Paying for Dementia Care: What Medicare, Medicaid and Other Programs Cover

Most people with dementia will eventually need help with everyday tasks such as bathing, dressing and staying safe. That kind of help is called long-term care, and it is where most of the cost of dementia falls. Many families assume Medicare will pay for it. In most cases it won't.

This guide explains what each program covers in the United States, what care typically costs, and where to start. Medicaid rules and many other details vary by state, so use it as a map, then confirm the specifics with your state's Medicaid agency or an elder law attorney.

In short: Medicare pays for medical care, short skilled nursing stays after a hospital admission, and hospice, but not ongoing custodial care. Medicaid is the main public payer for long-term care, but only for people with limited income and assets. Veterans may qualify for VA Aid and Attendance. Everything else is usually paid privately, through savings or long-term care insurance.

What dementia care costs

The most widely used national figures come from the 2025 Cost of Care Survey run by Genworth's CareScout, which the Alzheimer's Association also uses. National medians were:

The survey doesn't give a separate figure for memory care. Memory care is often provided in a secure unit of an assisted living community or nursing home, and it can cost more than standard assisted living, so ask every provider for their full fee schedule, including care-level charges. Prices also vary widely by state and city.

Needs usually grow as dementia progresses. Our guides to the stages of Alzheimer's disease and the middle stage of dementia explain the kind of help that tends to be needed at each point.

What Medicare covers, and what it doesn't

Medicare covers doctor visits, hospital care, tests and prescription drugs (with Part D or a Medicare Advantage plan with drug coverage). For long-term care, the key rule is simple: Medicare does not cover long-term care or custodial care unless medical care is also needed. Help with bathing, dressing, eating and supervision, at home, in assisted living or in a nursing home, is usually not covered.

Skilled nursing facility care

Medicare Part A can pay for a short stay in a skilled nursing facility, for example for rehabilitation after a hospital stay, but only if:

• the person had a medically necessary inpatient hospital stay of at least 3 days in a row (time under observation or in the emergency room doesn't count)
• they generally enter the facility within 30 days of leaving the hospital
• a doctor says they need daily skilled nursing or therapy care

In 2026, Medicare pays in full for days 1 to 20 after the Part A deductible ($1,736). For days 21 to 100 the person pays $217 a day. After day 100 in a benefit period, they pay everything. In practice, covered stays are usually much shorter: according to the Administration for Community Living, the average covered stay is 22 days.

Hospice

When a doctor certifies that someone with advanced dementia has a life expectancy of 6 months or less, Medicare covers hospice care. The person chooses comfort care instead of treatment aimed at curing the illness. Hospice can be provided at home, in a nursing home or in assisted living. There's no charge for hospice care itself, and drugs for pain and symptoms cost up to $5 per prescription. However, Medicare does not pay room and board in a nursing home or other facility. See our guide to end-stage dementia for signs that hospice may be appropriate.

The GUIDE dementia care model

Since July 2024, Medicare has been testing a dementia care program called GUIDE (Guiding an Improved Dementia Experience). Participating provider organizations offer care navigation, a 24/7 support line, caregiver training, and up to $2,500 a year in respite care for eligible patients. It runs for 8 years, but only through participating providers, so ask the person's doctor or memory clinic whether a GUIDE program is available nearby.

Medicaid: the main payer for long-term care

Medicaid is a joint federal and state program, and it pays for more long-term care than any other source. Unlike Medicare, it can cover nursing home care for as long as it's needed, and states also pay for some care at home and in the community.

Who qualifies

To get Medicaid long-term care, a person usually has to meet two tests:

• Financial: limited income and assets. Most states allow about $2,000 in countable assets for a single person, but limits and what counts vary by state.
• Functional: a state assessment shows they need help with activities of daily living, such as bathing, dressing, toileting and eating, at the level the state requires.

In 2026, states must deny long-term care coverage if the person's home equity is above a limit the state sets between $752,000 and $1,130,000. This doesn't apply if a spouse, a child under 21, or a blind or disabled child lives in the home.

Spend-down

People whose income or assets are too high may still qualify once they have spent down to the state's limits, for example by paying for care privately. In states with a "medically needy" pathway, income above the limit can be offset by medical bills.

The 5-year look-back

When someone applies for Medicaid long-term care, the state looks back 60 months at any money or property given away or sold for less than it was worth. Transfers in that window can lead to a penalty period during which Medicaid won't pay for long-term care. The penalty starts only once the person is otherwise eligible and receiving that level of care, which can leave a family with a large bill at the worst moment. Get advice before giving away a home or savings.

Protections for a spouse

Federal "spousal impoverishment" rules stop the spouse at home from being left without money. In 2026:

• the spouse at home can keep a share of the couple's assets, within a federal minimum of $32,532 and maximum of $162,660 (the state sets the exact rule)
• they can receive part of the other spouse's income so their own monthly income reaches at least $2,705 (from July 1, 2026, in most states; higher in Alaska and Hawaii), up to a maximum of $4,066.50

Estate recovery

States must try to recover the cost of nursing home care, home and community-based services, and related hospital and drug costs from the estates of Medicaid enrollees who were 55 or older. They can't recover while a surviving spouse, a child under 21, or a blind or disabled child is living. States must also have a hardship waiver process. What counts as the "estate" depends largely on state law.

Care at home: HCBS waivers

Nearly every state runs Medicaid home and community-based services (HCBS) waivers for people who would otherwise need nursing home care. Depending on the state, these can pay for personal care, homemaker services, adult day health care, respite and case management. States can cap the number of people on each waiver, so there may be a waiting list. Apply early.

PACE

The Program of All-Inclusive Care for the Elderly (PACE) coordinates all medical and long-term care so people can stay in the community. To join, a person must be 55 or older, live in a PACE service area, need a nursing home level of care as certified by the state, and be able to live safely at home with PACE support. People with Medicaid pay no monthly premium; people with Medicare only pay a monthly premium. PACE isn't available everywhere.

Long-term care insurance

Long-term care insurance pays for personal and custodial care at home or in a facility, usually up to a daily limit for a set period. Some policies pay for 2 to 5 years; some for life. Most individual policies require medical underwriting, and the Alzheimer's Association notes that coverage is usually not available to buy once symptoms of Alzheimer's appear. If the person already has a policy, find it now, read the conditions for benefits to start, and ask the insurer how to make a claim. Premiums can rise, so don't let a policy lapse without advice.

VA Aid and Attendance

Wartime veterans and surviving spouses who qualify for a VA pension can get an extra amount, called Aid and Attendance, if they need another person's help with daily activities such as bathing, eating or dressing, are largely confined to bed, or live in a nursing home because of lost mental or physical abilities.

The maximum annual pension rates from December 1, 2025 are $29,093 for a veteran with Aid and Attendance and no dependents, and $34,488 with one dependent. These are maximums, not flat payments: VA pays the difference between the person's countable income and the maximum. The net worth limit is $163,699 (through November 30, 2026), and VA looks back 3 years at assets transferred for less than fair market value. New figures apply each December, so check VA's current rate table. Apply on VA Form 21-2680, plus Form 21-0779 for someone in a nursing home.

Tax breaks

• Medical expense deduction. If you itemize, you can deduct medical costs above 7.5% of adjusted gross income. This includes qualified long-term care services for someone who is chronically ill, which covers a person who needs substantial supervision because of severe cognitive impairment, provided care follows a plan prescribed by a licensed health care practitioner. Nursing home meals and lodging count if a principal reason for being there is medical care.
• Paying for a parent. You can include medical costs you pay for a parent who would be your dependent except that their own gross income is too high.
• Long-term care insurance premiums count as medical expenses up to an age-based limit. For 2026, the limits are $4,960 for ages 61 to 70 and $6,200 for over 70.
• Child and dependent care credit. If you pay for care for a spouse or dependent who can't care for themselves and lived with you for more than half the year, so that you can work, you may get a credit. For 2026 it's 20% to 50% of up to $3,000 in expenses for one person.

Tax rules are complex. A tax professional can tell you what applies to your family.

Where to start

1. Ask the person's doctor about a care plan and whether GUIDE or hospice is relevant.
2. Make sure someone has legal authority, through a durable power of attorney, to manage money and deal with agencies.
3. Gather income, asset and insurance details, including any long-term care policy and military discharge papers.
4. Call the Eldercare Locator at 1-800-677-1116 to reach your local Area Agency on Aging and learn about state programs and waivers.
5. Speak to an elder law attorney before moving assets or applying for Medicaid.

Caring for someone with dementia is expensive emotionally as well as financially. Our article on the role of family and friends in dementia care looks at how to share the load.

This page is general information for people in the US, not legal, tax or financial advice. Figures are for 2025 and 2026 as stated, and many change every year.