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 cover everything that comes with living in a nursing home - including the pills they take every day. But that’s not true. Long-term care insurance doesn’t pay for prescription drugs, not even generics. It covers room and board, help with bathing, dressing, and eating - the daily support you need when you can’t live independently. But the meds? Those come from somewhere else.

Why Long-Term Care Insurance Doesn’t Cover Medications

Long-term care insurance was never designed to be health insurance. It’s custodial care insurance. Think of it like paying for a helper who gets you dressed, feeds you, and reminds you to take your pills - but not the pills themselves. The California Department of Insurance makes this clear: policies cover skilled, intermediate, or custodial care in nursing homes or assisted living. Prescription drugs? Not included. That’s been the rule since the 1970s, when these policies first became common.

Even if you’re in a nursing home covered by your long-term care policy, your medications are handled separately. Triage Health puts it simply: "If you live in a nursing home that’s covered by your long-term care insurance, the prescription drugs you take will be covered by your health insurance, not your long-term care insurance."

Who Actually Pays for Your Pills in a Nursing Home?

For most people living in nursing homes, the answer is Medicare Part D. Since it launched in January 2006, Part D has become the main source of drug coverage in these facilities. A 2020 study in PMC found that 82.4% of nursing home residents on Medicare get their prescriptions paid for by Part D. That’s over four out of five people.

Medicaid covers about 11.2% of drug costs, mostly for people who qualify for both Medicare and Medicaid (called "dual eligibles"). The Veterans Administration covers less than 1% - mostly for veterans with service-connected conditions. But here’s the scary part: nearly 9% of long-stay Medicare residents have no drug coverage at all. They pay out of pocket, rely on charity programs, or go without.

And yes - generic drugs are covered under Part D. In fact, they’re the backbone of nursing home pharmacy use. About 90% of all prescriptions written in nursing homes are for generics. They’re cheaper, just as effective, and preferred by most plans. Part D plans usually charge lower copays for generics - sometimes as little as $1 or $5 per prescription. But that doesn’t mean access is easy.

Formularies Are the Hidden Roadblock

Every Medicare Part D plan has a formulary - a list of drugs it will pay for. Not every generic is on every list. Some plans exclude certain generics because they’re not on their preferred drug list, or because they’re considered "non-formulary." And here’s the catch: if your drug isn’t on the formulary, you might not get it - unless you or your family appeals.

Medicare requires plans to cover all drugs on the official Part D formulary, but they’re not required to cover every single generic within a drug class. For example, if your doctor prescribes a generic blood pressure pill that’s not on your plan’s list, you could be stuck paying full price - unless you file an exception request. And while CMS now requires plans to respond to these requests within 72 hours for nursing home residents, delays still happen. Some facilities report waiting up to five days for approval.

And it’s not just about access. Some plans limit how much of a drug they’ll cover per month. A resident on a diuretic for heart failure might be restricted to 30 tablets a month, even if their doctor says they need 60. That’s not a medical decision - it’s a plan policy.

What About Private Insurance or Long-Term Care Policies?

Private insurance - like the kind you buy through an employer or individually - covers only 8.5% of nursing home drug costs. And even then, it’s often secondary to Medicare Part D. Most private plans don’t pay first for drugs in nursing homes. They wait for Medicare to process the claim, then cover what’s left - if anything.

Long-term care insurance? It doesn’t touch prescriptions at all. Not even if your policy says "comprehensive coverage." That’s a marketing term, not a legal one. You’ll find the fine print: "Coverage includes personal care services, but excludes medical care, physician visits, and prescription drugs."

Why This Mess Exists

Before Medicare Part D, nursing home residents relied on Medicaid for drugs - one system, one pharmacy, one payment stream. It was messy, but predictable. When Part D rolled out, it replaced that with dozens of private plans, each with their own rules, formularies, and preferred pharmacies.

Nursing homes now have to track which resident is on which plan, whether the plan works with their contracted long-term care pharmacy, and what drugs are covered. A 2019 survey found that 78% of facilities spend 10 to 15 hours a week just managing drug coverage issues. That’s over $28,000 a year in staff time per facility.

Residents and families are just as confused. Many don’t know the difference between Medicare Part A (hospital care), Part B (doctor visits), and Part D (drugs). Some think their long-term care policy covers everything. Others assume Medicaid pays for all drugs - until they’re told they don’t qualify.

What’s Changing in 2025?

Good news: the Inflation Reduction Act is fixing some of the worst problems. Starting in 2025, Medicare Part D beneficiaries will pay no more than $2,000 out of pocket for all their prescription drugs in a year - no more "donut hole." That’s huge for people on multiple meds.

Also, Medicare will now cover all vaccines recommended by the CDC at no cost. And CMS has tightened rules: Part D plans must now cover every drug on the official Part D formulary for nursing home residents, and they must approve exceptions within 72 hours.

But challenges remain. Rural nursing homes still struggle to find pharmacies that contract with all major Part D plans. About 22% of rural facilities report problems - compared to just 8% in cities. And while generics make up 90% of prescriptions, they only account for 25% of total drug spending. Why? Because the most expensive drugs - even when generic - are often for complex conditions like cancer or autoimmune diseases, and those are the ones that drive costs up.

What You Should Do Now

If you or a loved one is moving into a nursing home:

1. Find out what drug coverage they already have - Medicare Part D, Medicaid, VA, or private insurance.
2. Ask the facility’s social worker or pharmacy liaison for a list of the Part D plans they work with.
3. Check if your current prescriptions are on those plans’ formularies. Use the Medicare Plan Finder tool online.
4. If a needed drug isn’t covered, file an exception request immediately. Don’t wait.
5. Ask about generic alternatives. Many doctors will switch to a covered generic without losing effectiveness.
6. Don’t assume long-term care insurance will pay for meds. It won’t.

And if you’re considering buying long-term care insurance - understand what it does and doesn’t cover. It’s great for personal care. It’s useless for prescriptions. Buy a Part D plan separately. Don’t rely on the wrong policy to fill your pillbox.

Bottom Line

Long-term care insurance is not health insurance. It doesn’t pay for drugs - generic or brand-name. Medicare Part D does. And while Part D has dramatically improved access to medications in nursing homes, it’s far from perfect. Formularies, delays, and gaps in coverage still leave nearly 1 in 10 residents without reliable drug access. Knowing the difference between custodial care and medical care could save you thousands - and maybe even your health.