Long-Term Care Insurance and Generic Drug Coverage in Nursing Homes: What You Really Need to Know

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 confusion around this can lead to serious financial surprises, missed doses, or even hospitalizations. The truth is, long-term care insurance doesn’t cover prescription drugs, generic or brand-name. Not even close.

What Long-Term Care Insurance Actually Covers

Long-term care insurance is designed for one thing: paying for help with daily living. That means bathing, dressing, eating, moving from bed to chair, and other non-medical tasks that become hard with age or illness. It covers room and board in a nursing home, assisted living, or in-home care. But it draws a hard line at medical treatment. That includes doctor visits, physical therapy, and yes - prescription drugs.

This isn’t a loophole. It’s by design. When these policies were created in the 1970s, lawmakers and insurers wanted to avoid overlap with Medicare and Medicaid. They knew medical care, including drugs, was already being handled elsewhere. So long-term care insurance was built to fill the gap for custodial care - the kind that doesn’t require a licensed nurse, but still needs someone to be there every day.

Who Pays for Generic Drugs in Nursing Homes?

If long-term care insurance won’t pay for your pills, then who does? For most nursing home residents, the answer is Medicare Part D. Since its launch in 2006, Part D has become the main source of drug coverage in nursing homes. A 2020 study found it covers 82.4% of all prescriptions for Medicare enrollees living in these facilities. That’s more than four out of five residents.

Part D plans cover both brand-name and generic drugs. But here’s the key: they pay less for generics. Most plans charge a $5 or $10 copay for a 30-day supply of a generic medication - compared to $30 or more for the brand version. That’s why nursing homes rely heavily on generics. In fact, about 90% of all prescriptions written in nursing homes are for generic drugs. They’re cheaper, just as effective, and preferred by most Part D plans.

For residents who are also on Medicaid (called “dual eligibles”), drug coverage comes through Part D too. Even though Medicaid used to pay for drugs directly, the system changed after 2006. Now, Medicare Part D is the primary payer. Medicaid only steps in to cover costs Part D doesn’t - like the monthly premium or cost-sharing if the resident qualifies for extra help.

What About Private Long-Term Care Insurance?

Some people buy private long-term care insurance policies through companies like Genworth or John Hancock. These policies can be expensive - often costing $2,000 to $4,000 a year - but they offer more flexibility than Medicaid. Still, not one of them covers prescription drugs. Even if your policy says it pays for “all care needs,” the fine print always excludes medications. That’s because insurers know drugs are covered under other programs. They don’t want to duplicate coverage.

If you’re relying on private long-term care insurance and think your pills are included, you’re at risk. One woman in Ohio paid $3,000 a year for her policy for 12 years. When she moved into a nursing home, she assumed her insulin, blood pressure meds, and cholesterol pills were covered. They weren’t. She ended up paying $1,200 out of pocket in one year - money she didn’t have.

Formularies and the Hidden Barriers to Generic Drugs

Just because Part D covers generics doesn’t mean every resident gets them easily. Each Part D plan has a list of approved drugs called a formulary. If your medication isn’t on that list, you might have to wait weeks to get it - or pay full price.

Nursing homes have to check each new resident’s Part D plan to see what drugs are covered. They also need to know if their own pharmacy works with that plan. If not, they have to switch pharmacies - a process that can take days or even weeks. During that time, the resident might go without meds.

Some plans make it worse. They limit how many generics they’ll cover per month. Or they require prior authorization for common drugs like gabapentin or metformin. One 2022 study found that nearly 1 in 5 nursing home residents had a prescription delayed because their drug wasn’t on the plan’s formulary. And even when they request an exception, plans often deny it - especially if the drug is cheaper than the one they prefer.

The 10% Who Get Left Behind

About 8.9% of nursing home residents - roughly 115,000 people - have no drug coverage at all. They’re either not enrolled in Part D, or they’re dual eligibles who missed the enrollment window. Some can’t afford the premium. Others don’t understand how to sign up. A few are in denial about needing help.

These residents pay out of pocket. Or they get temporary help from charity programs. Or they skip doses. A 2020 study showed that residents without drug coverage received 40% fewer prescriptions than those with Part D. That’s not just inconvenient - it’s dangerous. Missing blood pressure or diabetes meds can lead to falls, strokes, or emergency room visits.

What’s Changing in 2025?

Good news: things are getting better. The Inflation Reduction Act of 2022 brought major changes. Starting in 2025, Medicare Part D beneficiaries will never pay more than $2,000 a year for drugs - no matter how many they take. That’s huge for nursing home residents on multiple medications.

Also starting in 2025, Part D plans must cover all drugs on the official Medicare formulary. No more “limited formularies” that leave out common generics. And plans must respond to exceptions requests within 72 hours for nursing home residents. That’s a big improvement from the 5-7 days some plans used to take.

These changes won’t fix everything. But they’ll cut down on delays and out-of-pocket costs. They’ll also make it easier for nursing homes to manage drug coverage - which currently takes staff an average of 10-15 hours per week per facility.

What You Should Do Now

If you or a loved one is entering a nursing home, here’s what to do:

• Confirm whether you’re enrolled in Medicare Part D. If not, sign up immediately. You can’t wait until you’re in the facility.
• Ask the nursing home’s pharmacy team which Part D plans they work with. Make sure your plan is on the list.
• Get a copy of your plan’s formulary. Check that your current medications - especially generics - are covered.
• If a drug isn’t covered, ask for an exception. You have the right to appeal.
• Don’t assume long-term care insurance covers your pills. It doesn’t. Plan for drug costs separately.

Bottom Line

Long-term care insurance is a valuable tool - but it’s not a magic wand. It won’t pay for your medications. Medicare Part D will. And while Part D isn’t perfect, it’s the best system we have. The real challenge isn’t the cost of drugs - it’s navigating the system. The paperwork. The delays. The formularies that change every year.

The good news? You’re not alone. Nursing homes, pharmacists, and advocates are working to fix the gaps. And with new rules coming in 2025, the system is slowly becoming more reliable. But until then, the responsibility falls on you - or your family - to make sure your meds don’t get lost in the bureaucracy.