The short answer is no: traditional employer-sponsored health benefits do not typically include coverage for long-term care services. It's one of the most persistent and expensive gaps in the U.S. benefits landscape. Most employees assume that if they have major medical insurance, whether through a fully insured plan or a self-funded arrangement, long-term care such as nursing home stays, home health aides, or assisted living will be covered. That assumption is almost always wrong.
What Most Group Health Plans Actually Cover
Standard group health plans, including PPOs, HMOs, and self-funded plans administered by TPAs, are designed to cover medically necessary acute care, preventive services, and prescription drugs. They do not cover custodial care or the ongoing support activities of daily living (bathing, dressing, eating, toileting). Here is the breakdown:
- Medically necessary skilled care: covered, but only for a limited duration, such as post-hospital rehabilitation.
- Custodial or personal care: not covered under standard medical plans.
- Home health aide services: typically covered only if deemed medically necessary and part of a skilled plan of care, not for ongoing daily assistance.
- Assisted living or nursing home stays for chronic conditions: almost never covered by employer-based health plans.
Medicare and Long-Term Care: A Common Misunderstanding
Many employees also mistakenly believe Medicare (or Medicare Advantage) will cover long-term care. Original Medicare pays only for short-term skilled nursing facility care following a qualifying hospital stay, up to 100 days per benefit period, and limited home health services when medically necessary. It does not cover the ongoing custodial care that most people need. Medicare Advantage plans often market extra benefits, but meaningful long-term care coverage is almost never one of them. A few Advantage plans offer narrow non-medical benefits for the chronically ill, and those stop well short of covering ongoing custodial care.
What About Medicaid?
Medicaid is the main payer for long-term care in the U.S., but it is a means-tested program. Qualifying generally means meeting strict income and asset limits, often after spending down savings. That leaves middle-income workers who saved for retirement but never bought long-term care insurance in a tough spot. Medicaid planning is a conversation for a financial advisor, not an open enrollment meeting.
Why This Matters for Employers and Benefits Designers
This gap hits employees' health and wallets hard, and it is exactly the kind of risk the Health-to-Wealth™ approach aims to address. When employees or their family members need long-term care, they face financially devastating out-of-pocket costs. This stress impacts workplace productivity, retention, and retirement readiness. Consider these numbers:
- Almost 70% of people turning age 65 will need some form of long-term care in their lifetime.
- The national median cost of a private nursing home room reached $129,575 per year in 2025, according to the CareScout Cost of Care Survey.
- Only about 5.8 million people held stand-alone long-term care insurance at the end of 2024, according to NAIC data compiled by Milliman.
Options for Bridging the Gap
Employers and benefits advisors have a few levers to pull:
- Group long-term care insurance: some carriers offer voluntary or employer-paid policies that can be added during open enrollment.
- Hybrid life insurance with LTC riders: an increasingly popular way to combine life insurance with long-term care coverage, often with cash value accumulation.
- Wellness and preventive health programs: while not a direct fix, programs like WellthCare™ that incentivize preventive health behaviors can delay or reduce the need for costly long-term care later in life, aligning with the Health-to-Wealth operating system philosophy. WellthCare, the first Health-to-Wealth Benefit System, turns this philosophy into action by rewarding preventive health actions with store dollars and automatic retirement contributions, at zero net cost to employers.
- Health savings accounts (HSAs): funds can be used tax-free for long-term care insurance premiums, but only up to the age-based limits the IRS sets each year.
When a State Steps In: Washington's Public Long-Term Care Fund
The gap is large enough that at least one state has built a public option. Washington's WA Cares Fund is a mandatory long-term care insurance program funded by a 0.58% payroll tax on Washington workers, with collection beginning in July 2023. Workers who contribute build a lifetime benefit worth up to $36,500, adjusted for inflation each year, and the first benefit payments began in July 2026. The benefit covers professional care, equipment, home safety evaluations, and compensation for family members who provide care. Washington employers already withhold the premium for covered workers. New York, Massachusetts, and California have each authorized actuarial feasibility studies for similar programs, so the model may spread to other states.
The Bottom Line for Benefits Leaders
If you're an HR executive or broker evaluating a benefits ecosystem, recognize that long-term care coverage is a separate product, not part of standard health benefits. The best employers are already looking beyond standard medical and pharmacy plans, adding financial wellness and longevity protection to the mix. In the emerging Health-to-Wealth category, systems like WellthCare that automatically build pension contributions and reward preventive behavior are a step in the right direction, but they don't replace the need for dedicated long-term care planning.
For employees, the takeaway is clear: don't assume your employer's health plan covers long-term care. Review your benefits booklet, talk to a benefits advisor, and consider supplemental insurance or personal savings strategies to protect yourself and your family.