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Medicare, Medicaid, and Memory Care: Payment Options for Seniors and Families

By Kara LewisFebruary 12, 2021
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When it comes to paying for memory care, many older adults and their families aren’t aware of all available options. The confusion surrounding both state and federal programs, as well as services they encompass, can lead to a common question: Do Medicare and Medicaid cover memory care facilities?

“Even among attorneys, it can be confusing,” says Wendy Shparago Cappelletto, an elder law attorney in Chicago who has been practicing for 30 years. “I think the general public and many families probably don’t know how to use these important resources.”

Read on to learn eligibility guidelines for Medicare and Medicaid, demystify the differences between the two, and discover how these programs may help you pay for memory care.

Medicare vs. Medicaid: What’s the difference?

Simply put, Medicare is a federal health insurance program. In 2019, 18% of the U.S. population benefited from Medicare coverage. The program has three parts, all of which cover different services: hospital care, medical care —such as doctors’ visits and preventive care— and prescription drug coverage.

Medicaid, a joint state and federal program, differs from Medicare as it’s based largely on income, rather than age. As the largest health coverage source in the U.S., Medicaid covers more than 72 million Americans. Due to variations in state guidelines, Medicaid may cover more or fewer services depending on where recipients live.

Medicare

What it covers– Medicare Part A covers inpatient and hospital visits.

– Medicare Part B covers medically necessary services and preventive care.

– Medicare Part D covers prescription drugs.

– Hospital services

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– Doctor’s visits

– X-ray and lab services

– Home health services

– Many types of long-term care

Who is eligible– Adults 65 and older

– People who have a disability

– People with end-stage renal disease

– People considered low-income  based on state-specified guidelines

– People considered medically needy, or those who have health needs that may result in significant expenses

Depending on your state of residence, Medicaid may or may not cover additional services, such as prescription drugs and physical or occupational therapy.

The eligibility guidelines for Medicaid are much more complex than those for Medicare, making an elder care attorney a trusted and valuable resource when navigating Medicaid coverage. Income requirements, assets, and transfers of money or assets to another party can all affect your Medicaid eligibility, and these regulations vary in each state.

“With Medicaid, people really have to understand that it’s a need-based program with strict rules. There are certain allowable transfers,” says Cappelletto. “People sometimes think, ‘Why can’t I just give my house to my kid?’ They make mistakes all the time, often unintentionally, and need to make sure to get proper advice.”

To meet income standards for Medicaid, individuals typically need to possess no or few assets. Though the asset limit can vary, in most states, those eligible for Medicaid must have $2,000 or less in assets, including stocks, bonds, and other liquid assets. A primary residence and one car of market value are considered “non-countable” assets for Medicaid.

Does Medicare or Medicaid cover memory care facilities?

If you’re considering dementia care for a loved one, you might be wondering whether Medicare or Medicaid can offset memory care costs. While Medicare may cover short-term care related to dementia, only Medicaid provides coverage for long-term memory care. Read on to learn the distinctions between these two programs.

What dementia care services does Medicare cover?

Medicare typically doesn’t pay for memory care. However, it may pay for a short-term stay in a skilled nursing community, often referred to as a nursing home.

“Typically, Medicare will cover extended treatment for something like a fall, serious wound care, an infection, or physical therapy—something that requires rehab,” Cappelletto explains.

Medicare will pay for a maximum 100-day stay, with the level of coverage decreasing at the 20-day mark. While this may help treat injuries spurred by dementia safety risks, Medicare doesn’t provide long-term memory care coverage.

What dementia care services does Medicaid cover?

Unlike Medicare, which primarily covers short-term medical solutions, Medicaid can be a payment solution for seniors and families considering memory care. In fact, in 2018, Medicaid paid for 57% of long-term care services—including memory care—according to the AARP Public Policy Institute.

“As long as a memory care community accepts Medicaid, it pretty much covers total room and board at the facility,” says Cappelletto. Additionally, Medicaid will cover all or most of a memory care resident’s medical treatments.

While Cappelletto says that most memory care facilities accept Medicaid as a payment method, there is a limit to how many Medicaid beneficiaries communities can accept as residents. In most cases, facilities will reserve a certain number or percentage of units for older adults on Medicaid. Sometimes, this can mean that a senior has to wait longer to move into the community. If you’re planning to cover dementia care costs with Medicaid, let communities know upfront so you’ll have an accurate sense of wait times.

Though Medicaid can seem like a simple way to finance memory care, Cappalletto urges caregivers and families to ask community staff several key questions about Medicaid memory care coverage:

  • Can an individual become a resident and move in while “Medicaid pending?” This term refers to people who have applied for Medicaid, but who have not yet been approved to receive benefits.
  • Will the community expect private —or out-of-pocket— pay for any amount of time?
  • What legal protections are in place to ensure the community continues to accept Medicaid in the future?
  • How many beds does the community have certified for residents receiving Medicaid?
  • Will my senior loved one have to wait to move in due to availability of Medicaid-certified beds?

Find an elder law attorney to answer Medicare and Medicaid memory care questions

Typically, Medicaid covers most or all memory care costs. In contrast, Medicare doesn’t pay for memory care, but may pay for medical costs associated with dementia, like hospital stays, preventative care, prescription drugs, and medical equipment. Consider these general rules to be a guide—but know that they can vary depending on your location, income, and several other highly individual details.

Consulting with an elder law attorney is a good idea if you’re considering using Medicare, Medicaid, or both programs to pay for dementia care. The National Academy of Elder Law Attorneys (NAELA) maintains a state-specific database to help you find legal assistance near you.

Sources:

AARP Public Policy Institute. “Long-Term Services and Supports.”
https://www.aarp.org/content/dam/aarp/ppi/long-term-services-and-supports.doi.10.26419-2Fppi.00079.001.pdf

Centers for Medicare & Medicaid Services. “What’s Medicare?”
https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare

Centers for Medicare & Medicaid Services. “Eligibility.”
https://www.medicaid.gov/medicaid/eligibility/index.html

Elflein, John. “Percentage of U.S. Americans covered by Medicare 1990-2019.”
https://www.statista.com/statistics/200962/percentage-of-americans-covered-by-medicare/

Author
Kara Lewis

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