Does Medicare Pay For Assisted Living?

Assisted living can be an ideal option for people who need assistance with everyday activities but do not require full-time skilled nursing. There are more than 800,000 assisted living residents in the United States. The seniors who reside in these facilities receive help with bathing, walking, and other daily activities such as dressing, eating, and/or toileting. Staff members also help residents with their medications and provide limited medical care when needed. 

On average, assisted living costs $4,200/month, based on Caring.com's proprietary senior living data. It can, therefore, be quite a challenge for seniors to find the resources to pay for these services. Seniors may wonder if their Medicare coverage will help with any of the expenses of assisted living — although assisted living isn't covered under Medicare at this time, there are other resources that can help older adults afford the care they need.

This guide explores the roles of Medicare, Medicaid, and other forms of financing available to help you or your loved one pay for assisted living.

 

Independent living is intended for older adults in good health who may want fewer responsibilities and prefer to receive help with minor tasks like housekeeping and meal preparation. In contrast, assisted living communities assist residents who are still in generally good health but need help managing their personal care. 

The staff members at assisted living facilities are available 24/7 to help residents with activities of daily living such as bathing, dressing, and toileting. On-site staff can also help with transportation and housekeeping but do not provide ongoing skilled nursing. When residents' needs can no longer be met by assisted living facility staff, they often transfer to skilled nursing facilities or nursing homes.

Medicare is a health insurance program provided by the U.S. government for seniors aged 65 and older and some younger people with qualifying medical conditions or disabilities. Although it doesn't pay for assisted living, this service covers medical expenses for seniors. Medicare is divided into sections that address different areas of health care:

• Medicare Part A/Hospital Insurance: Hospital stays, limited nursing home care, hospice care, and some home health care costs
• Medicare Part B/Medical Insurance: Preventative care, doctors' office visits, home health care, outpatient care and medical supplies
• Medicare Part D/Prescription Drug Coverage: Prescription drugs and vaccinations

Medicare Part A is funded by taxes on income, and most people over 65 can receive this insurance at no cost. If a senior or their spouse has worked for a certain amount of time and paid taxes, they should qualify. This coverage may start automatically for seniors already receiving Social Security payments. 

To find out whether or not you will automatically receive coverage or to learn about additional ways you can enroll in Medicare, visit the USAGov Medicare webpage.

Individuals must choose Medicare Part B, the insurance for doctors' office visits, during enrollment to avoid paying an extra penalty for adding it later. After the initial enrollment, Medicare coverage choices can be changed at certain times of the year without a penalty.

Medicare Part D, an optional prescription drug program, carries a yearly cost of a few dollars to a couple of hundred dollars, based on income. Declining a drug benefit plan upon Medicare enrollment can add a permanent penalty charge to Medicare payments going forward.

People over 65 can also choose to enroll in Medicare Advantage Plans offered by private providers, as well. These health insurance plans, administered by insurers or hospital systems, are also referred to as Medicare Part C. Medicare Advantage Plans include all the services provided by Medicare Part A and B, and some also cover dental and vision costs. Not all plans include prescription drug coverage, so seniors should examine Medicare Advantage Plans carefully before enrolling.

For seniors in assisted living, Medicare continues to cover medical care and the cost of medical supplies and prescription drugs. However, Medicare doesn't pay for long-term personal care assistance for people with chronic illnesses and disabilities. Medicare considers this type of care custodial care. Most assisted living services provided to residents are a type of custodial care, including assistance with eating, bathing, dressing, toileting, and transferring in or out of a bed or chair.  

There are rare exceptions to this rule, and guidelines may vary by state for some Medicare Advantage programs. We'll explore this in more detail, along with other financial aid options that can make assisted living more affordable.

• Medicaid: As a joint federal and state health care program, Medicaid eligibility and benefits vary by state. All states cover some form of personal care assistance, but not all areas cover it when provided in assisted living residences. Room and board are not covered.  
• Long-Term Care Insurance: This insurance covers costs associated with long-term care. Policies vary but typically pay up to a set daily amount for personal care services in specific settings, which may include an assisted living facility. 
• Reverse Mortgages: People who have sufficient equity in their homes can use reverse mortgages to borrow against their equity. However, if they reside in a facility for more than 12 consecutive months, the home will likely have to be sold, so the reverse mortgage can be repaid unless a joint borrower continues to live in it.  
• Veterans Benefits: Sick or disabled veterans can receive assisted living care coverage through Veterans Affairs (VA) if considered necessary, and it is available nearby. The veteran must be currently enrolled in VA health care and meet all other eligibility criteria to qualify. 
• Other Funds: Assisted living can be paid for through savings, income, retirement, or other sources.

Another option for seniors who need assistance is home health care. When this service is ordered by a doctor in place of in-patient treatment, it’s covered by Medicare. Speech, occupational and physical therapy can often be provided at home instead of in a care facility. Home health care coverage is usually temporary, but it may become long-term for seniors as an alternative to full-time care in a nursing home.

Long-term care insurance can fill the gap in paying for both nursing home care and home health care. Insurers may cover only certain types of nursing home facilities and home health care providers, and some policies exclude pre-existing conditions. That’s why it’s vital to do your homework and choose wisely among providers licensed by the state where you live.

Seniors with disabilities and chronic health problems that require around-the-clock care may qualify for Medicare nursing home coverage for up to 100 days. However, Medicare will only cover skilled nursing needs, and it isn't available for assisted living facilities that provide help with everyday activities.

Seniors with low incomes and few assets may qualify for additional nursing home care through Medicaid. Initially, most seniors pay out of pocket for nursing home care until their resources run out. After that, Medicaid may eventually fill the gap, depending on each person's income and assets.

For married couples, if one spouse is ill, they are allowed to assign their assets to the other spouse so they can qualify for Medicaid. Because of this policy, a married couple doesn't have to become completely impoverished before qualifying for help.

Another option for seniors who need assistance is home health care. When a doctor confirms through a face-to-face encounter that a patient needs specific services and is homebound, these services are eligible for coverage. However, the agency providing care must also be Medicare-certified. Speech, occupational, and physical therapy can often be provided at home instead of in a care facility. 

Home health care coverage is usually temporary but may become long-term for seniors as an alternative to full-time care in a nursing home. However, Medicare doesn't cover more than intermittent skilled nursing care. If needed 7 or more days a week or for more than 8 hours each day over a period of 21 days, patients will become ineligible for continued Medicare coverage. 

Long-term care insurance can fill the gap in paying for both nursing home care and home health care. Insurers may cover only certain types of nursing home facilities and home health care providers, and some policies exclude pre-existing conditions, making it crucial to research available services among providers licensed by the state where you live.

Everyone who has paid Medicare taxes qualifies for Medicare health insurance coverage when they turn 65. Younger people with disabilities or certain medical conditions may also qualify, and individuals who have not paid Medicare taxes may be eligible to buy Medicare Part A coverage

Seniors who sign up for Social Security at least four months before turning 65 become automatically enrolled in Medicare Part A and Part B. Part A, which covers hospitalization, is free for these individuals. 

Part B offers routine medical care coverage, with coverage costs determined by income. Most people will pay the standard premium for Part B ($174.70 as of 2024), which is deducted from their monthly Social Security benefit. Income-based increases in the cost of Part B begin for incomes over $103,000 for individuals and $206,000 for couples. 

In the three months before turning 65, seniors who do not qualify for automatic enrollment can enroll in Medicare parts A and B online. Part A may still be free, depending on the individual or spouse's work history. If sufficient Medicare taxes have not been paid, an individual will have a monthly premium of either $278 or $505 for their Part A coverage. They will also have to pay a monthly premium for Part B, which will depend on their income. 

Both Part A and Part B are required before joining a Medicare Advantage or Part C plan. Part A and/or Part B are required to apply for Medicare Part D. Stand-alone drug plans are available, and some Medicare Advantage Plans also offer prescription drug coverage. To compare prescription drug plans and Medicare Advantage plans side-by-side, visit the Medicare prescription drug page.

While Medicare doesn't pay for assisted living, it does cover limited skilled nursing, rehabilitative services, and home health care for those who qualify. Many seniors in assisted living use alternative sources of funding for their care, such as Medicaid, long-term care insurance, veteran's benefits, or a reverse mortgage.

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