Many people assume that if they have long-term care insurance, it will cover everything that happens when they move into a nursing home - including the pills they take every day. But that’s not true. Long-term care insurance does not pay for prescription drugs, not even generic ones. This is one of the most misunderstood aspects of the policy, and it can leave families scrambling when a loved one needs daily medications and has no other coverage.

What Long-Term Care Insurance Actually Covers

Long-term care insurance is designed to pay for help with daily living - things like bathing, dressing, eating, and moving around. It kicks in when someone can no longer do these tasks on their own. The policy covers room and board in a nursing home, assisted living, or at-home care. It pays for aides, therapists, and supervision. But it draws a hard line at medical care. That includes doctor visits, physical therapy, hospital stays, and yes - prescription drugs.

The reason is simple: long-term care insurance was never meant to replace health insurance. It’s meant to fill the gap that Medicare doesn’t cover - the long, slow decline that doesn’t involve acute medical treatment. So if your mom needs insulin, blood pressure pills, or a generic version of a cholesterol medication, that’s not coming from her long-term care policy. It’s coming from somewhere else.

Who Pays for Generic Drugs in Nursing Homes?

For most nursing home residents, the answer is Medicare Part D. Since it launched in 2006, Part D has become the main source of drug coverage in long-term care. By 2020, it was paying for 82.4% of all prescriptions given to Medicare enrollees in nursing homes. That’s more than eight out of every ten pills.

Part D plans cover both brand-name and generic drugs. But they prefer generics - and for good reason. Generics make up about 90% of all prescriptions written in nursing homes, but only cost 25% of what brand-name drugs do. Most Part D plans have lower copays for generics, sometimes as little as $1 to $5 per prescription. That’s why pharmacists and nursing staff push for generics whenever possible.

But here’s the catch: not all Part D plans cover the same drugs. Each plan has its own list - called a formulary - and if a resident’s medication isn’t on it, they might not get it unless someone files an exception request. That process can take days, and in a nursing home where someone needs their meds daily, even a 48-hour delay can be dangerous.

The Medicaid and Dual-Eligible Patchwork

Not everyone in a nursing home is on Medicare. Some rely on Medicaid, especially those with low income. For these residents, Medicaid typically pays for drugs at the actual cost of the medication, plus a small dispensing fee. That means generic drugs are covered without copays.

But here’s where it gets messy: about 60% of nursing home residents are dually eligible - meaning they qualify for both Medicare and Medicaid. For them, Medicare Part D is still the primary payer for drugs, even if Medicaid covers their nursing home room and board. This creates a confusing overlap. The nursing home staff must figure out which plan is active, which pharmacy they use, and which drugs are covered under which formulary.

And it’s not just paperwork. It’s logistics. Each Part D plan works with different pharmacies. If the nursing home’s preferred pharmacy doesn’t have a contract with a resident’s Part D plan, the facility has to switch to another pharmacy - or the resident has to pick up meds elsewhere. Some rural nursing homes struggle to find any pharmacy that works with all the major plans. In fact, 22% of rural facilities report difficulty finding pharmacies that contract with enough Part D plans to serve their residents.

The Hidden Costs of No Coverage

Despite Medicare Part D’s dominance, about 8.9% of long-stay nursing home residents - nearly 30,000 people - have no detectable drug coverage at all. That means they’re paying out of pocket, relying on charity programs, or skipping doses.

These residents often end up in worse health. A 2020 study found that people without drug coverage got far fewer prescriptions than those on Part D. They were more likely to be hospitalized for preventable conditions like uncontrolled diabetes or heart failure. And because they’re already in a nursing home, their decline accelerates.

Even for those with coverage, the system isn’t perfect. Before 2025, Medicare Part D had a coverage gap - the infamous “donut hole” - where beneficiaries paid more after hitting a spending threshold. Though the Inflation Reduction Act of 2022 is phasing out that gap, the changes won’t be fully in effect until 2025. Until then, some residents still face unexpected bills.

How Nursing Homes Manage the Chaos

Nursing homes don’t just hand out pills. They’re now pharmacy management hubs. Staff must track which Part D plan each resident is enrolled in, whether that plan works with their contracted pharmacy, and what drugs are covered. They have to know how to file exceptions for non-formulary drugs. They have to train families on how to appeal denials.

A 2019 survey found that nursing homes spend an average of 10 to 15 hours per week just managing drug coverage issues. That’s over 700 hours a year per facility - time that could be spent on direct care. The cost? About $28,500 annually in staff hours.

The best-run facilities have dedicated pharmacy liaisons and electronic systems that auto-check formularies when a new resident arrives. One 2022 study showed that these facilities cut down the average time to get a new medication from 3.2 days to just 0.7 days. That’s the difference between a resident getting their meds on time - and waiting long enough to get sicker.

What Families Should Do Now

If you’re planning for long-term care - or already in it - here’s what you need to do:

• Confirm whether your loved one is enrolled in Medicare Part D. If not, enroll immediately - late enrollment penalties apply.
• Ask the nursing home: “Which pharmacy do you use, and which Part D plans do they contract with?”
• Get a copy of your loved one’s current drug list and check it against the Part D plan’s formulary. If something’s missing, ask about the exception process.
• Ask if the plan covers all generic versions of their medications. Don’t assume - some plans restrict certain generics.
• Don’t rely on long-term care insurance to pay for drugs. It won’t.

There’s no magic solution. But knowing the system helps you avoid costly mistakes. A simple phone call to the Part D plan’s customer service can prevent a week of missed pills.

What’s Changing in 2025

The Inflation Reduction Act is bringing big changes. Starting in 2025, Medicare Part D beneficiaries will pay no more than $2,000 per year out of pocket for all their prescription drugs - no matter how many they take. That’s a huge win for nursing home residents who often take 10 or more medications daily.

Also, Part D plans will be required to cover all drugs on the official Medicare formulary, and they must approve non-formulary requests for nursing home residents within 72 hours. That should reduce delays and improve access to essential generics.

But experts warn that without stronger oversight, insurers may still find ways to limit access - through step therapy, quantity limits, or narrow pharmacy networks. The fight for affordable, reliable drug coverage isn’t over.

Bottom Line: Insurance Doesn’t Cover Drugs - But Someone Else Does

Long-term care insurance is vital for covering the cost of daily care. But it’s not a health insurance policy. If you think it will pay for your parent’s pills, you’re setting yourself up for a financial shock.

The real answer is Medicare Part D - and for those with low income, Medicaid. Together, they cover nearly 95% of nursing home drug costs. The system is complex, messy, and sometimes slow. But it works - if you know how to use it.

Start with the basics: Know what drugs your loved one needs. Know which plan pays for them. Know how to get them when they’re denied. And don’t wait until a crisis hits to learn the rules. The sooner you understand the system, the better care you can ensure.