savings of most households if it goes unaddressed. The tools that exist, including long-term-care insurance, hybrid life-insurance policies with care benefits, and Medicaid planning done well ahead of any look-back window, all work better when arranged early rather than in a crisis.
The practical starting point is to treat the possibility of custodial care as a real line in the retirement picture and to confirm exactly what Medicare will and will not do before a stay is ever needed. The cost data is public, the coverage rules are fixed, and the households that plan around both are far better positioned than those who discover, only after a parent or spouse is admitted, that the program they trusted was never designed to pay this bill.
This article was produced with AI assistance and reviewed by The Financial Wire editorial team.
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Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
