Does Medicare Cover Continuing Care Retirement Communities?

Over 70% of adults aged 65 and older will need some form of long-term care services as they age. But when exploring Continuing Care Retirement Communities (CCRCs), one of the biggest financial questions is: Does Medicare cover continuing care retirement communities? This guide provides an authoritative breakdown of what to expect.

Quick Summary

Medicare generally does not cover the high costs associated with Continuing Care Retirement Communities (CCRCs), such as entrance fees and daily living expenses. Coverage is limited to medically necessary skilled nursing care for a short period, and other physician-ordered services, but excludes the bulk of long-term custodial care.

Key Points

• Limited Medicare Coverage: Medicare does not cover the long-term, custodial care costs in a CCRC, including entrance fees and monthly room and board expenses.

• Skilled Nursing Exception: Medicare Part A may cover a short-term, medically necessary stay in a Medicare-certified skilled nursing unit within a CCRC, following a qualifying hospital stay.

• CCRC Contract Matters: The type of contract (Extensive, Modified, or Fee-for-Service) dictates how much you pay for higher levels of care, influencing your out-of-pocket costs.

• Primary Funding Sources: The majority of CCRC costs are paid for through private funds, such as personal savings, investments, and the sale of a home.

• Explore Other Options: Long-term care insurance and Medicare Advantage plans can supplement coverage, but it's crucial to understand their specific benefits and limitations regarding CCRC care.

• Plan Ahead Financially: Prospective residents need to engage in comprehensive financial planning to cover both the initial buy-in and ongoing monthly fees throughout their residency.

A CCRC Primer: Understanding the Layers of Care

Continuing Care Retirement Communities (CCRCs), also known as Life Plan Communities, are unique senior living options that offer a tiered approach to care. This model allows a resident to transition through different levels of care—from independent living to assisted living, and finally, skilled nursing care—within the same community. This structure is what distinguishes a CCRC from a standard assisted living facility or a nursing home.

While the promise of aging in one place is appealing, it comes with a complex financial structure, typically involving a significant upfront entrance fee and ongoing monthly payments. The levels of care available include:

• Independent Living: For residents who require little to no assistance with daily activities. Services often include housing, meals, housekeeping, and social activities.
• Assisted Living: For those who need some help with daily activities like bathing, dressing, and medication management.
• Skilled Nursing: Provides 24-hour medical care and supervision for those with chronic illnesses, serious medical conditions, or rehabilitation needs.

The Role of Medicare: What it Covers and What it Doesn't

It’s a common misconception that Medicare will pay for a significant portion of a CCRC, but this is far from the reality. Medicare is a federal health insurance program for people 65 or older and younger people with certain disabilities. It is designed to cover medical care, not long-term custodial care.

Here’s a breakdown of what Medicare will and will not cover within a CCRC:

What Medicare Covers in a CCRC

Medicare coverage within a CCRC is limited and highly conditional. The key is understanding that Medicare focuses on short-term, medically necessary care:

1. Skilled Nursing Care: If the CCRC has a Medicare-certified skilled nursing facility, Medicare Part A may cover a limited stay (up to 100 days per benefit period) following a qualifying hospital stay of at least three days. The stay must be for a new medical condition or for rehabilitation, not for general long-term care.
2. Physician Services: Medicare Part B covers medically necessary doctor services, outpatient care, durable medical equipment, and other medical services that are used inside the CCRC, just as it would anywhere else.
3. Hospital Stays: If a CCRC resident requires hospitalization, Medicare Part A will cover the costs, subject to deductibles and coinsurance.
4. Prescription Drugs: Medicare Part D provides coverage for prescription drugs, just as it would for any other beneficiary, regardless of their residence.

What Medicare Does Not Cover in a CCRC

Medicare explicitly excludes coverage for the core costs of living in a CCRC, which are considered custodial or long-term care.

• Entrance Fees: The large, one-time payment required to move into a CCRC is not covered by Medicare. This fee typically secures your residence and access to future care.
• Room and Board: The monthly fees for housing, meals, and utilities are not covered by Medicare.
• Assisted Living: The costs associated with assisted living services, such as help with bathing, dressing, and other activities of daily living, are not covered.
• Long-Term Custodial Care: Medicare does not pay for long-term stays in a nursing home unit for chronic conditions. Coverage is strictly for short-term, skilled care and rehabilitation.

How CCRC Contracts and Medicare Interact

CCRCs offer various types of contracts that influence how Medicare coverage and private payment sources work together. Understanding your specific contract is crucial for financial planning.

Contract Type	Upfront Costs	Monthly Fees	Health Care Included	Medicare Integration
Type A (Extensive)	Highest	Stable	Unlimited days of assisted living and skilled nursing included at little to no extra cost.	Medicare benefits are used first for eligible skilled nursing stays. After Medicare coverage ends (or if not eligible), the CCRC covers the remaining costs as per the contract.
Type B (Modified)	Medium	Lower	A limited number of free or discounted days for assisted living and skilled nursing.	Medicare is used first for qualifying skilled nursing care. Once the contract-allotted days are used, the resident pays market-rate for additional care, with Medicare covering eligible portions during short-term stays.
Type C (Fee-for-Service)	Lowest	Lowest	Access to assisted living and skilled nursing is guaranteed, but all services are charged at market rates.	Medicare is used first for eligible skilled nursing stays. Residents pay the standard daily rate for all other services, which is typically higher than under a Type A or B contract.

Financial Planning for a CCRC: Beyond Medicare

Since Medicare provides only limited support, it is essential to plan for CCRC costs using other financial resources.

1. Long-Term Care (LTC) Insurance: Many residents use long-term care insurance to cover assisted living or long-term skilled nursing costs not covered by Medicare. It's critical to review your specific policy to understand what it covers and any limitations.
2. Private Funds: Most residents rely on personal savings, investments, or the proceeds from selling a home to pay the entrance fee and monthly fees.
3. Bridge Loans: These short-term loans can help cover the gap between moving into a CCRC and the sale of your home.
4. Medicare Advantage Plans (Part C): These private plans must cover everything Original Medicare does and may offer additional benefits. However, they are still limited in what they can pay for long-term, non-skilled care.

For more detailed information on paying for long-term care, an authoritative resource is the U.S. government's website on the topic. For example, the National Institute on Aging offers extensive resources on planning and financing long-term care options, including how different facilities, like CCRCs, interact with insurance and personal finances.

Conclusion: Making an Informed Decision

Ultimately, understanding the interplay between your personal financial resources, your CCRC contract, and Medicare is key to a successful move. While Medicare serves a crucial role in covering specific, medically necessary services, it is not a solution for the overall costs of living in a Continuing Care Retirement Community. Prospective residents must engage in careful financial planning, often with the guidance of a financial planner or elder law attorney, to ensure they can meet their financial obligations throughout their retirement. Researching and comparing CCRC contracts, alongside exploring alternative payment options like long-term care insurance, will provide a clearer path forward.

Your Medicare and CCRC Checklist

• Confirm Medicare Certification: For potential skilled nursing stays, verify if the CCRC's health center is Medicare-certified.
• Understand Contract Types: Know the financial implications of Type A, B, and C contracts concerning your monthly fees and access to care.
• Review Your Finances: Assess your savings, investments, and long-term care insurance to cover costs not covered by Medicare.
• Plan for the Future: Consider how your finances will cover your care needs across all levels of the CCRC.
• Consult Professionals: Speak with a financial advisor and elder law attorney to review your CCRC contract and financial readiness.

Frequently Asked Questions

Can I use Medicare to cover my monthly CCRC fees?

No, Medicare does not cover monthly fees for Continuing Care Retirement Communities (CCRCs), which typically include housing, meals, and other residential services. These are considered long-term, custodial care costs and must be paid privately.

Does Medicare pay for assisted living in a CCRC?

No, Medicare does not pay for assisted living services, even when they are part of a CCRC. This includes help with daily activities like dressing, bathing, and medication management. These costs are paid out-of-pocket or via long-term care insurance.

Under what conditions will Medicare cover skilled nursing care in a CCRC?

Medicare Part A will cover a limited stay (up to 100 days per benefit period) in a Medicare-certified skilled nursing facility within a CCRC. This coverage is triggered only after a qualifying hospital stay of at least three consecutive days and must be for medically necessary skilled care or rehabilitation.

Will Medicare cover the CCRC entrance fee?

No, the initial entrance fee required by many CCRCs is a capital expense for residency and is not covered by Medicare. This fee is typically paid using private funds.

What role does a CCRC contract play in Medicare coverage?

Your CCRC contract dictates your financial responsibility for care beyond what Medicare provides. Depending on whether you have a Type A, B, or C contract, you may receive unlimited, modified, or market-rate pricing for long-term care after Medicare coverage is exhausted.

What is the difference between Medicare and long-term care insurance for CCRCs?

Medicare covers short-term, medically necessary care (like skilled nursing). Long-term care insurance is specifically designed to cover the costs of long-term custodial care, including assisted living and extended nursing home stays, which Medicare does not cover.

Can a Medicare Advantage (Part C) plan help cover CCRC costs?

While Medicare Advantage plans may offer additional benefits and a different network of providers, they still follow the same rules as Original Medicare regarding long-term custodial care. They do not cover CCRC room, board, or the bulk of assisted living expenses.