This is one of the most important, and most misunderstood, questions in employee benefits. The short answer: most standard employer-sponsored health plans do not cover long-term custodial care in a nursing home. That's a brutal reality. A new category of benefits is starting to change the conversation, though, and understanding the gap is the first step to closing it.
What Traditional Health Plans Cover (and Don't Cover)
Your standard group health plan, whether a PPO, HMO, or self-funded plan, is designed to cover medically necessary care. Doctor visits, hospital stays, surgeries, prescription drugs. It will cover skilled nursing care in a facility for a limited time after a hospital stay, but only while you need skilled rehabilitation (think: physical therapy after a hip replacement).
What it will not cover is custodial care, the kind of help with daily activities like bathing, dressing, eating, and toileting that you need in a nursing home for months or years. Medicare Part A draws the same line, with a twist. It covers skilled nursing facility care for up to 100 days per benefit period, and only after a qualifying inpatient hospital stay of at least three consecutive days. The first 20 days come with no daily coinsurance; days 21 through 100 carry a $217 daily coinsurance in 2026. Once the stay turns custodial, or you pass day 100, the costs are on you.
What About Medicare Advantage or Supplement Plans?
Medicare Advantage (Part C) plans must cover at least the same services as Original Medicare, so they also won't cover long-term custodial care. Medigap supplemental policies help with copays and deductibles but do not add long-term care coverage. None of these are designed to pay for a nursing home stay that lasts a year or more. That's a gap you need to plan for.
What Long-Term Care Actually Costs
The numbers make the gap concrete. The 2025 Cost of Care Survey from CareScout and Genworth puts the national median for a semi-private nursing home room at $315 per day, or $114,975 a year. A private room runs $355 per day, or $129,575 a year. Assisted living adds a median $74,400 a year.
Those are medians, so half of families pay more, and costs vary widely by state. A stay that lasts two or three years can consume most of a retirement account. For many families, the payer of last resort is Medicaid, which is the primary payer for nursing facility care and covers the custodial stays that Medicare and employer plans do not. It applies only after strict income and asset limits are met, which often means spending down savings first.
That math is why the gap belongs in benefits design. An employer can add a voluntary long-term care insurance option, and a health-to-wealth system builds the retirement savings that can absorb part of these bills before Medicaid becomes the only answer.
The Real Solution: Long-Term Care Insurance (LTCI)
The product specifically designed to cover nursing home and long-term care costs is Long-Term Care Insurance. It can cover:
- Nursing home care (custodial and skilled)
- Assisted living facility costs
- In-home care (home health aides, adult day care)
- Memory care for Alzheimer's and dementia
LTCI is typically purchased as an individual policy or offered as a voluntary employee benefit. Some employers now offer group long-term care insurance or hybrid life/LTC policies that combine a death benefit with a long-term care rider. These policies are useful, but employees often put off buying them. Premiums rise with age, and once a person needs care, underwriting usually closes the door. WellthCare is a Health-to-Wealth Benefit System that works alongside existing plans to make preventive care free and rewarding, building both health and retirement wealth through every verified action.
How a Health-to-Wealth System Changes the Picture
WellthCare is not long-term care insurance, and it will not pay a nursing home bill. Its Health-to-Wealth operating system targets the two root causes of the nursing home crisis: preventable chronic disease and a lack of retirement wealth.
- Prevention-first design: WellthCare rewards employees for preventive health actions (scans, labs, adherence) that reduce the risk of diseases like diabetes, heart failure, and dementia, conditions that often lead to nursing home placement.
- Automatic retirement contributions: As employees complete verified preventive actions, savings their employer commits flow into SEP/Pension accounts, building a nest egg that can later fund in-home support or assisted living.
- WellthCare Complete™: When employers transition to this fully self-funded system, the savings (30-45% vs. traditional BUCA plans) can free up budget to offer or subsidize long-term care insurance as an additional benefit.
- WellthCare Medicare™: For employees over 65, this aligned Medicare solution reduces employer claim exposure and keeps retirees inside the WellthCare system, where preventive care and wealth-building continue past 65.
The WellthCare Store offers 3,000+ FSA-approved, health-supporting products. It doesn't pay for nursing home stays, but it incentivizes the preventive behaviors that keep people healthier longer, potentially delaying or avoiding the need for long-term care altogether.
Key Takeaways for Employers and Employees
- Most health plans do not cover long-term custodial care. Know that gap and plan for it.
- Long-term care insurance is the main product designed for this need. Consider offering it as a voluntary benefit.
- Prevention is your best long-term strategy. Systems like WellthCare that reward healthy behaviors can reduce the likelihood of needing nursing home care in the first place.
- Wealth-building matters. Automatic retirement contributions from preventive health actions give employees more resources to manage care later in life.
- Compliance is critical. Any benefit that touches health data must comply with HIPAA, ERISA, and applicable state laws. WellthCare maintains full compliance-grade records automatically.
If you're an employer evaluating your benefits package, ask your broker or TPA: “Do we offer any coverage or savings vehicle for long-term care?” If the answer is no, explore adding group LTCI or consider a health-to-wealth system that builds both health and retirement wealth, the two pillars that most influence whether an employee's later years are spent in a nursing home or at home.
This article is for general information only and is not legal, tax, or medical advice. Employers should consult their own advisors.