Does Medicare Pay for Nursing Homes? Understanding Coverage and Limitations

According to the Centers for Medicare & Medicaid Services, most long-term nursing home care is not covered by Medicare. It is a common misconception that Medicare pays for nursing homes, but this article will clarify the intricate details of what is actually covered and what isn't.

Quick Summary

Medicare's coverage for nursing home stays is very limited, primarily covering short-term, medically necessary care in a skilled nursing facility after a qualifying hospital stay, but not long-term custodial care.

Key Points

• Limited Coverage: Medicare only covers short-term, medically necessary stays in a skilled nursing facility (SNF), not long-term custodial care.

• Qualifying Hospital Stay: Coverage for SNF care requires a prior hospital stay of at least three consecutive days as an inpatient.

• Custodial Care Excluded: Medicare does not pay for non-medical assistance with daily activities like bathing, dressing, or eating.

• Alternatives Exist: For long-term care, individuals often rely on Medicaid, long-term care insurance, or private funds.

• Medicare Advantage Details Vary: If you have a Medicare Advantage plan, the specifics of your SNF coverage and costs may differ from Original Medicare, so you must check your plan's details.

The Core of Medicare's Nursing Home Policy

When considering the costs of nursing home care, it is critical to understand the distinction Medicare makes between 'skilled care' and 'custodial care.' This difference is the deciding factor in whether Medicare provides any financial assistance for a nursing home stay. For most long-term residency, which is often custodial in nature, Medicare does not provide coverage.

What is Skilled Nursing Facility (SNF) Care?

Skilled nursing facility (SNF) care is a short-term, medical-based service provided in a facility setting, usually following a hospital stay. It is ordered by a doctor to treat a specific illness or injury and requires the daily services of a skilled medical professional, such as a physical therapist or registered nurse. Medicare Part A will cover this type of care for a limited time under very specific conditions.

Coverage for an SNF stay has strict limits: Medicare can cover up to 100 days in each 'benefit period,' but this is not an unlimited benefit. For days 1–20, Medicare pays the full cost. For days 21–100, the patient is responsible for a daily coinsurance amount. If care extends beyond 100 days, the patient must cover all costs out-of-pocket, as Medicare coverage ends.

What is Custodial Care?

Custodial care, which makes up the bulk of nursing home services, is non-medical care that helps with daily living activities. This can include assistance with bathing, dressing, eating, and using the bathroom. Medicare explicitly states that it will not cover custodial care if it is the only care needed. The high cost of long-term custodial care is the primary reason why many families explore alternative payment methods.

Conditions for Medicare-Covered Skilled Nursing Care

To qualify for the limited SNF coverage, several conditions must be met:

• Qualifying Hospital Stay: You must have been admitted to a hospital as an inpatient for at least three consecutive days. The count begins on the day you are admitted but does not include the day of discharge.
• Doctor's Order: Your doctor must officially order skilled nursing services to treat a hospital-related illness or injury.
• Timely Transfer: You must be admitted to a Medicare-certified SNF within 30 days of leaving the hospital.
• Continued Need: The skilled care must continue to be medically necessary, not just ongoing maintenance or custodial assistance.

Comparing Payment Options for Long-Term Care

Navigating payment for nursing home care can be complex. Here is a comparison of some of the most common options:

Feature	Medicare	Medicaid	Long-Term Care Insurance	Private Pay
Coverage	Limited to 100 days of skilled care per benefit period after a qualifying hospital stay.	Pays for long-term care for eligible individuals. Rules vary by state.	Covers nursing home stays based on policy terms; benefits often have waiting periods.	Uses personal savings, income, or other assets to cover costs.
Eligibility	Age 65+ or certain disabilities, regardless of income.	Based on income and personal assets. Criteria are often strict.	Based on health status and age when purchased.	Everyone is eligible, but it requires significant personal funds.
Common Use	Short-term rehabilitation after an injury or illness.	Long-term stays for those with limited income and assets.	Planned coverage for potential future long-term care needs.	Initial payment method until other funds are spent down.
Flexibility	Inflexible rules regarding duration and type of care covered.	State programs have specific rules, but are designed for long-term needs.	Coverage varies greatly based on the specific policy purchased.	Offers full control over care choices, facility, and duration.

How to Pay for Long-Term Nursing Home Care

Because Medicare's role is so limited, planning for long-term care involves exploring other avenues. The majority of Americans who need extended nursing home services rely on alternative payment strategies.

Medicaid

Medicaid is a state and federal program that provides health coverage to low-income individuals. Unlike Medicare, it can pay for long-term nursing home costs for those who meet eligibility requirements. Eligibility is based on a person's income and assets, and the rules are complex and vary by state. It is possible for someone to start by paying for their own care and then 'spending down' their assets until they qualify for Medicaid.

Long-Term Care Insurance

This private insurance option is designed specifically to cover the costs of long-term care, including nursing homes. Policies can cover both skilled and custodial care, but they require premiums, and benefits typically have a waiting period before they begin. Premiums are generally more affordable when purchased at a younger age.

Private Assets

Using private funds is another route for covering nursing home costs. This includes personal savings, pension payments, retirement accounts, and Social Security income. Many people begin by using private funds and later transition to Medicaid if their assets are depleted.

Veterans Benefits

The U.S. Department of Veterans Affairs offers benefits that may cover some or all long-term care costs for eligible veterans, depending on their service-connected disability status and medical needs.

Understanding Medicare Advantage vs. Original Medicare

Medicare Advantage plans (Part C) are private health plans that contract with Medicare. While they must provide at least the same level of coverage as Original Medicare, their rules for skilled nursing facility stays can differ. Some plans may have different out-of-pocket costs, such as copayments for the first 20 days. It is crucial to check with a specific Medicare Advantage plan administrator to understand the details of their SNF coverage, including the network of facilities and patient costs. For more detailed information on understanding your options, visit the National Council on Aging (NCOA) website.

Conclusion: Navigating the Complexities of Nursing Home Costs

Does Medicare pay for nursing homes? The short answer is generally no, especially for the long-term custodial care that most residents require. While it provides limited, short-term coverage for skilled nursing care following a qualifying hospital stay, it is not a solution for ongoing residency. Families facing the prospect of nursing home care must carefully consider and plan for the financial burden, exploring alternatives such as Medicaid, long-term care insurance, or leveraging private assets. Understanding these distinctions is the first step toward making an informed decision for yourself or a loved one.

Frequently Asked Questions

What is the difference between a skilled nursing facility and a regular nursing home?

A skilled nursing facility (SNF) provides short-term, medical-based care and rehabilitation, usually following a hospitalization. A regular nursing home primarily offers long-term custodial care, which is assistance with daily living activities.

Does Medicare pay for nursing homes if the resident has dementia?

Medicare does not cover the costs of a nursing home stay for dementia if the care needed is primarily custodial. While certain services for a dementia patient may be covered, the facility's room and board are not.

If I have Medigap, does that help with nursing home costs?

Some Medigap (Medicare Supplement) policies can cover the daily coinsurance for skilled nursing facility stays between days 21 and 100, which can result in significant savings. Medigap does not cover long-term custodial care costs.

What is a 'qualifying hospital stay' for Medicare SNF coverage?

A qualifying hospital stay is an inpatient admission of at least three consecutive days, not including the day of discharge. An observation stay does not count toward this requirement.

How can Medicaid help with nursing home expenses?

Medicaid is a needs-based program that can cover long-term nursing home costs for eligible individuals. Many people who initially pay for care with private funds eventually spend down their assets to qualify for Medicaid.

Does Medicare cover hospice care in a nursing home?

Yes, if a patient is receiving hospice care in a nursing home, Medicare generally will cover the hospice services, which can include managing pain and providing comfort. The hospice benefit is available to those with a terminal illness and covers a range of services.

Can I use Medicare Advantage for long-term nursing home care?

No, like Original Medicare, Medicare Advantage plans do not cover long-term custodial care. They must provide the same basic skilled nursing facility coverage as Original Medicare but may have different network rules or cost-sharing requirements.