Many seniors and their families search for ways to make long-term care more affordable. In some cases, Medicare and Medicaid can help by financing senior health services and some types of senior living. Though not everyone qualifies for these programs, many individuals do — potentially reducing their senior care costs.
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As many as 6 million eligible Americans either don’t apply for or don’t use their benefits each year, according to the Centers for Medicare & Medicaid Services. Many factors contribute to this staggering number, notes Letha Sgritta McDowell, an elder law attorney who practices at Hook Law Center in Virginia and North Carolina.
“It’s really about comprehending the rules,” explains McDowell, who also serves as president of the National Academy of Elder Law Attorneys (NAELA). “Many people don’t understand the intricacies of how public benefits work.”
Whether Medicaid and Medicare will help with your family member’s senior living costs depends on several factors, such as your loved one’s age, income, and required level of care. It also depends on communities themselves, as some accept Medicaid as a payment method, while others require private pay.
Medicaid is a state and federal program designed to provide health care coverage to vulnerable populations, or to people who might not otherwise have health insurance. It’s currently the largest source of health insurance in the U.S., covering low-income individuals and people with significant medical expenses.
Since Medicaid is a partnership between individual state governments and the federal government, the program’s coverage provided — as well as eligibility requirements — vary significantly based on where you live. Due to this complexity, it’s often best for seniors and their families to work with an elder law attorney, specifically one who focuses on Medicaid planning.
Medicaid recipientsmust meet certain health or physical requirements in addition to income thresholds and asset limitations based on their state of residence and type of coverage requested. They may also be subject to a Medicaid look-back period. Though income requirements vary by state, they’re typically based on earnings beneath 133% of the poverty level. This means if the poverty line in your state is calculated at $13,000, your income would need to be less than $17,290 to qualify for Medicaid.
States can also deem individuals “medically needy,” meaning they exceed the standard income but have significant medical expenses. Similarly, several states have Medicaid “buy-in” programs. These allow some individuals with disabilities to have access to Medicaid coverage even if they exceed income requirements.
If your family member is planning to apply for Medicaid, it’s a good idea to contact your state medical assistance office for more details. Depending on where you live, Medicaid programs may be referred to as “auxiliary grant,” “elderly waiver,” or “frail elderly waiver” programs.
In many cases, older adults may have income above the Medicaid threshold yet still find themselves in need of public assistance due to high medical costs. Several states address this through “Medicaid spend down” programs, which allow seniors to reduce their countable income by subtracting medical expenses. By lowering their countable income, these individuals may become eligible for Medicaid.
For example, a senior might receive $2,000 a month in Social Security payments but live in a state that requires Medicaid recipients to have monthly income below $1,500. In a state with a Medicaid spend down program, they could qualify for Medicaid by spending $500 each month on medical expenses, including prescription drugs, doctor co-pays, and long-term care costs. It’s important to track and document all medical expenses if you’re considering a Medicaid spend down.
Medicare provides federal health insurance coverage to almost all Americans 65 and older and to people with end-stage renal disease. It has several separate components:
While most people don’t pay a premium for Part A, Medicare’s other forms of coverage come with monthly costs for seniors.
Medicare recipients must be age 65 or older, have a disability determined by the Social Security Administration, or have ALS or end-stage renal disease. Individuals receiving Social Security or Railroad Retirement Board benefits are also eligible, along with people who’ve received Social Security or Railroad Retirement Board disability benefits for at least two years previously. Kidney transplant patients and people undergoing kidney dialysis treatment are also eligible.
Though adults over 65 who have paid taxes for at least 10 years automatically receive Medicare Part A coverage, they must opt in and complete enrollment paperwork to receive Part B and Part D coverage. Seniors who enroll in Part C, also called a Medicare Advantage plan, will also have to select a plan, complete paperwork, and pay monthly costs, as well as forfeit their Medicare Part A coverage. The Social Security website is a resource that can help seniors review requirements and start the Medicare application process.
Seniors in independent living are usually healthy and active. They choose this care type for benefits like housekeeping, lawn maintenance, and social activities. Since Medicare covers only health care services, it doesn’t pay for independent living.
Medicaid helps low-income and medically needy individuals access medical care. Because independent living doesn’t encompass medical services, Medicaid doesn’t cover this care type.
Generally, Medicare pays for short-term, intensive care for seniors who have experienced an injury or who are in the end-of-life stage, as determined by a doctor. In contrast, assisted living provides care to seniors who are largely independent but could benefit from assistance with activities of daily living (ADLs). Given this more limited range of care, Medicare doesn’t cover assisted living.
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Some — but not all — states have Medicaid waiver programs that help cover the costs of assisted living. With a waiver, families and seniors can expect help with costs related to medical treatments and personal care services, reducing their overall bill. However, Medicaid often won’t cover the total price of room and board in an assisted living community.
In some states, Medicaid can be used to pay for the following:
Medicare won’t pay for rent or board in memory care facilities. However, Medicare does cover many costs associated with dementia treatment, such as equipment and supplies like the following:
Though not all communities accept Medicaid, waivers in some states pay for 24-hour dementia care in skilled nursing communities. If a senior chooses to receive care in a memory care community rather than a nursing home, waivers typically don’t cover these costs.
For seniors who do choose to receive memory care in a skilled nursing home, waivers usually cover all costs associated with room and board. Under Medicaid policies, seniors must forfeit most of their available income — including Social Security checks — toward their care and can retain only a small monthly personal allowance. Allowance amounts differ by state but typically are less than $75.
“The number one misconception about Medicare is that it will pay for your long-term care,” says McDowell. “Medicare will only pay for a rehabilitative stay after an acute hospitalization.”
Seniors who need care in a skilled nursing facility due to an injury or period of acute illness can receive Medicare coverage to stay in a nursing home for up to 100 days after three nights in a hospital. In addition, the patient must either be making improvements in therapy or require skilled care to prevent a decline in their condition.
A stay in a nursing home comes with the following costs:
Medicare also pays for the entirety of hospice and palliative care in a skilled nursing community.
Medicaid pays for long-term care in a nursing home for seniors who meet the program’s requirements. The requirements are both financial and non-financial and involve an examination of medical criteria, monthly income, countable assets, and gifts made within five years of applying for Medicaid. Once approved, seniors must pay a monthly co-insurance amount based on their income. Medicaid will then cover nearly all associated costs, including a senior’s room and health care services.
Medicare doesn’t pay for non-medical personal services, long-term home care costs, or in-home 24-hour assistance. Medicare covers only in-home care ordered by a doctor such as skilled care from a nurse, occupational therapist, physical therapist, speech therapist or social worker. Similar to Medicare’s nursing home coverage, the program contributes to short-term home health care services. Medicare Part A and Part B entitle seniors to fewer than eight hours of care per day for a 21-day period. A doctor must prescribe this care and recommend a Medicare-certified agency to arrange and facilitate it.
Medicare primarily pays for treatments that help seniors recuperate from an injury or stroke, such as:
Many families hire a home caregiver to give their loved one companionship or to reduce their at-home responsibilities, like chores and meal preparation. In these cases, Medicare can’t serve as a payment method.
Medicare doesn’t pay for these aspects of home care:
Depending on the State Medicaid Waiver program, seniors may hire a caregiver from a Medicaid-approved agency using their Medicaid benefits. The senior must demonstrate a need for medical care equivalent to the level they would otherwise receive in a nursing home. Then the senior must meet financial eligibility requirements and be approved for this type of care.
In most states, Medicaid Home and Community-Based Services (HBCS) waivers provide financial assistance to seniors who require these services:
Low-income seniors who qualify can expect Medicaid to absorb nearly all the costs associated with these services.
Whether your family member currently has Medicaid coverage or thinks they may be eligible someday, public payment sources can significantly alter their senior living options. While many communities accept Medicaid, others don’t, making it crucial to verify this information upfront.
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Determining how Medicaid and Medicare help cover senior living can be a challenge for most seniors and their families. Because requirements vary from state to state, one-size-fits-all advice may not apply to each family’s unique situation. If seniors are eligible for other cost assistance, such as VA benefits, the process can be complicated further.
“Doing your own research and then talking to an expert is so critical,” urges McDowell. “In the same way a financial advisor or accountant would talk to someone about how to reduce their taxes, that’s how an elder law attorney would help someone decide the best option for their long-term care.”
Seniors and their families can use NAELA’s up-to-date database to find a qualified, local elder care attorney. Consider seeking an attorney who specializes in Medicare and Medicaid policies. Get answers to your Medicare questions by calling 1-800-MEDICARE (1-800-633-4227), or by contacting the Centers for Medicare & Medicaid Services office in your region.
Experts in your state or territory can help answer questions about specific Medicaid policies and requirements. Find your state contact below:
Administration for Community Living. Medicaid ‘Buy-in’ Q&A.
American Hospital Association. Medicaid.
Centers for Medicaid & Medicare Services. Eligibility.
Centers for Medicaid & Medicare Services. Home Health Services.
Centers for Medicaid & Medicare Services. Medicaid Spenddown & Extra Help.
Centers for Medicaid & Medicare Services. Medicare Coverage of Skilled Nursing Facility Care.
Centers for Medicaid & Medicare Services. What’s Medicare?
Centers for Medicaid & Medicare Services. Medicaid expansion and what it means for you.
Centers for Medicaid & Medicare Services. Home health services.
Centers for Medicaid & Medicare Services. Parts of Medicare.
Centers for Medicaid & Medicare Services. Skilled nursing facility (SNF) care.
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