Who pays for medications in a nursing home depends on what kind of stay it is. Short-term rehabilitation after a hospital admission is covered by Medicare Part A, which bundles drug costs into its daily payment to the facility. Long-term custodial care is a different picture: Medicare Part D handles most prescriptions, Medicaid steps in for those who qualify, and VA benefits, long-term care insurance, or personal funds fill the remaining gaps. The payer often changes over the course of a stay as benefits run out or a resident’s finances shift.
Short-Term Rehab Stays: Medicare Part A
When a resident enters a skilled nursing facility for rehabilitation after a qualifying inpatient hospital stay of at least three consecutive days, Medicare Part A pays for nearly everything, medications included. The facility receives a single bundled payment meant to cover room and board, nursing care, therapy, and prescription drugs together. The resident does not see separate drug bills during this phase.
Cost-sharing works in three phases within one benefit period:
- Days 1 through 20: after the resident pays the Part A deductible of $1,736 in 2026, Medicare covers all remaining costs, including medications, with no additional daily charge.
- Days 21 through 100: the resident owes a daily coinsurance of $217 in 2026. Medicare continues to cover the rest, medications included.
- Day 101 onward: Part A coverage ends. The resident is responsible for all costs.
The day-21 coinsurance adds up. A full 80-day stretch at $217 per day runs $17,360 out of pocket. Many residents carry a Medicare Supplement (Medigap) policy that covers some or all of that coinsurance; residents without supplemental coverage feel the full weight. Once Part A stops paying, medication costs shift to whatever other coverage the resident has.1Medicare.gov. Skilled Nursing Facility Care
One boundary families often miss: Part A only pays when the stay is for medically necessary skilled care. If someone enters a nursing home primarily for help with bathing, dressing, and eating rather than for skilled nursing or rehabilitation, Part A does not cover any of it, medications included.2Medicare.gov. Nursing Home Coverage
Long-Term Custodial Stays: Medicare Part D
Once a resident moves past the skilled-nursing phase into long-term care, Part A stops paying for drugs. The primary drug benefit shifts to Medicare Part D, which is offered through private insurance companies. Residents need to be enrolled in either a standalone prescription drug plan or a Medicare Advantage plan that includes drug coverage.3Medicare.gov. What’s Medicare Drug Coverage (Part D)?
Nursing home residents have one enrollment advantage worth knowing about: they qualify for a special enrollment period that lasts the entire time they live in the facility. If a plan’s formulary doesn’t cover critical medications or the copays are too high, the resident can switch plans without waiting for annual open enrollment.4CMS. Medicare Advantage and Part D Enrollment and Disenrollment Guidance
The Formulary and Exceptions
Every Part D plan maintains a formulary listing the drugs it covers. If a resident’s prescription isn’t on the formulary, the plan won’t pay for it unless the resident successfully requests an exception. To do this, the prescribing doctor submits a supporting statement, in writing or by phone, explaining why no formulary drug would work as well or why alternatives would cause harmful side effects. The plan must respond within 72 hours for a standard request, or within 24 hours for an expedited one. A denial can be appealed.5CMS. Exceptions
The $2,100 Out-of-Pocket Cap
The Inflation Reduction Act eliminated the old coverage gap (the “donut hole”) and replaced Part D’s cost structure with a hard annual cap on what beneficiaries pay out of pocket. For 2026, that cap is $2,100.6CMS. Final CY 2026 Part D Redesign Program Instructions
The mechanics: a Part D plan can charge a deductible of up to $615 in 2026. After the deductible, the resident pays 25% of covered drug costs. Once total out-of-pocket spending hits $2,100, the resident enters the catastrophic phase and pays nothing for covered Part D drugs for the rest of the calendar year.7Medicare.gov. How Much Does Medicare Drug Coverage Cost?
The Medicare Prescription Payment Plan
Anyone with a Part D plan can opt into the Medicare Prescription Payment Plan, which spreads out-of-pocket drug costs into monthly installments instead of demanding full copays at the pharmacy counter. Participation is voluntary and free. Once enrolled, the resident pays nothing at the pharmacy; the drug plan sends a monthly bill calculated by dividing the remaining annual costs across the months left in the year. It renews automatically each year unless the resident opts out.8Medicare.gov. What’s the Medicare Prescription Payment Plan
This is less useful for residents already receiving Extra Help or Medicaid, since those programs already minimize out-of-pocket costs.
What Part D Does Not Cover
Part D has statutory exclusions that catch families off guard. The program does not cover over-the-counter medications, prescription vitamins and minerals, drugs used for weight loss or cosmetic purposes, or cough and cold products. Nursing home residents frequently need vitamin D supplements, certain mineral preparations, or over-the-counter pain relievers that the facility administers but Part D won’t pay for. Those costs fall to the resident, Medicaid (if eligible), or the family.9CMS. Part D Drugs/Part D Excluded Drugs
Extra Help for Limited Income
Between full Medicaid eligibility and paying the full freight on Part D sits an important middle ground: the Low-Income Subsidy, commonly called Extra Help. This federal program helps Medicare beneficiaries with limited income and resources pay for Part D premiums, deductibles, and copayments.
The Inflation Reduction Act expanded eligibility for the full Extra Help benefit to individuals with incomes up to 150% of the federal poverty level who meet the resource requirements. For 2026, the resource limits for full Extra Help are $16,590 for an individual and $33,100 for a married couple. Qualifying residents pay no Part D premium and no deductible, with only minimal copayments per prescription.10CMS. Calendar Year (CY) 2026 Resource and Cost-Sharing Limits
Anyone who qualifies for a Medicare Savings Program automatically qualifies for Extra Help. Applications go through the Social Security Administration or the state Medicaid office.
Medicaid: The Largest Payer for Long-Term Care
Medicaid is the single largest payer for long-term nursing home care in the United States, and its drug coverage for residents is broad. How it works depends on whether the resident also has Medicare.
Dual-Eligible Residents
Residents who qualify for both Medicare and Medicaid get their prescription drugs through Part D, which remains the primary payer. Medicaid picks up what Part D doesn’t: it typically pays the Part D monthly premium, eliminates the deductible, and reduces copayments to nominal amounts. Dual-eligibles automatically receive Extra Help, so their out-of-pocket drug costs are minimal.
Medicaid-Only Residents
For residents without Medicare, the state Medicaid program directly covers most prescription medications, and the nursing home’s pharmacy bills the state. Coverage is comprehensive, though states maintain preferred drug lists and generally favor generics. Some states charge small copayments per prescription, but federal law caps these at modest amounts for nursing home residents.
Qualifying: Asset Limits and Spend-Down
Medicaid eligibility for nursing home care requires meeting strict financial thresholds. The federal resource standard for an individual applicant is just $2,000 in countable assets. For married couples where one spouse enters a nursing home and the other stays in the community, the community spouse can retain between $32,532 and $162,660 in assets for 2026, depending on the state.11Centers for Medicare & Medicaid Services (CMS). 2026 SSI and Spousal Impoverishment Standards
Most people entering a nursing home have more than $2,000 in assets, so they must spend down to qualify. That means using excess assets to pay for legitimate expenses: nursing home bills, medical equipment not covered by insurance, paying off debts, home modifications, or prepaying funeral costs. Assets must be spent on fair-value goods and services, not given away.
The Five-Year Look-Back
When someone applies for Medicaid nursing home coverage, the state reviews all financial transactions from the previous 60 months. Any assets given away or sold below fair market value during that window trigger a penalty period of Medicaid ineligibility. The penalty length is calculated by dividing the transferred amount by the average monthly cost of nursing home care in that state, with no cap on how long the penalty can last.12Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
The practical consequence: a parent who gave $50,000 to a child three years before entering a nursing home will face months of ineligibility during which the family must cover the full cost of care, medications included, from their own resources.
The Personal Needs Allowance
Once a resident qualifies for Medicaid, nearly all of their income goes to the nursing home to offset the cost of care. Each state sets a personal needs allowance, a small monthly amount the resident keeps for personal expenses like clothing, phone service, or uncovered medications. Allowances vary widely, from as low as $30 per month in some states to $200 in others. For residents buying over-the-counter medications or supplements that Medicaid and Part D don’t cover, this limited allowance is often all they have.
VA Benefits, Long-Term Care Insurance, and Private Pay
When a resident doesn’t qualify for Medicare or Medicaid, or has gaps in coverage, other sources must fill in.
Department of Veterans Affairs
Eligible veterans may receive VA long-term care benefits that cover nursing home placement, including medication management. The VA provides 24-hour nursing care, therapy, and help with daily tasks including taking medicine. Eligibility depends on the veteran’s service-connected disability rating, income, and clinical need. Veterans who don’t meet the VA’s criteria fall back on Medicare, Medicaid, or private resources.13Veterans Affairs. VA Nursing Homes and Assisted Living
Long-Term Care Insurance
Private long-term care insurance policies can help pay for a nursing home stay, but their treatment of prescription drugs varies. Many policies pay a daily or monthly benefit that the policyholder can apply toward any long-term care expense, including medications. A significant number of policies, however, assume prescriptions will be covered by a separate health insurance plan like Part D and exclude drug costs from their benefit. Review the policy language before an admission forces the question.
Private Pay
Residents without applicable coverage pay for medications out of pocket. This most commonly happens during the spend-down period before Medicaid eligibility, after Part A’s 100-day limit expires, or for drugs excluded from Part D. Nursing home medications delivered through a long-term care pharmacy can cost substantially more than retail prices because of the specialized packaging and delivery services involved. For families in this position, reviewing the medication list with the prescribing physician to identify lower-cost alternatives or eliminate unnecessary drugs can produce meaningful savings.