Many people assume that if they have long-term care insurance, it will pay for everything when they move into a nursing home - including their daily medications. That’s not true. And the misunderstanding can cost families thousands of dollars in unexpected out-of-pocket expenses.
Long-term care insurance covers room and board, help with bathing, dressing, and eating - the kind of daily support people need when they can no longer live independently. But it does not cover prescription drugs, whether they’re brand-name or generic. This is a hard rule, not a loophole. If you’re in a nursing home and taking pills for high blood pressure, diabetes, or arthritis, your long-term care policy won’t pay for them. Not one cent.
Who Actually Pays for Medications in Nursing Homes?
The real answer lies in Medicare Part D. By 2020, nearly 82.4% of all prescription drugs taken by nursing home residents were paid for by Medicare Part D plans. That’s more than four out of every five medications. Medicaid covers another 11.2%, and the rest come from private insurance, the VA, or the resident’s own pocket.
Here’s how it works: When someone enters a nursing home, the facility checks which drug plan they’re enrolled in. If they’re on Medicare Part D - which most are - the pharmacy bills the plan directly. The resident pays a copay, usually lower for generic drugs. A generic version of a common blood pressure pill might cost $5, while the brand-name version could be $40 or more. That’s why most nursing homes push for generics whenever possible - they’re cheaper, equally effective, and better covered.
Why Long-Term Care Insurance Doesn’t Cover Drugs
This separation isn’t an accident. It was built into the system on purpose. When long-term care insurance was created in the 1970s, lawmakers decided it should cover custodial care - the non-medical help people need as they age. Medical care, including doctor visits and prescriptions, was left to Medicare, Medicaid, or private health insurance.
The 2003 Medicare Prescription Drug, Improvement, and Modernization Act made this even clearer. It created Medicare Part D, which officially took effect in January 2006. Before that, millions of seniors in nursing homes had no drug coverage at all. Now, Part D is the backbone of medication access in these facilities. Long-term care insurers don’t cover drugs because they don’t have to - Medicare Part D already does.
Formularies and the Hidden Barriers to Generic Drugs
Just because Medicare Part D covers generic drugs doesn’t mean every resident gets them easily. Each Part D plan has a formulary - a list of approved medications. Not every generic is on every list. Some plans restrict certain drugs, require prior authorization, or charge higher copays for even common generics.
For example, a nursing home resident might need a specific generic antibiotic. If their Part D plan doesn’t include it, the pharmacy can’t fill the prescription until an exception is approved. That process can take days. In 2021, CMS required plans to approve non-formulary drug requests for nursing home residents within 72 hours - but delays still happen, especially in rural areas where fewer pharmacies contract with Part D plans.
And here’s the catch: Part D plans are not required to cover a drug beyond 180 days if it’s not on their formulary. That means a resident might get a needed medication for six months - then suddenly be denied. Families often don’t realize this until the pills stop arriving.
The Administrative Nightmare for Nursing Homes
Nursing homes don’t just deal with one drug plan. They manage dozens - sometimes over 20 different Part D plans among their residents. Each has its own rules, formularies, and prior authorization requirements.
A 2019 survey found that 78% of nursing facilities spend 10 to 15 hours a week just managing prescription drug coverage. That’s over 700 hours a year per facility. Staff time alone costs an average of $28,500 annually. Many facilities now hire dedicated pharmacy liaisons or use electronic systems that sync with Part D formularies to cut down on delays. Those that do see medication access times drop from 3.2 days to under a day.
It’s not just about speed - it’s about safety. A delayed antibiotic or insulin dose can lead to hospitalization. And hospital stays? Those are covered by Medicare Part A, not long-term care insurance. So the cost of a missed pill can spiral quickly.
What About People Without Drug Coverage?
Even today, nearly 9% of long-stay Medicare enrollees in nursing homes have no detectable drug coverage. They either didn’t enroll in Part D, lost their coverage, or their plan doesn’t work with their facility’s pharmacy. These residents pay out of pocket - or rely on temporary assistance from charities or state programs.
Studies show they get far fewer prescriptions than those with Part D. One 2020 study found that residents without drug coverage received 30% fewer medications on average. That’s not just inconvenient - it’s dangerous. A person with dementia who skips their Alzheimer’s meds, or someone with heart failure who misses their diuretic, can deteriorate rapidly.
What’s Changing in 2025 and Beyond
Good news: The Inflation Reduction Act of 2022 is making things better. Starting in 2025, Medicare Part D beneficiaries will pay no more than $2,000 out of pocket for drugs in a year. That’s a huge win for people who take multiple medications.
Also, Medicare will now cover all vaccines recommended by the CDC at no cost. And there’s growing pressure to standardize formularies across Part D plans - especially for nursing home residents. Some experts are pushing for a single, simplified formulary for long-term care, which would cut administrative chaos.
But challenges remain. Rural nursing homes still struggle to find pharmacies that work with all major Part D plans. Twenty-two percent of rural facilities report difficulties, compared to just 8% in cities. And while generics make up 90% of prescriptions, they only account for 25% of total drug spending - meaning the system still favors expensive brand-name drugs in some cases.
What Should You Do?
If you or a loved one is considering long-term care insurance:
- Understand what it covers - and what it doesn’t. Medications are not included.
- Make sure you’re enrolled in Medicare Part D. If you’re not, sign up as soon as possible. Late enrollment penalties apply.
- Ask which generic drugs are on your Part D plan’s formulary. Don’t assume all generics are covered equally.
- If a medication is denied, file for an exception. Nursing homes can help with this process.
- Check if your facility has a dedicated pharmacy liaison. If not, ask how they handle drug coverage delays.
Long-term care insurance is valuable - but it’s not a magic wand. It pays for care, not drugs. The real protection comes from Medicare Part D. Know your plan. Know your formulary. And don’t let a misunderstanding leave you without the pills you need.
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 pays for custodial care like help with bathing, dressing, and eating. Medications are covered by Medicare Part D, Medicaid, or private health insurance.
Who pays for medications in nursing homes?
Medicare Part D pays for about 82% of prescriptions in nursing homes. Medicaid covers around 11%, and the rest come from private insurance, the VA, or out-of-pocket payments. Most residents are dual-eligible for Medicare and Medicaid, and their drugs are billed through Part D.
Why are generic drugs preferred in nursing homes?
Generics are chemically identical to brand-name drugs but cost far less. Medicare Part D plans offer lower copays for generics, so nursing homes and pharmacies prioritize them to reduce costs and improve access. About 90% of prescriptions in nursing homes are generics.
What if a needed generic drug isn’t on my Part D plan’s formulary?
You can request an exception. The nursing home’s pharmacy or your representative can file a formal appeal. Medicare Part D plans must respond within 72 hours for nursing home residents. If approved, the drug will be covered. If denied, you can appeal again or switch plans during open enrollment.
Can I switch Medicare Part D plans if I’m in a nursing home?
Yes. You can change your Part D plan during the Annual Enrollment Period (October 15-December 7) or during a Special Enrollment Period if your current plan doesn’t cover your medications or doesn’t work with your facility’s pharmacy. Nursing homes can help you compare plans and make the switch.
What happens if I don’t enroll in Medicare Part D?
You’ll pay full price for all prescriptions out of pocket - which can cost hundreds or even thousands of dollars a month. You may also face a late enrollment penalty if you sign up later. About 9% of nursing home residents currently have no drug coverage, and they’re at higher risk for medication gaps and health decline.