How to Pay for Long-Term Care: 6 Ways, and the 2026 Medicaid Rules for Missouri and Kansas

$752,000. In 2026, in most states, including Missouri and Kansas, if mom's home equity is above that number, Medicaid will not pay for her nursing home care. Not $1.

Meet Linda. She's 54. She lives in Kansas City, Missouri, and she's made up. But her problem is real. Her mom, Ruth, is 81. Ruth lives alone across the state line in Kansas in the house Linda grew up in. Paid off. Worth about $820,000. Last month, Ruth started needing help getting in and out of the shower and getting dressed. That's two activities of daily living. And that one phrase decides more about how Ruth's care gets paid for than almost anything else. So Linda is asking the question every family asks too late. How do we pay for this?

I'm Hans Goldstein with the Retirement Literacy Foundation. Here are six ways to pay for long-term care. The 2026 Medicaid rules for Missouri and Kansas and a one-screen chart at the end to see which way fits you.

Way number one, life insurance with a chronic illness rider. A rider is an add-on to a life insurance policy. If you become chronically ill, it lets you take part of the death benefit early while you're still alive to pay for care. How much you get depends on the design. Many riders pay a discounted lump sum based on your age and life expectancy. The older you are and the closer the insurer thinks you are to the end, the more of the death benefit they'll advance. Other riders pay a set percentage every month, often around 2-4% of the death benefit until it's used up. The pros. It rides on life insurance you may want anyway. And if you never need care, your family still gets the death benefit. The cons. Every dollar you use comes out of that death benefit. A discounted payout can be a lot less than the face amount and you have to qualify on health to buy it. If this, then that. If you're healthy and you need life insurance anyway, a rider is a low-cost backup plan. If mom already owns an old policy, pull it out of the drawer and read it. The rider might already be there.

Way number two, a life insurance policy built for long-term care. Some people call it a hybrid. Here, long-term care is the main job, not an add-on. You put in a lump sum or a few years of payments and the long-term care benefit pool can be several times what you put in, depending on your age and health. Some designs even pay for life with no cap. How can an insurer afford that? They invest the premiums, largely in bonds, for years. And not everyone who buys one ever files a claim. Dementia care is the big wild card and it's the reason these get priced carefully. The pros. The care pool can be several times your premium. Some designs pay for life. And if you never need care, a death benefit is left for the family. The cons. It takes a big check or years of payments up front. You have to pass health underwriting and the money is tied up so cashing out early can cost you. If you have savings sitting idle and you're still healthy, a hybrid turns part of it into a large care pool. If mom already needs help with two or more activities of daily living, new underwriting is likely off the table. Look at ways five and six and Medicaid.

Way number three. Long-term care through work. Some employers still offer group long-term care coverage and sometimes you can keep it when you leave. It's less common than it used to be. But if it's on the menu, it may come with lighter health questions when you sign up. The pros. Payroll deduction, group pricing, often lighter health questions, and sometimes it's portable when you leave. The cons. Fewer employers offer it now. The benefits are often smaller and premiums can change. If you or your spouse still work, ask HR this week whether long-term care is on the benefits menu. If you're about to retire, check whether you can keep the coverage before your last day.

Way number four. Traditional long-term care insurance. This is the classic policy. It pays a set monthly amount for care for a set period. You choose the monthly benefit, how long it pays, the waiting period before it starts, and whether it grows with inflation. To claim, most policies use the same test. Help with two of six activities of daily living or severe cognitive impairment like dementia. The pros. It's usually the most care per premium dollar. It can cover home care, assisted living, and a nursing home. And tax qualified benefits are generally tax-free. The cons. Premiums are not guaranteed and can go up. If you never need care, the premiums are gone. And you have to qualify on health. If you're in your 50s or early 60s and healthy, this is when it's easiest to qualify. If the premium would strain your budget, a smaller policy beats no plan at all. Or look at way number two.

Back to Linda. Ruth already needs help with two activities of daily living. So for Ruth, the first four ways only help if she already owns a policy. Linda checked every drawer. She doesn't. That leaves the house.

Way number five. A reverse mortgage. A HUD reverse mortgage lets a homeowner age 62 or older turn home equity into cash, monthly payments, or a line of credit with no monthly mortgage payment. It's repaid when she sells, moves out for good, or passes away. She still pays the property taxes, the insurance, and the upkeep. Here's the timing nobody mentions. It has to be set up while she still lives in the home. It has to be her main home. And if she's away in a care facility for more than 12 months in a row, the loan can come due. So it works for paying for care at home. It doesn't work after she's moved into a nursing home. The pros. No monthly mortgage payment. It pays for care at home. And an unused line of credit can grow over time. The cons. It must be set up while she lives there. Fees and interest shrink what the heirs get. And it can come due after a long stay in a facility. If mom wants to age at home and has real equity, look at a reverse mortgage now while she still lives there. If a move to a facility is likely within a year, it's usually the wrong tool. A session with a HUD-approved counselor comes first.

Way number six. Sell the house with an installment sale. Ruth bought the house in 1979. After the home sale exclusion, say $400,000 of gain is still taxable. Sample numbers. Sell for cash and that whole gain can land in one tax year. One tax bomb. With an installment sale, the buyer pays over time and the tax is reported as the payments come in. So instead of one huge tax year, the gain is spread over several years, often at lower rates. And the payments become a monthly income stream to help pay for care. One big warning. This one is for families paying privately or well above Medicaid limits. For Medicaid, the home is usually an exempt asset while she lives there or plans to return. Sell it and it turns into countable assets. Installment payments can count as income and the note itself can count as an asset. Unless it meets strict federal rules. Actuarially sound, equal payments, no balloon, and the balance can't be forgiven at death. If Medicaid is in the picture, talk to an elder law attorney before you sell. The pros. It spreads the capital gains tax over years, turns the house into monthly income, and the interest on the note adds income too. The cons. The buyer could stop paying, the payments count if Medicaid is needed, and the money arrives over time, not all at once. If you have a big house and plan to pay privately, an installment sale can spread the tax. If Medicaid is likely within five years, see an elder law attorney before selling or gifting anything.

Now Medicaid. When the money runs out, Medicaid pays for nursing home care. But Missouri and Kansas don't use the same numbers. In Missouri, a single person on Missouri's Medicaid program can keep about $6,220 in countable assets. In Kansas, under KanCare, it's $2,000. Same metro area. A three-to-one difference. Both use the 2026 home equity limit of $752,000. Unless a spouse or a child under 21 lives in the home. Both look back five years at gifts and transfers. Give money away inside those five years, and there can be a penalty period with no coverage. And if one spouse is still at home, they're protected. In 2026, the at-home spouse can keep at least $32,532 of the couple's countable assets, and up to $162,660, depending on what the couple owns.

Here it is on one screen. And for Ruth, her house is worth more than the equity limit. So until something changes, Medicaid isn't paying for her long-term care. That's why the order of your moves matters so much.

So which way fits you? If you're healthy and planning ahead, look at traditional coverage or hybrid. If you need life insurance anyway, add the rider. If you still work, ask HR. If mom already needs help and wants to stay home, a reverse mortgage set up now. If there's a big house and you're paying privately, an installment sale. And if assets are near the Medicaid limit, an elder law attorney before anyone sells or gifts anything.

Linda's plan? Ruth wants to stay home as long as she can. So they're meeting a HUD counselor about a reverse mortgage now, while Ruth still lives there. And they're seeing an elder law attorney before anyone sells or gifts anything. One afternoon of planning. A lot less panic later.

Want to go deeper? Join our free class, What Changes for You in 2027 on Tuesday, November 17th at 10am Pacific, noon central. The link is below. It's free. It's education only. And there's nothing to buy. Education only. Not tax, legal, or financial advice. Linda and Ruth are made up. The rules are real.