Paying for Nursing Home Care: Medicare, Medicaid and Insurance

Reviewed by the RBNH Editorial Team. Last updated October 2026.

Nursing home care is generally paid for through one of three main sources, each covering a different situation:

• Medicare Part A can cover a limited, short-term skilled nursing or rehabilitation stay, but only under specific conditions, generally following a qualifying inpatient hospital stay, and only for as long as the care remains genuinely skilled with continued potential for improvement. It is not designed to cover long-term custodial care.
• Medicaid is the primary payer for long-term, ongoing nursing home care for people who meet both the medical/functional and financial eligibility requirements. In Illinois, this program is administered by the Illinois Department of Healthcare and Family Services (HFS).
• Private pay or long-term care insurance covers situations where Medicare doesn't apply and Medicaid eligibility hasn't been established yet, or for residents who don't qualify for Medicaid. Many families start on private pay and later transition to Medicaid once financial eligibility is confirmed, which is a separate application process.

Which specific insurance plans and payer types a facility currently accepts can vary and change over time, so always confirm directly with the specific facility's admissions or business office rather than assuming based on general information. Our FAQ on Medicaid specifically, and our FAQ on application assistance, go into more detail on that particular path.

How a Stay Can Move Between Payers

It is common for a single nursing home stay to start under one payer and shift to another. A typical pattern: a resident is admitted on Medicare Part A after a qualifying hospital stay for short-term rehabilitation, Medicare coverage ends once the stay is no longer considered skilled or the covered period runs out, and the resident then moves to private pay while a Medicaid application is prepared, finally shifting to Medicaid once approved. Ask the facility's business office to walk through exactly what happens at each transition point, including how much notice they give before a payer source changes and what the family is responsible for during any gap.

What to Ask Before Signing an Admission Agreement

• What happens, in writing, on the day Medicare coverage ends if Medicaid has not yet been approved?
• Does the facility require a deposit or guarantee of private payment while a Medicaid application is pending?
• Who at the facility is the point of contact for payer questions as the situation changes?