Health care at any level is expensive, but at the top of the list is nursing home care. The national annual median cost of care for a resident in a private room in a nursing home is now $116,800, according to Genworth’s 2023 Cost of Care Survey. A semi-private room clocks in at a similarly staggering $104,025 per year.
Footing the bill for nursing home costs lies beyond most people’s financial reach.
“Nursing homes are one of most expensive levels of care, and most people don’t have that money,” says Amie Clark, a senior care expert and creator of AgingToday.com, a company specializing in geriatric care management and senior housing advisory.
There is, however, one option for older adults who don’t have the funds to pay for a nursing home: Medicaid.
Does Medicaid Pay for Nursing Homes?
The short answer is yes. Medicaid, a federal health insurance program that’s administered at the state level, kicks in when there are no other options available to a senior who needs nursing home care.
“Medicaid was built to be the payer of last resort for people in poverty,” says Chris Orestis, a Maine-based senior care advocate and expert in retirement, long-term care and specialty senior living funding solutions.
Data from KFF, an independent source of health policy research, shows that Medicaid is the primary payer for nursing home care, covering 62% of nursing home residents.
[READ: Nursing Homes vs. Assisted Living.]
Does Medicare pay for nursing home care?
What about Medicare paying for nursing homes? For some seniors, Medicare — the federal health insurance program designed for adults age 65 and older and some younger individuals with qualifying disabilities — will cover a portion of the costs of nursing home care, explains Kelsey Simasko, an attorney with Simasko Law in Mount Clemens, Michigan.
While it won’t pay the tab for long-term nursing home care, Medicare does cover rehab provided in a nursing home for 20 days. It will also pay for an additional 80 days of rehab, as long as the patient is consistently improving, Simasko notes. If the patient declines or plateaus, those rehab days are turned off. Once the rehab payments run out, Medicare will no longer cover the individual’s care. So, if you still need nursing home care, you’ll have to pay for it out of pocket.
[READ: How to Pay for Senior Living]
How to Get Medicaid to Pay for Nursing Home
Securing Medicaid coverage for nursing home care takes some effort. For starters, there are strict asset requirements you must meet before you can apply for Medicaid, Simasko says.
For a single person, your assets can’t be greater than one house, one car and $2,000 or less in all accounts combined. For a married couple, assets can’t exceed one house, one car and approximately $3,000 in all accounts.
If you have more than that, you likely won’t qualify for Medicaid benefits, Simasko says, unless you go through an involved spend-down process to reduce your assets. It can be a complex process, though, especially because the state will review your assets and income over the prior five years to evaluate your eligibility. This is called the “look back” period. If Medicaid determines that you moved some assets in violation of its rules, you may lose some or all of your nursing home coverage. So, it’s a good idea to work with an elder law attorney to make sure you’re doing it right.
Once you qualify, Medicaid will typically cover these costs:
— General health coverage
— Nursing services
— Room and board
— Rehabilitative services
— Medical social services
— Meals
— Other care in an approved nursing home
Keep in mind that once you qualify for Medicaid, you lose the capacity to choose where you live, according to Orestis, who also serves as president of the retirement consultancy Retirement Genius.
“You become a ward of the state,” he explains.
That means you have no say over which nursing home or which room you’ll have. You’ll need to take what you’re offered, which is typically not high-end or luxury senior living.
[READ: Does Medicaid Pay for Assisted Living? What You Need to Know]
Who Is Medicaid Nursing Home Coverage For?
Nursing home care is designed for individuals with medical conditions or physical disabilities that are too severe for them to live at home but not acute enough to require hospitalization.
In many cases, nursing home care involves rehabilitation services, such as physical therapy, occupational therapy and other services designed to help restore some level of mobility and independence.
To qualify for this type of care with Medicaid, the payer requires proof that there’s a medical need. Different states use different criteria to make this determination. Their assessment may include measuring your ability to perform activities of daily living, such as bathing, dressing and going to the bathroom.
You’ll also have to meet income and asset requirements to qualify. Some states may have higher Medicaid income guidelines for nursing care or a spend-down program that allows you to deduct certain medical expenses to help you meet income qualifications.
Are There Limits to What Medicaid Covers?
Although Medicaid can be a lifeline for seniors in nursing homes, there are some limits to what it covers. For example, it pays only for room, board and nursing care. It doesn’t cover amenities or non-medical services.
Medicaid also doesn’t pay for medical services rendered outside the nursing home, such as going to a doctor or a specialist’s office. Look to Medicare Part B to cover most of those costs.
Medicaid benefits can vary by state, so be sure you understand what’s included and not included before seeking care outside of the nursing home.
Work With a Medicaid Expert
Applying for Medicaid coverage can be tricky, and it’s best to seek out a local expert who can help you meet all the necessary requirements in your state.
Even if you do a spend-down, there are ways to exclude some assets from the Medicaid qualification assessment. For example, if you have a spouse, both of your incomes and assets will be considered during the eligibility assessment. However, you can usually set aside a certain amount of income and assets for your spouse to keep, and this will not be counted when you apply for Medicaid. You can also typically keep a small amount of your income for a personal allowance, but this varies by state. The rest of your income must be paid to the nursing home.
If you own your home, talk to an elder law attorney to learn how it will affect your Medicaid eligibility and coverage, because home equity may count as an asset. When you no longer need long-term care, or when you are deceased, such assets may be used to repay Medicaid for care that it covered for you, which means you would not be able to leave your home or other assets to your heirs.
Medicaid should have no bearing on the quality of care you or your loved one receive.
“The people providing the care probably have no idea what the payer source is,” Clark says. “So once you’re in there, I don’t think it has any effect on the kind of care they give.”
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Medicaid Coverage for Nursing Home Care originally appeared on usnews.com
