More than half of Americans think Medicare will help pay for their long-term care when they are seniors. This is a big and potentially costly misunderstanding, because people who think Medicare will cover their nursing home care probably aren’t setting aside the savings or buying the long-term care insurance they need to meet these expenses later on. So where does this misunderstanding come from? Medicare and Medicaid are not the same thing, but many people mistakenly think that they are, and Medicaid pays for nursing home care for people who meet the program’s income and asset requirements. Actually, Medicare does pay for a very narrow range of short nursing home stays. But as you’ll see, the vast majority of people who need nursing home care will not be able to rely on Medicare to pay for it.
Medicare pays for some nursing home care—within strict limits
Medicare does pay for some short-term nursing home stays, but only for a limited amount of time, after a qualifying hospital stay, with a doctor’s written instructions, and in a Medicare-approved facility. Here’s a brief summary of the details, which you can find at Medicare.gov:
To qualify for a Medicare-covered skilled-nursing facility stay, you have to have Medicare Part A coverage and have days left in your 60-day benefit period. (Benefit periods start over with each new hospital or nursing home stay after the last benefit period ended.) Before you can enter the skilled nursing facility, you must have spent at least three days as an admitted hospital patient (not just there under observation) and your doctor must say that you need skilled nursing inpatient rehab. Whatever skilled nursing facility you use must be Medicare-approved in order for Medicare to pay for your care.
It’s important to note that many patients spend three days or longer in the hospital only to find that Medicare won’t cover post-hospital skilled nursing care, because they were never admitted or were admitted partway through their stay. Time spent “under observation” in the hospital—even if it’s several days—does not count for Medicare skilled nursing eligibility. For many years, this was such a common cause of confusion that the NOTICE Act was passed by Congress in 2016. It requires hospitals to give you written notice of your status (under observation or admitted) between 24 and 36 hours into your stay.
If you meet all of Medicare’s requirements, your post-hospital short-term nursing home stay will be covered during your benefit period. But Medicare will not pay for long-term stays—the kind someone might need if they require help with healthcare tasks every day for months or years, or if they need constant supervision and special care due to dementia. Families who only learn this when a loved one needs care can find themselves dealing with payment issues during an emotionally challenging time.
The high cost of misunderstanding Medicare benefits
The problem with the “Medicare pays for nursing homes” myth is that folks who believe it probably aren’t going to make other plans to pay for long-term care –- and that care can be incredibly expensive. In 2016, the national median cost of a semi-private nursing home room was $82,125 per year. For a private room, the cost was $92,387. The average length of time patients spend in long-term care is 2.3 years for men and 2.6 years for women.
It’s worth noting that dementia care costs much more than other types of long-term care. That’s because high-quality care for people with dementia requires a secure but inviting environment and specially trained staff who understand how to keep their patients socially engaged and comfortable in their surroundings. According to a 2017 study published in the Journal of the American Geriatrics Society, dementia costs about $185,000 more per patient than care for someone without the disease, for a total cost of care of about $321,000 per person.
How to pay for long-term care
If Medicare doesn’t cover long term care, how can families manage to afford it? Paying for care with savings isn’t practical for most Americans, because the cost of care far outpaces what most adults have saved for care. Long-term care insurance can help cover costs if your parents bought their policy and chose a policy with a good per-diem coverage rate. This post explains in detail what long term care insurance does and doesn’t cover.
If your parents own a home, they may be able to use their equity to pay for care when they need it. In general, the three options for homeowners who want to tap the value of their home are:
- Sell the home outright and use the proceeds to pay for care. In cases where the homeowner needs to move into care right away, before the house can sell, a bridge loan may be an option.
- Rent the home while continuing to own it and using the rental income to pay for care. This post covers the pros and cons of selling versus renting to pay for care.
- Taking out a “reverse mortgage” to access equity to pay for care. This will require the sale of the home once the owners have passed away.
There are also two aid programs that can help seniors pay for long term care, including in-home care, assisted living, and nursing homes. Medicaid will pay for nursing home care (and in some states, in-home and assisted living care) for seniors whose income and assets fall below a level set by each state. The majority of American seniors in nursing homes use Medicaid to help pay for their care. You can read more about applying for Medicaid in this post. Veterans, their spouses, and their widows who have low incomes and limited assets may be eligible for the Aid & Attendance pension benefit from the VA. You can read about Aid & Attendance eligibility and the application process in this post.
Paying for nursing home care can be complicated, but there are experts who can help you find what your family needs. You can call 1-800-805-3621 for detailed information about skilled nursing care options near you.