Many people assume that if they have long-term care insurance, it will pay for everything that comes with nursing home care-room, meals, physical therapy, and yes, even their daily medications. But that’s not true. Long-term care insurance does not cover prescription drugs, not even generic ones. This is one of the most misunderstood aspects of the policy, and it can lead to serious financial surprises for families already stretched thin.
If you or a loved one is moving into a nursing home, you need to know right now: your long-term care insurance pays for the cost of care-help with bathing, dressing, eating, and mobility. It does not pay for pills. That’s where Medicare Part D, Medicaid, or private health insurance come in. And understanding how these systems work together is critical to avoiding gaps in care.
Why Long-Term Care Insurance Doesn’t Cover Drugs
Long-term care insurance was designed in the 1970s to fill a specific gap: the cost of custodial care. That’s the kind of help you need when you can’t do daily tasks on your own, not medical treatment. Think of it like home help, not hospital care. Prescription drugs fall squarely into the medical category. So even if you’re living in a nursing home full-time, your long-term care policy won’t touch your medication bills.
This separation isn’t an accident-it’s by design. The industry has always treated drugs as a separate cost. When Medicare Part D launched in 2006, it made this divide even clearer. Before that, many nursing home residents paid for drugs out of pocket or relied on patchwork coverage. Now, Medicare Part D is the main source of drug coverage for residents, covering over 82% of prescriptions in nursing facilities.
Who Actually Pays for Generic Drugs in Nursing Homes?
Generic drugs make up about 90% of all prescriptions written in nursing homes. They’re cheaper, just as effective as brand-name drugs, and often preferred by doctors and pharmacists. But who pays for them?
- Medicare Part D covers 82.4% of drug costs for residents who qualify. Most plans require a small copay for generics-usually $1 to $5 per prescription.
- Medicaid pays for drugs for residents who are low-income and enrolled in both Medicare and Medicaid (called “dual eligibles”). Medicaid pays the pharmacy’s acquisition cost plus a small dispensing fee.
- Private insurance covers about 8.5% of prescriptions, but this is becoming rare as more people switch to Medicare Part D.
- Out-of-pocket payments still account for nearly 9% of drug costs. That’s about 29,000 residents in nursing homes who pay for all their meds themselves-often because they didn’t enroll in Part D or lost coverage.
The bottom line? If you’re in a nursing home and need generic drugs, Medicare Part D is your best bet. But enrollment isn’t automatic. You have to sign up, and you have to pick a plan that works with your facility’s pharmacy.
How Medicare Part D Works in Nursing Homes
Medicare Part D isn’t a single plan-it’s a network of private insurance companies offering different drug plans. Each plan has its own formulary, which is a list of drugs it covers. Not every generic is covered on every plan. Some plans exclude certain generics, or require prior authorization before approving them.
Nursing homes have to figure out which Part D plan each resident is enrolled in. Then they have to check whether that plan works with the facility’s preferred long-term care pharmacy. If not, the resident might have to switch pharmacies-or wait days for a drug to be approved.
Here’s how it plays out in real life:
- A resident moves into a nursing home on January 15. Their Part D plan doesn’t cover the generic version of their blood pressure med.
- The facility’s pharmacy doesn’t carry the brand-name alternative because it’s too expensive.
- The doctor submits a prior authorization request. It takes five days to get approved.
- The resident goes without medication for five days.
This isn’t rare. A 2022 study found that nursing homes average 3.2 days of delay in getting medications approved. Facilities with dedicated pharmacy liaisons and electronic systems cut that down to under one day.
The Hidden Problem: Formulary Restrictions and Access Gaps
Just because a drug is on Medicare’s national formulary doesn’t mean every Part D plan covers it. Plans can exclude certain generics to save money. And they’re not required to cover non-formulary drugs beyond 180 days for nursing home residents-even if that’s the only medication that works for the patient.
Dr. David Grabowski from Harvard Medical School calls this a “hidden barrier.” He says, “Part D improved access, but the lack of standardization across plans creates confusion and delays. Residents get stuck because a plan won’t cover a generic they’ve been on for years.”
Some residents are forced to pay out of pocket for a generic drug that’s just $3 a month-because their plan won’t cover it, and their family can’t afford to pay. In rural areas, the problem is worse. Twenty-two percent of rural nursing homes report difficulty finding pharmacies that contract with all major Part D plans. That means residents might have to wait weeks for prescriptions to be filled.
What Families Should Do Before Moving Someone In
If you’re planning for nursing home care, here’s what you need to do now:
- Check current drug coverage. Make a list of every medication the person takes-brand and generic. Note the dosage and frequency.
- Find out if they’re enrolled in Medicare Part D. If not, enroll immediately. Late enrollment penalties apply, but they can be waived for people moving into nursing homes.
- Ask the nursing home which pharmacies they work with. Then check if those pharmacies accept the resident’s Part D plan.
- Review the plan’s formulary. Go to the plan’s website or call customer service. Ask: “Is [generic drug name] covered? Is prior authorization required?”
- Know the exception process. If a needed drug isn’t covered, you can request an exception. The facility’s social worker or pharmacist can help with this.
Don’t wait until the day of admission. Start this process at least 30 days in advance. Delays in medication can lead to hospitalizations, which cost far more than the drugs themselves.
What’s Changing in 2025
The Inflation Reduction Act of 2022 brought big changes that will kick in starting January 1, 2025:
- There will be a $2,000 annual cap on out-of-pocket drug costs for all Medicare Part D beneficiaries.
- Insulin will cost no more than $35 per month.
- Some vaccines will be free.
This will be a huge relief for nursing home residents who currently pay hundreds of dollars a year for meds. It won’t fix formulary issues, but it will protect people from being priced out of their prescriptions.
Also, CMS now requires Part D plans to process non-formulary drug requests for nursing home residents within 72 hours. That’s faster than before, but it still leaves room for delays.
Bottom Line: Don’t Rely on Long-Term Care Insurance for Drugs
Long-term care insurance is a valuable tool-but it’s not a magic wand. It won’t cover your medications. Medicare Part D will. But Part D isn’t perfect. Formularies vary. Plans change. Pharmacies don’t always cooperate.
The key is to plan ahead. Know what drugs are needed. Confirm coverage before admission. Work with the nursing home’s pharmacy team. And never assume anything is covered unless you’ve checked it yourself.
If you skip this step, you could end up paying thousands out of pocket for pills that should be covered. And that’s a cost no family should have to bear.
Does long-term care insurance cover generic drugs in nursing homes?
No, long-term care insurance does not cover any prescription drugs, including generics. It only covers custodial care services like help with bathing, dressing, and mobility. Drug costs are covered by Medicare Part D, Medicaid, or private health insurance.
Who pays for medications if someone is in a nursing home?
Medicare Part D covers about 82% of prescription drugs in nursing homes. Medicaid pays for drugs for low-income residents who qualify for both Medicare and Medicaid. Private insurance covers about 9%, and nearly 9% of residents pay out of pocket because they lack coverage.
What is a formulary, and why does it matter?
A formulary is a list of drugs a Medicare Part D plan covers. Not all plans cover the same generics. If a drug isn’t on the formulary, you may have to pay full price or go through a lengthy approval process. Always check the formulary before choosing a plan.
Can I switch my Part D plan after moving into a nursing home?
Yes, you can switch plans during the Annual Enrollment Period (October 15 to December 7) or during a Special Enrollment Period if you move into a nursing home. You should also check if your new facility’s pharmacy accepts your current plan.
What happens if a needed generic drug isn’t covered by the plan?
You can request an exception from the plan. The nursing home’s pharmacy or social worker can help submit paperwork. If approved, the drug will be covered. If denied, you can appeal. In urgent cases, CMS requires plans to respond within 72 hours for nursing home residents.
Will the $2,000 out-of-pocket cap in 2025 help nursing home residents?
Yes. Starting in 2025, Medicare Part D beneficiaries won’t pay more than $2,000 per year for prescription drugs. This will protect residents from high costs, especially those on multiple medications. It won’t fix formulary issues, but it will prevent financial ruin.
Erica Vest
December 18, 2025 AT 20:54Long-term care insurance never covered drugs-it was never meant to. The confusion comes from assuming it's a comprehensive health plan, but it's strictly custodial. Medicare Part D is the correct vehicle for prescriptions, and families need to treat it like a separate policy they must actively manage. Skipping enrollment or not checking formularies is like forgetting to lock your front door and then being shocked someone stole your TV.