The cost of a nursing home stay can overwhelm seniors and their family members very quickly. According to the 2020 Genworth Cost of Care Survey, the median cost of a semi-private room in a nursing home is $7,756 per month. Fortunately, Medicare, Medicaid or both programs may be used to cover nursing home expenses, depending on the circumstances. Read on to learn how to pay for nursing home care.
Medicare and Medicaid Basics
Both Medicare and Medicaid are overseen by the Centers for Medicare & Medicaid Services (CMS). These programs are often confused, but they are very different. The most important differences are the ways in which they are funded/administered and the purpose each serves.
Medicare is a federal health insurance program for seniors, certain younger individuals with disabilities and people with end-stage renal disease. Like private health insurance plans, Medicare does not cover long-term care of any kind. This includes in-home care, assisted living, memory care and nursing home care. However, there are exceptions for the short-term provision of similar services. For example, Medicare will cover stays in skilled nursing facilities (also referred to as SNFs, nursing homes, convalescence homes, or senior rehab facilities) for short-term rehabilitation following a qualifying hospital stay.
Medicaid is a jointly funded federal and state medical assistance program that provides health coverage for low-income Americans with few assets. Unlike Medicare, Medicaid programs for the elderly and disabled do cover various long-term care services. Essentially, the Medicaid long-term care program ensures that people who cannot afford the high level of care they need are still able to receive it. Seniors who meet their state’s financial eligibility requirements and have a documented medical need for nursing home level care should qualify for Medicaid coverage of their nursing home costs.
For more detailed information on how these programs differ, read What Is the Difference Between Medicare and Medicaid?
Medicaid Pays for Nursing Home Care
Medicaid pays for 100 percent of a qualifying individual’s nursing home costs in a Medicaid-certified facility, but it’s important to understand that it is a needs-based program. This means that an applicant’s income and assets cannot exceed strict limits set by their state’s Medicaid program. Certain assets, such as one’s primary residence, are exempt from these limits. Applicants must also meet state-specific level of care requirements to qualify.
While nursing home care is covered by every state’s Medicaid program for all eligible applicants who need it, some states have expanded their coverage to include other types of long-term care, such as home and community based services (HCBS) and assisted living. This enables seniors with significant care needs to delay or avoid placement in nursing homes and receive services in less restrictive and more home-like environments.
Dual Eligibility for Medicare and Medicaid
Finally, keep in mind that it is possible to qualify for and be covered by both Medicare and Medicaid simultaneously. Such individuals are known as “dually eligible beneficiaries.” With dual eligibility, Medicare pays for covered medical services first and Medicaid is considered the “payer of last resort.” For example, Medicare covers qualifying health care costs for doctor’s appointments, durable medical equipment and hospitalizations while Medicaid covers qualifying remaining expenses, such as Medicare premiums and cost-sharing requirements and long-term care services.
Keep in mind that coverage and benefits available for dually eligible beneficiaries vary by state. To learn more, read Dual-Eligible Beneficiaries: Some Seniors Qualify for Both Medicare and Medicaid.