Medicare vs. Medicaid: Is Assisted Living Covered?

Danny Szlauderbach
By Danny SzlauderbachJune 27, 2020
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It’s no secret that assisted living costs can stretch any family budget. The median cost for assisted living in 2019 was $4,051 per month, according to Genworth’s Cost of Care Survey. However, Medicare and Medicaid may help with certain health care costs.

Medicare: government health insurance for seniors

Medicare is national, government-funded health insurance that all Americans are eligible for when they turn 65. In some cases, disabled people under 65 can also enroll in Medicare with no premiums.

Medicare has four components:

  1. Part A, Hospital Insurance
    This helps pay for inpatient care in a hospital or skilled nursing facility (following a hospital stay), as well as some home health care and hospice care.
  2. Part B, Medical Insurance
    This helps pay for doctors’ services and many other medical services and supplies that are not covered by hospital insurance.
  3. Part C, Medicare Advantage
    These plans are available in many areas. People with Medicare Parts A and B can choose to receive all of their health care services through one of these provider organizations under Part C.
  4. Part D, Prescription Drug Coverage
    This helps pay for medications doctors prescribe for treatment.

Does Medicare pay for assisted living?

Medicare covers only short-term, non-custodial care, so you can’t use Medicare to pay for long-term care like assisted living or a residential care home. However, Medicare may cover some of the costs of health care received while in an assisted living facility.

Here’s the short-term care that Medicare covers:

  • 100% of the first 20 days in a Medicare-approved skilled nursing facility after a three-night minimum inpatient hospitalization
  • 80% of days 21-100 in a Medicare-approved skilled nursing facility
  • Short-term rehabilitation care at a nursing home after a hospitalization
  • Rehabilitation services and in-home therapy in some cases

Not all three-night hospital stays automatically qualify for inpatient rehabilitation, and you’re not guaranteed a full 100 days even if you do qualify. Talk to a doctor, social worker, discharge planner, or case manager at the hospital to help determine if rehabilitation is the next best step for your loved one.

If you have private health insurance, such as Blue Cross or Aetna, you will need to contact the insurer directly to determine the amount of skilled nursing coverage included in the policy. If you’re having difficulties determining coverage, ask the social worker, discharge planner, or case manager at the hospital to assist you.

Medicaid: government health care assistance for low-income seniors

The leading government-assistance program for long-term care, Medicaid is essentially a safety net for Americans who can’t afford the care they need without help. Provided cooperatively by the federal government and states, the majority of Medicaid funding comes from the U.S. government.

Medicaid eligibility varies by state, but the federal government requires each state to cover certain populations. People with disabilities are eligible in every state. Seniors who don’t have a disability but are looking to finance long-term care with Medicaid may need to show both that care is needed and that their income won’t cover the cost of care.

Here are the requirements for Medicaid eligibility:

  1. You must allocate almost all of your existing assets toward medical care
  2. You must have a low income or medical-related care expenses that exceed your income
  3. You must reside in the state where you’re receiving benefits
  4. You must be a permanent resident of the United States or have U.S. citizenship

Keep in mind that a married couple doesn’t need to have exhausted all financial resources before qualifying for Medicaid.

Each state has its own guidelines, so it’s important to contact a state medical assistance office for more details. Or, you can contact an elder law attorney who can walk you through the nuances of a Medicaid application.

Some states also have “buy-in” programs that allow people with disabilities who have incomes above regular Medicaid limits to enroll in the Medicaid program.

Does Medicaid pay for assisted living?

Like Medicare, Medicaid acts as health insurance but it covers nearly every type of health care cost, including some long-term care costs. While each state has its own rules and regulations, Medicaid pays some costs for assisted living communities and in-home care in most states.

Here’s what Medicaid may cover:

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  • Long-term care services including assisted living, residential care homes, and nursing home care
  • Inpatient and outpatient hospital services not covered by Medicare
  • Home health services
  • Prescription drugs
  • Physical, occupational, or speech therapy
  • Eyeglasses and hearing aids
  • Respite care and other in-home long term care
  • Personal care services
  • Hospice

Medicaid also may help cover costs if you can’t pay the Medicare co-pay for days 21-100 during a hospitalization, or if you can’t pay for long-term care in the skilled nursing facility after rehabilitation is complete.

Finding assisted living that accepts Medicaid

If you’re looking for Medicaid-approved assisted living communities, first review information online about Medicaid Waiver programs available in your state.

You can also contact your local Medicaid office, Department of Aging, Department of Elder Affairs, or local social service agency. Be sure to request a list of all Medicaid programs in your state that your loved one may be eligible for.

Here are some other questions to keep in mind when speaking with an agent:

  • What is the process for applying for Medicaid?
  • Can you assign a case worker to assist with the application process?
  • Is there a waiting list? If so, how long is the waiting list? Are they currently adding individuals to the waiting list?
  • What are the income and asset qualifications for Medicaid Waiver programs?
  • Are there any programs that would provide services in your loved one’s home?
  • Are there any programs that would provide services in assisted living?

If your loved one is currently in a skilled nursing facility under Medicaid, ask about Medicaid’s program called Money Follows the Person. It provides states with federal funding to help seniors move out of facilities like nursing homes and back into their own home or a loved one’s home.

Reviewed by:

Samantha L. Shepherd is a certified elder law attorney and former president of the Missouri chapter of the National Academy of Elder Law Attorneys (NAELA). She is the managing attorney of Shepherd Elder Law Group in Overland Park, Kansas, and Hutchinson, Kansas.

Danny Szlauderbach
Danny Szlauderbach