Many people assume that if they have long-term care insurance, it will cover everything that comes with living in a nursing home - including the cost of their daily medications. But that’s not true. Long-term care insurance does not pay for prescription drugs, even generics. Not even close.
When you move into a nursing home, your room, meals, and personal care are covered under your long-term care policy. But the pills you take for high blood pressure, diabetes, or arthritis? Those come out of a completely different pocket. That’s because long-term care insurance was never designed to cover medical treatments. It’s built to pay for help with daily tasks - bathing, dressing, eating - when you can no longer do them on your own. Medications? Those fall under medical care. And medical care is handled by health insurance, not long-term care insurance.
So if your long-term care policy won’t cover your drugs, who does? For most people in nursing homes, the answer is Medicare Part D. Since it launched in 2006, Medicare Part D has become the main source of prescription drug coverage in nursing facilities. In 2020, it paid for 82.4% of all drugs taken by Medicare enrollees living in these settings. That’s more than eight out of every ten prescriptions. Private insurance covered just 8.5%. Veterans Affairs covered less than 0.2%. And nearly 9% of residents - that’s almost one in ten - paid for their meds out of pocket or relied on temporary help.
Here’s the catch: Medicare Part D doesn’t cover every drug. Each plan has a list - called a formulary - that tells you exactly which medications are covered. Most formularies favor generic drugs because they’re cheaper. And for good reason. Generics make up about 90% of all prescriptions written in nursing homes, but only cost about 25% of what brand-name drugs do. So if you’re on a Part D plan, you’ll usually pay less out of pocket for a generic version of your medication than the brand-name one.
But having a formulary doesn’t mean you’ll always get the drug you need. If your doctor prescribes something that’s not on your plan’s list, you might be stuck. Some plans will cover non-formulary drugs for up to 180 days as a temporary fix, but they’re not required to. And even then, the process can take weeks. Nursing homes have to figure out which plan each resident is on, whether that plan works with their pharmacy, what drugs are covered, and how to appeal if a drug is denied. One 2019 survey found that nursing facilities spend 10 to 15 hours a week just managing these issues. That’s over $28,000 a year in staff time per facility.
And it’s not just the staff who are confused. Residents and their families often don’t realize how complicated this system is. You might think, “I’m in a nursing home, so my meds should be covered.” But coverage depends on whether you’re on Medicare, Medicaid, both, or neither. If you’re dually eligible - meaning you get both Medicare and Medicaid - your drugs are still covered by Medicare Part D, not Medicaid. Medicaid pays for drugs only if you’re not on Medicare. That’s a detail most people never hear until they’re already in a facility.
What happens if you don’t enroll in Part D? You’re at risk. A 2020 study showed that residents without Part D coverage received significantly fewer prescriptions than those who had it. That’s not because they didn’t need the meds. It’s because they couldn’t afford them. Some skip doses. Others go without. And in nursing homes, where medications are often critical to managing chronic conditions, that can mean more falls, more hospital visits, and worse outcomes.
There’s good news on the horizon. Starting in 2025, the Inflation Reduction Act will cap out-of-pocket drug costs for Medicare Part D beneficiaries at $2,000 per year. That’s a big deal for people in nursing homes who’ve been paying hundreds or even thousands of dollars annually just to stay on their meds. Also, Medicare now requires Part D plans to process requests for non-formulary drugs within 72 hours for nursing home residents - a rule that should speed up access to essential medications.
But problems remain. Rural nursing homes are especially vulnerable. About 22% of them struggle to find pharmacies that contract with all the major Part D plans. That means residents might wait days longer for their prescriptions, or worse - have their meds delayed entirely. And while generics are widely used, some residents still need brand-name drugs because of allergies, side effects, or medical necessity. If their plan doesn’t cover it and they can’t afford the copay, they’re stuck.
The bottom line? Long-term care insurance is not a substitute for health insurance. It’s a complement. If you’re planning for future care, don’t assume your long-term care policy will pay for your pills. Make sure you’re enrolled in Medicare Part D. Check your plan’s formulary. Know which drugs are covered and what the copays are. Talk to your pharmacist and your nursing home’s medication coordinator. And if you’re already in a facility and your meds aren’t being covered, ask about the exceptions process. You have rights - but you have to know how to use them.
Don’t wait until you’re already in a nursing home to figure this out. If you’re considering long-term care insurance, ask your agent: “What does this policy cover - and what doesn’t it cover?” Make sure you understand the difference between custodial care and medical care. And make sure you have a solid plan for prescription drug coverage before you need it.