Medicaid versus Medicare: Who Covers Nursing Home Costs?

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Because a stay in a nursing home may be covered by either Medicare or Medicaid, it can be confusing to determine which program will cover your family member's stay. While both programs may indeed cover at least some portion of a visit to a nursing home, there are important differences to the rules.

Medicare coverage of nursing home costs

In order for Medicare to cover a person's nursing home stay, the person must:

  • Have been hospitalized for medically necessary inpatient hospital care for at least three consecutive days, not counting the date of discharge,
  • Be admitted to the nursing home within 30 days after the date of discharge from the hospital,
  • Require skilled nursing or rehab care on a daily basis for a condition for which the patient was hospitalized, and
  • Receive a physician's order that such care is needed.

The difference between skilled care and custodial care

Skilled care is care that can only be administered by professional (physician or nurse) or technical personnel, and which will prevent further deterioration in the patient's health. Examples include: intravenous feeding, injections, insertion of catheters, application of sterile dressings, treatment of skin ulcers, and therapeutic exercises of various kinds (physical therapy). Less medically-intensive and critical personal care services—even if performed by a nurse—are not considered skilled care.

If the care the patient requires is not considered "skilled care," as defined above, such care is called "custodial care." This is the type of long-term care is typically received in a nursing home. Only Medicaid—not Medicare—covers custodial nursing home care.

The co-pay rule

Medicare will only cover a patient for a maximum of 100 days (per separate spell of illness), if it covers the patient at all. During days one to 20, Medicare will cover the entire cost of the nursing home stay. For days 21 to 100, the patient must pay a co-pay, which is currently set at $161 per day. If care is needed beyond the 100-day limit—or if patient no longer needs skilled or rehab care before 100 days have passed—then the patient must either pay privately, be covered by some form of insurance or qualify for Medicaid.

Medicaid rules for skilled nursing payments

Medicaid is a "needs-based" program, meaning that the patient cannot have more than a certain minimal amount of assets and income in order to be covered. Medicare, on the other hand, is available regardless of the patient's income or assets, if they meet the other requirements. Also, there is no mandate that a patient require skilled or rehab care in order to be covered by Medicaid, as there is for Medicare. To find out the asset and income limits in order to qualify for Medicaid, see "Assets You Can Have to Still Qualify for Medicaid" and "How Can My Elderly Loved One Qualify for Medicaid?"

A note about dual-eligibility

Finally, keep in mind that it is possible to be covered by both Medicare and Medicaid, simultaneously. Such individuals are known as "dual eligibles." For these elders, Medicaid covers those expenses not covered by Medicare, such as paying the Medicare premiums and cost-sharing requirements and paying for long-term custodial care, while Medicare would cover hospitalizations and related medical costs along with skilled care in a nursing home.

K. Gabriel Heiser is an attorney with over 25 years of experience in elder law and estate planning. He is the author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," an annually updated practical guide for the layperson.

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2 Comments

Good information. Most people don't know the difference until they have to deal with it.