The cost of a nursing home now runs well past $100,000 a year in much of the country, a number that can drain a lifetime of savings within a few years and is the single biggest financial threat many families face in old age. For a specific group of frail seniors, a lesser-known government program offers a different path: keep the person in their own home while still delivering the intensity of care a facility would provide. The Program of All-Inclusive Care for the Elderly, known as PACE, does this by fusing Medicare and Medicaid into one coordinated benefit, and for those who qualify it can eliminate out-of-pocket costs entirely.
How PACE bundles Medicare and Medicaid into one program
PACE is not a supplement layered on top of existing coverage. It replaces the usual patchwork by having a single organization manage every piece of a participant’s care and pooling the Medicare and Medicaid dollars that would otherwise flow through separate systems. A team of doctors, nurses, therapists, social workers, and aides works together, meaning the same group that treats a chronic condition also arranges the transportation, meals, and home help around it.
The breadth of what is covered is what sets the program apart. According to Medicare’s PACE guidance, the benefit spans primary and specialty care, hospital and nursing-home care when needed, prescription drugs, physical and occupational therapy, dentistry, mental health counseling, and personal care at home. It also covers services a traditional plan rarely touches, such as adult day programs, nutritional counseling, and rides to and from the PACE center.
Much of the day-to-day care is delivered at a community-based PACE center where participants receive medical attention and social contact, then return home each evening. The model is built to delay or avoid a permanent move into a facility, which is both the humane goal for many families and the reason the program can be cost-effective for the two agencies footing the bill.
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Who qualifies, and the four conditions that decide it
Eligibility turns on four requirements, and all must be met. A participant has to be at least 55 years old, live within the service area of a PACE organization, be certified by the state as needing a nursing-home level of care, and still be able to live safely in the community with the help PACE provides. That last condition is the balance the program strikes: sick enough to need facility-level care on paper, but stable enough to remain at home with support.
The geographic limit is the practical catch. PACE operates only in states that offer it through Medicaid, and even there it exists in defined service areas rather than statewide, so availability depends heavily on where a senior lives. The joint federal-state structure and state-by-state footprint are detailed on the Medicaid PACE page, and the number of programs has grown steadily as more states adopt the model.
Enrollment is also voluntary and reversible. A participant can leave at any time, but the trade-off during enrollment is real: PACE participants generally must use the program’s own network of providers, and joining a separate Medicare drug plan while enrolled triggers automatic disenrollment from PACE. For someone attached to a longtime outside physician, that restriction can be the deciding factor.
The program remains small relative to the need it addresses. PACE serves tens of thousands of participants nationwide through more than 150 organizations operating in roughly 30-plus states, a fraction of the millions of seniors who meet a nursing-home level of care, which means many who would qualify never encounter it. Federal and state officials have encouraged expansion, approving new sites and prodding more states to adopt the model, precisely because keeping a frail senior at home tends to cost the two programs less than institutional care over time. A family weighing PACE typically starts by checking whether a program even operates in their county, since the benefit is out of reach outside a defined service area no matter how cleanly a person meets the other three conditions.
What PACE costs a participant
The financial appeal is sharpest for those who qualify for both programs. A participant who has Medicaid pays no monthly premium for PACE, and regardless of income, no participant faces a deductible, copayment, or coinsurance for any drug, service, or care the PACE team approves. That eliminates the cost-sharing that erodes budgets under conventional Medicare and Medicare Advantage.
The math shifts for those with Medicare but not Medicaid. Such a participant pays a monthly premium covering the long-term-care portion of the benefit plus a premium for Part D drugs, though still without per-service cost-sharing. Someone with neither program can pay the full premium privately, an option that rarely makes sense given the underlying expense. The Centers for Medicare and Medicaid Services outlines these arrangements in its overview of the program.
The comparison that matters is not PACE against a standard Medicare plan but PACE against the alternative it is meant to prevent. Weighed against a nursing home bill that can exceed six figures annually and quickly force a household to spend down its assets, a program that keeps a frail parent at home with no cost-sharing changes the entire calculus of long-term care, provided a family lives where it is offered and can accept the closed network that comes with it.
This article was produced with AI assistance and reviewed against primary sources by The Money Overview editorial team.
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