Does Medicare Pay for Assisted Living? Your Questions Answered

The journey to find the perfect assisted living community for yourself or a loved one can be both exciting and overwhelming. And if you've started your search for assisted living, it's more than likely that you've also started the process of figuring out how to pay for it, too.

At Seniorly, we're often asked about whether or not Medicare covers senior living solutions. To that end, we've put together a comprehensive guide to help you understand what Medicare will - and won't - cover in the world of senior living and care.

Let's start with the basics. Medicare is a government health care program that covers adults that are 65 and older, younger people with long-term disabilities, those with end-stage renal disease (ESRD) (permanent kidney failure requiring dialysis or transplant), and amyotrophic lateral sclerosis (also known as Lou Gehrig's disease or ALS). Those who want to take advantage of Medicare benefits need to enroll in a Medicare plan.

While Medicare is an incredible resource for covering many healthcare-related costs which may be provided in an assisted living facility, it does not cover the cost of long-term care or custodial care which are typically associated with assisted living.

However, there are a few very specific instances in which Medicare may cover the cost of certain types of care within assisted living, such as skilled nursing care, home health care, or rehabilitative services after a qualifying hospital stay.

In order to use Medicare benefits to cover assisted living costs, it's important to understand the specific coverage offered by Medicare Part A, Part B, and Medicare Advantage plans.

Many families inquire about Medicare's coverage of nursing homes, also known as skilled nursing facilities (SNF). These communities are different from a long term care environment (like assisted living) in that they provide a higher level of skilled services and medical care.

This type of care might include round-the-clock supervision by licensed nurses and rehabilitation services for individuals recovering from illness, injury, or surgery. In general, skilled nursing care is often a temporary support to care for an older adult through a specific medical episode, such as recovery from a surgery, stroke or accident.

The good news is that Medicare does cover the cost of a skilled nursing facility (SNF) under specific conditions. Coverage is provided under Medicare Part A if you meet the following criteria:

• You have a qualifying inpatient hospital stay of at least three days before being admitted to the SNF.
• Your doctor certifies that you require daily skilled nursing care or skilled rehabilitation services related to your hospitalization.
• The SNF services are furnished to treat your hospital-related medical condition or an associated complication.
• You enter the SNF within a short time (usually 30 days) of leaving the hospital.

Please note that Medicare covers SNF stays only for a limited number of days and may not cover all associated costs. The coverage for SNF care includes:

• Days 1-20: Medicare covers 100% of the approved amount.
• Days 21-100: You pay a daily coinsurance amount, and Medicare covers the remaining approved amount.
• Days 101 and beyond: Medicare provides no coverage, and you're responsible for all costs.

Keep in mind that these coverage conditions apply for each benefit period. A benefit period starts when you enter the SNF and ends when you haven't received any inpatient hospital or SNF care for 60 days in a row. Once a benefit period ends, you become eligible for a new one, including additional days of SNF coverage.

In order to understand how Medicare can contribute to the cost of assisted living or skilled nursing, you first need to know the basic options of the plan so you can narrow down what is the best option for you. The following options are available:

• Medicare Part A (inpatient hospital insurance/coverage)
• Medicare Part B (outpatient /medical coverage)
• Medicare Part C (Advantage plans)
• Medicare Part D (prescription drug coverage)

Medicare plans coverage

Medicare Part A covers hospitalization. When you enroll in Medicare, you automatically receive Part A. There is no monthly cost, but in 2022 there was a $1,556 deductible.

Medicare Part B covers medical services such as doctor's visits, durable medical equipment, outpatient care, outpatient procedures, rehabilitation, or cancer treatments. You’re never required to enroll in Part B; it is voluntary. You will not have a penalty for enrolling late, when you choose to enroll.  If you have "creditable coverage" from another insurer, such as an employer, you will pay a monthly premium for Part B. In 2022, the standard cost was $170.10. If you're on Social Security, this may be deducted from your monthly check. If you don't enroll and you don't have coverage from another insurer, you may have to pay a penalty if you enroll later.

It’s important to be aware that  Medicare will not cover the costs of chronic conditions that require ongoing long-term care assistance or an assisted-living facility or skilled nursing facility. You will have coverage for a short period if you require rehabilitation after a hospitalization covered under Part A. 

Medicare Part C, known as Medicare Advantage, is an alternative/supplement to traditional Medicare coverage. Coverage includes all of Parts A and B, a prescription drugs plan (Part D), and other benefits. Part C is administered by approved private insurance companies that collect payment from the government Medicare system. Depending on the plan, you may not need to pay an additional cost for Part C. You still need to pay for Medicare Part B. It is not mandatory to enroll in a Medicare Advantage plan, but for many people, these plans can be a lower cost than paying separately for Parts A, B, and D. Be aware, also, that some Medicare Advantage plans refund all or part of your Part B premium. 

In choosing between “Original Medicare” (Parts A and/or B), you should be aware that most Medicare Advantage Plans limit the providers you can choose from. If this is a concern for you, be sure to review the list of providers the plan you are considering has enrolled. 

Medicare Part D, known as the prescription drug benefit, is also provided by private insurance companies. This is optional and is normally included in any Medicare Advantage plan. Depending on the plan, you may have to meet a yearly deductible before your plan begins paying for your eligible drug costs. Some Part D plans have a co-pay.

Medicare Supplement, also referred to as Medigap, covers health care costs that are not already covered by original Medicare. Medigap plans have varying premiums and rarely include extra benefits, in contrast to Medicare Advantage plans. 

A key distinction to make as you evaluate any assisted living cost is the difference between standard living costs and healthcare-related services, as Medicare typically only covers specific healthcare costs. As you explore assisted living costs structures, you'll likely notice that most assisted living facilities will separate these two categories of expenses.

Standard living costs typically include support for activities of daily living and personal care services, room and board, meals, housekeeping, and general activities. Medicare does not cover these costs.

On the other hand, there are certain healthcare-related services which are offered by many assisted living communities, which include things like skilled nursing, therapy, or home health care, which Medicare has designated coverage for under very specific conditions. In this respect, Medicare might cover skilled nursing care within an assisted living facility, but not the cost of the assisted living itself.

By clearly separating the expenses of daily living from the eligible healthcare services, assisted living facilities can help residents and their families navigate the complex process of utilizing Medicare and identify potential opportunities for cost savings.

It's crucial to thoroughly review the fee structure and service offerings of a facility to determine which costs will fall under Medicare's purview and which will require alternative funding sources.

Not everyone is eligible for Part A & B. This can be solved by paying premiums for Part A or Part B. You can enroll in Part A and B at www.medicare.gov.

Qualifying seniors who are 65 or older may qualify to have premium-free Part A.  This health insurance can help protect you from the high costs of medical expenses.  Everyone pays taxes throughout their lives, and if you’ve worked long enough (around 10 years), then you are likely to be eligible for this benefit at age 65. You will need to sign up for the Medicare program at your local Social Security office as soon as possible after you turn 65.

If you have been receiving Social Security benefits or Railroad Retirement Board disability benefits for at least two years, then you may qualify to receive premium-free Part A.  You also may be eligible for both if you have not yet filed for them yet.  

Finally, there are people who are not yet 65 but have certain disabilities that cause them to need special care such as kidney transplant patients, those who require dialysis, or have been diagnosed with Lou Gehrig's disease (ALS), may be eligible for Medicare without having to pay a monthly premium.

Medicare Parts A and B are not comprehensive. Medicare Advantage plans may offer extra benefits that Original Medicare does not cover, so it's important to consider this when purchasing a Part C plan for yourself. Items and services not covered by Medicare Parts A & B

• Routine foot care
• Acupuncture
• Most Dental Care
• Dentures
• Cosmetic Surgery
• Hearing Aids and Hearing Aid Exams
• Routine Eye Exams

If you are currently receiving Social Security benefits, enrollment is automatic. If not, you need to sign up three months before your 65th birthday. By enrolling before your birthday month your benefits will start the first day of your birth month. There are three ways to enroll:

• Applying online at Social Security's website
• Calling Social Security at 1-800-772-1213
• Visiting a local Social Security office in person

The online application is short and can take approximately 10 minutes. If you would rather visit an office in person, consider making an appointment. 

The initial enrollment period for Original Medicare is from Oct. 15 to Dec. 7. Any changes that are made during this period will begin on Jan. 1 of the next year.

Medicare Advantage enrollment is from Jan. 1 to March 31. Any changes that are made during this period will take effect on the first of the month after the plan receives your request.

Medicare is partially funded by Social Security and also the taxes on your income. Part A is free for most people who are over the age of 65 that have worked and paid Medicare taxes. Part B is not free and has a standard premium that must be paid.

According to medicare.gov, Medicare costs for 2023 are as follows:

Medicare part A

• Part A premium: Most people don't pay a monthly premium for Part A (sometimes called "premium-free Part A"). If you buy Part A, you'll pay up to $506 each month in 2023. If you paid Medicare taxes for less than 30 quarters, the standard Part A premium is $506. If you paid Medicare taxes for 30-39 quarters, the standard Part A premium is $278.
• Part A hospital inpatient deductible and coinsurance: You pay:
  • $1,600 deductible for each benefit period
  • Days 1-60: $0 coinsurance for each benefit period
  • Days 61-90: $400 coinsurance per day of each benefit period
  • Days 91 and beyond: $800 coinsurance per each "lifetime reserve day" after day 90 for each benefit period (up to 60 days over your lifetime)
  • Beyond lifetime reserve days: all costs

Medicare part B:

• Part B premium: The standard Part B premium amount is $170.10 in 2023.  (or higher depending on your income).
• Part B deductible and coinsurance: $226. After your deductible is met, you typically pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you're a hospital inpatient), outpatient therapy, and durable medical equipment (DME).

Medicare part C:

• Part C premium: The Part C monthly premium varies by plan. Compare costs for specific Part C plans.

Medicare part D:

• Part D premium: The Part D monthly premium varies by plan (higher-income consumers may pay more). Compare costs for specific Part D plans.

Medicare is a federal health insurance program that is run by the federal government. It mainly focuses on and provides coverage to individuals who are 65+ or have a disability, no matter what your income. There is no means test for Medicare. 

Medicaid is an assistance program run by both state and federal governments and provides health coverage if you have a very low income. Medicaid does not pay money to you; instead, it sends payments directly to your health care providers. Eligibility is largely determined by income and resource level. Medicaid programs offer a wider range of health care services compared to Medicare.