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Medicare, Medicaid and the Costs of Residential Care

  • Published: 2012-10-08 (Revised/Updated 2016-10-08) : Author: Wendy Taormina-Weiss : Contact: Disabled World
  • Synopsis: Article examines ways to help finance residential care costs including insurance policies and personal means.

Quote: "Coverage through Medicaid is different in states across America and is usually limited to people who are low-income with few assets."

Main Document

The costs of residential care can be high, but there are a number of methods to help people and their loved ones to pay for the services they need. For the majority of people, finding ways to finance residential care is a huge concern. There are four basic ways the costs might be financed.

Residential Care is a general term used to define a group home, specialized apartment complex or other institution that provides care services where individuals live. The term is used to refer to a range of residential care options including assisted living facilities, board and care homes and skilled nursing facilities. Basically, residential care services provide accommodation and support for people who can no longer live at home.

One of the ways to finance residential care is through a person's own personal resources. Around half of all people pay for these costs out of their own resources. When someone enters a nursing home or other type of care facility, they pay for their care out of their own income and savings. Due to the high costs of these types of care, some people find their personal resources depleted and end up applying for Medicaid.

Another way to pay for residential care is through private insurance. Some Medicare supplement insurance policies or, 'Medigap,' insurance policies may provide a source of payment for residential care. Others may have private, long-term care insurance coverage.

Medicaid is State and Federal coverage that is available to people who are eligible and low-income who are in need of care. Medicaid may provide coverage for people who need care that is above the level of room and board. Medicaid requires a nursing home to be certified.

Under some limited circumstances, Medicare hospital insurance, Part A, will cover the costs for a set period of time of skilled nursing home care. Medicare also requires that a nursing home be certified.

A number of Health Maintenance Organizations or, 'HMO's,' and other coordinated care plans participate in the Medicaid and Medicare programs. The plans many times cover some benefits along with the ones covered by Medicaid and Medicare. HMO's and other coordinated care plans often have experience with coordinating a person's health care. Some HMO's might offer more medical or supportive services, while others may not require a hospital stay prior to approval of a person's nursing home admission.

If a person is enrolled in an HMO or a Competitive Medical Plan (CMP), ask a representative of the plan about coordinating their health care services between the HMO/CMP and the residential care facility. As the representative which facilities the HMO or CMP works with in the person's area. If the person is interested in a specific facility located outside of the area that is served by their HMO, talk about this with the plan representative.

Medicare Residential Care Coverage

Medicare will pay for at least some of the costs of a nursing home for up to one-hundred days during each benefit period for people who meet the coverage requirements and need care in a skilled nursing facility or, 'SNF.' The first day through the twentieth do not have a deductible or a coinsurance amount for the person, although the twenty-first through the one-hundredth days do have a coinsurance amount. The amount is calculated on an annual basis to one-eighth of the annual hospital deductible.

Medicare will only pay for care in an SNF after a person has stayed in a hospital at least three days. Medicare states a person must require daily skilled nursing or skilled rehabilitation services such as physical, speech, or occupational therapy. The therapy services must be provided, performed, and supervised by professionals.

A number of long-term care facilities in America have both Medicare and non-Medicare sections in their facilities. Medicare law does not allow payments for residents in non-Medicare sections of a facility, even if the care a person needs meets the medical standards for coverage. What this means is that for Medicare to pay for a person's stay in a long-term care facility, the person has to be placed in the section of the facility that is certified under Medicare.

Skilled Nursing Facilities (SNF's) try to avoid issues with Medicare and certification standards. They usually work closely with hospital discharge planners and social works to make sure that only people who need skilled services are admitted to skilled portions of the facility. If the SNF determines that a person does not meet their standards for skilled care and then admits the person to a skilled section, it has to provide the person with a, 'Notice of Non-Coverage.' SNF's are required to provide a person with a Notice of Non-Coverage at the time of their admission, any time after their admission, or when the person no longer needs skilled services.

A person or their loved one may appeal a SNF's decision for Non-Coverage. A person should not be charged for services until they receive a formal decision concerning their appeal from Medicare. If; however, Medicare determines it will not cover the person's stay in the SNF, the person or their loved one is liable for the costs of the person's care from the start of the person's stay at the SNF.

It is important to ask to see a copy of a Skilled Nursing Facility's (SNF's) Notice of Non-Coverage. Ask some of the people living in the facility of they have had trouble or misunderstandings with the facility over payments. Ask if the issues were resolved quickly and satisfactorily.

Medicaid and Residential Care Coverage

Medicaid will pay for nursing home costs for people who meet both income and resource eligibility requirements for the program. Medicaid may pay for Skilled Nursing Facility (SNF) care ranging from skilled nursing care that is above the level of room and board to less intensive yet skilled care. It is important to contact your state's Medicaid agency concerning eligibility and information about the program as early as possible if you think you or a loved one needs this type of care. The financial guidelines for Medicaid differ from state to state in America and may be fairly restrictive. Please bear in mind that if either spouse transfers resources such as bank accounts or real estate for less than fair market value within thirty months before a spouse is admitted to an SNF, it may affect the extent to which Medicaid pays for the cost of care for the spouse.

The Prospect of Long-Term Care Insurance

The likelihood of seniors in America having to use long-term care services at some point during their lifetime is increasing. It is important to plan ahead and prepare for your loved one's financial future. The reason it is important is because the majority of home care services, as well as around fifty-percent of SNF services, are paid directly by the person and their family members.

Medicare supplemental insurance or, 'Medigap,' policies commonly cover precious little long-term care unfortunately. Medigap policies will usually only cover things such as coinsurance, deductibles, and long hospital stays. Medicaid will cover nursing home care and some community care benefits including adult day care or home health care. Coverage through Medicaid is different in states across America and is usually limited to people who are low-income with few assets.

One of the options that is available is to consider purchasing long-term care insurance. Long-term care insurance policies cover nursing home care and include home care coverage too. Due to the fact that long-term care policies and their costs can vary widely, even for the same or similar policies, it is wise to shop around and compare prices. Counseling services can help you to pick a policy that is most appropriate for your specific needs. If you are deciding whether or not to purchase long-term care insurance, consider the following questions:

It is important to remember that before you sign a long-term care insurance policy, a loved one should ask if they have a period of time during which they can cancel the policy and receive a refund for the first premium that has been paid. While you shop around for the best long-term care insurance policy it is important to:

If you decide to buy long-term care insurance, examine the financial stability and reputation of the company that is offering you the insurance coverage. The State health insurance commissioner and consumer affairs offices can help you to identify companies that are reliable.

The Costs of Long-Term Care

The simple fact is that long-term care costs around half of all uninsured people in America who are over the age of 65 an average of $200,000. In the year 2009 the national average cost for a private nursing home room was $204 per day, or $74,806 per year. The average cost of a private room in an assisted living facility was $2,714 a month, or $32,572 each year. The average cost for home care providers in America in this year was $25 per hour, with certified care providers costing on average $36 per hour. There is also no way to know how long a person will require care.

The overall costs of long-term care are determined by what it costs where a person receives the care, as well as how long they receive care. The average length of a stay in a nursing home is 875 days, or 2.4 years. Out of the people who were admitted to a nursing home, 55% remained there for at least a year and 21% stayed for more than 5 years. The average length of time a person with Alzheimer's required care was 8 to 10 years, although many people with this diagnosis may remain in a skilled environment for as little as 1 year, or as long as 25 years.

Long Term Care needs are complex. The fact that they are required over a long period of time makes Long Term Care very costly.

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