Does Medicare Pay for Nursing Home Care?

Medicare doesn’t cover custodial care. This major expense can be met by other sources.

Medicare doesn’t cover all costs associated with nursing home care. There are other ways to pay for some of these costs, which averaged $105,850 per year in 2020 for a private bedroom, according Genworth, a provider long-term care insurance.

According to the U.S. Administration on Aging, a third of those 65 and older in 2021 may not need long-term care. However, 20% of those in this age group will require custodial care for at least five years. It is a good idea to plan early to make the most of your later years.

Medicare doesn’t cover most long-term nursing home care

Nonmedical custodial care in a nursing home — like help with eating and bathing — is not covered by Medicare. If a person is unable to pay for long-term skilled nursing care due to an injury or illness, Medicare will cover it.

But Medicare Part A does cover professional medical care provided in a skilled nursing facility (not to be confused with a nursing home), a time-limited benefit available when medically necessary for recovery and rehabilitation after a hospital stay. This Medicare coverage has significant limitations. There is a 20% copay on days 21-100, and no coverage beyond 100.

For people who are medically and financially able to age in place, Medicare does fully cover many home health care services, such as occasional skilled nursing. Medicare covers 80% of all other costs, including physical therapy and durable medical equipment like wheelchairs.

Medicare Advantage (an alternative to Original Medicare offered by private insurers) also generally does not cover long-term custodial care, but plans may include supplemental coverage to assist with some home health care costs. For details about your coverage, please check your Medicare Advantage plan.

Medicaid pays for some nursing home expenses, if you are eligible

Medicaid pays for some long-term custodial nursing homes and home health care costs for those with low income and little savings. Many people who have exhausted their financial resources in a nursing facility eventually qualify for Medicaid.

Medicaid benefits can vary because it is a combined federal-state program. For more information, contact your state’s Medicaid office.

Even if your financial situation qualifies you for Medicaid, you may have to pay copays for certain services you will need in long-term nursing care. Especially when it comes to nursing home coverage, it’s important to understand the differences between Medicare and Medicaid.

Some people have the option of long-term care insurance.

Long-term care insurance can work as a way to pay for nursing home care if you can afford the hefty premiums for years or even decades into retirement. You can get insurance that covers a large portion of the cost of care in a nursing facility, assisted living facility, or at your home.

Make sure you read all terms and conditions of any long-term insurance policy that you are considering. Also, don’t forget to seek professional advice if there is a potential for your insurance to be misused. Some people who have long-term policies for care have seen their rates rise unexpectedly after years of paying premiums.

Some people can afford to spend their savings.

Someone who has accumulated substantial wealth might be able pay $100,000 per year out of pocket for nursing home care for five or more years. However, this is not the case for most people.

You will face many challenges when you plan to pay for nursing home care. With all these challenges, you owe it to yourself to speak with a professional about how long-term custodial care figures into your overall financial plan. The sooner you start, the better.