Does Medicare pay for nursing homes?

The Truth About What Is (and Is Not) Covered

One of the most common and costly misunderstandings about senior care is that Medicare pays for nursing home stays. Many families assume that after a lifetime of paying into Medicare, it will cover long-term care when they need it. This is not true.

Understanding what Medicare actually covers, and what it does not, can save families from financial surprises during an already difficult time.

The Short Answer

Medicare does not pay for long-term nursing home care.

Medicare is health insurance. It covers medical treatment, hospital stays, and doctor visits. It was never designed to cover the cost of living in a nursing home for months or years.

However, Medicare does cover short-term stays in skilled nursing facilities under very specific conditions. This is where the confusion often starts.

Medicare Does Cover Skilled Nursing Facility Care

Medicare Part A will pay for a stay in a skilled nursing facility (SNF), but only when all of these conditions are met:

1. You had a qualifying hospital stay of at least 3 consecutive days as an inpatient (not including the discharge day)

2. You enter the skilled nursing facility within 30 days of leaving the hospital

3. You need skilled care, like physical therapy, IV medications, or wound care

4. A doctor orders the skilled nursing care

When these conditions are met, here is what Medicare pays:

Days 1 through 20: Medicare pays 100% of approved costs

Days 21 through 100: You pay a daily coinsurance (about $204 per day in 2024). Medicare pays the rest.

After Day 100: Medicare pays nothing. You pay 100% of costs.

Important: Most people do not stay the full 100 days. Medicare coverage ends when you no longer need skilled care or are no longer making progress in rehabilitation. If your loved one still needs help with activities of daily life (ADLs), but is not getting better the next step would be to move them to assisted living, a nursing home, or back home with in-home help.

What Counts as a “Qualifying Hospital Stay”

This trips up many families. To qualify for Medicare coverage in a skilled nursing facility, you must have been admitted to the hospital as an inpatient for at least 3 days.

Observation status does not count.

Many patients are placed in “observation status” in the hospital. They are in a hospital bed, receiving care from doctors and nurses. It looks and feels like being admitted. But observation status is technically outpatient care, and those days do not count toward the 3-day requirement.

Always ask: “Am I being admitted as an inpatient, or am I in observation status?” This question can have huge financial consequences.

“Families are often shocked to learn their loved one was never actually admitted. They spent four days in the hospital, but it was all observation. Then Medicare will not cover the rehab stay. It is one of the most frustrating gaps in the system.”

– Lori Maloney, Umbra Health Advocate

Medicare Does Not Pay for Daily Living

Since Medicare is only health insurance, it only pays for medically necessary costs. Medicare does not pay for:

• Long-term custodial care (help with daily activities like bathing, dressing, and eating)

• Assisted living facilities

• Living in a nursing home permanently because you can no longer care for yourself

• Room and board for stays that are not medically necessary

• Personal care services when you do not need skilled medical care

Once you no longer need skilled nursing or therapy, Medicare stops paying. Even if you still cannot care for yourself at home.

The Difference Between Skilled Care and Custodial Care

This distinction is critical to understanding Medicare coverage.

Skilled care requires trained medical professionals. Examples include:

• Physical, occupational, or speech therapy

• Wound care and dressing changes

• IV medications or injections

• Monitoring of unstable medical conditions

• Post-surgical care

Custodial care is help with daily activities or ADLs. Examples include:

• Bathing and grooming

• Getting dressed

• Eating meals

• Using the bathroom

• Moving around safely

Who Pays for Long-Term Nursing Home Care?

If Medicare does not cover long-term stays, how do people pay? There are really only a few options:

Private Pay:

Many families pay out of pocket using savings, retirement accounts, or by selling assets like a home. Nursing home costs average $7,000 to $13,000 per month depending on the state, so this can drain savings quickly. See our Guide to Long-Term Care Costs by state for the average cost in your state.

Long-Term Care Insurance:

If your loved one purchased a long-term care insurance policy years ago, it may help cover nursing home costs. These policies vary widely in what they cover and how much they pay.

Medicaid:

Medicaid is the largest payer of long-term nursing home care in the country. But it is a needs-based program. To qualify, you must have very limited income and assets. Most people only become eligible after they have spent down their savings. Check out our Medicaid Guide by State for Long-Term Care to see the requirements for your state.

VA Benefits:

Veterans may qualify for benefits that help pay for nursing home care. The VA operates its own nursing homes and also has programs that can help cover care in community facilities.

“Most families do not realize this until they are in crisis. They assume Medicare will cover Mom’s nursing home, and then they discover it does not. The spend-down to Medicaid eligibility can be devastating if you have not planned ahead.”

– Lori Maloney, Umbra Health Advocate

Getting Medicaid to Pay for Long-Term Care

Medicaid is the largest payor for nursing homes and over 60% of those in a nursing home for 4 or more years end up on Medicaid. Here is how it often works:

1. A senior is hospitalized (as an inpatient) for a medical event like a fall, stroke, or surgery

2. They are discharged to a skilled nursing facility for rehabilitation

3. Medicare pays for the first 20 days, then you pay coinsurance through day 100

4. The person improves but cannot safely return home

5. Medicare coverage ends because skilled care is no longer needed

6. The family must now pay privately or apply for Medicaid

Applying for Medicaid while in a nursing home is common, but it requires meeting strict financial requirements. Many families need to “spend down” assets before their loved one qualifies.

Do Medicare Advantage Plans pay for Nursing Homes?

Like Medicare, Medicare Advantage plans do not pay for long-term nursing home stays. They do pay for skilled nursing facilities provided the patient meets the criteria outlined earlier. Medicare Advantage plans (Part C) must provide at least the same skilled nursing coverage as original Medicare. Some plans offer additional benefits, but they cannot reduce the basic coverage.

However, Medicare Advantage plans often have network restrictions. Your loved one may need to use a skilled nursing facility that is in the plan’s network, or coverage may be reduced or denied.

Always check with your specific plan about coverage rules, prior authorization requirements, and network facilities.

Planning for Nursing Home Costs

Understanding Medicare’s limits now can help you plan before a crisis:

• Talk to a financial advisor about long-term care planning

• Consider long-term care insurance if you are in your 50s or early 60s

• Understand Medicaid eligibility rules in your state

• Know what resources are available before you need them

• Have family conversations about care preferences and finances

For a deeper look at planning for long-term care costs, read our guide to Long-Term Care Costs.

Get Help With Nursing Home Placement and Costs

Medicare coverage rules are complicated, and the stakes are high. Understanding what is covered before a hospital discharge can make a significant difference in your options.

Umbra Health Advocacy can help you understand Medicare coverage, navigate hospital discharges, appeal coverage denials, and plan for long-term care needs. Our patient advocates know the system and can help you make informed decisions.

Call us at 332-699-6778 or click to Get Started.

This article was developed in consultation with Lori Maloney, a long-term care expert and Umbra Health Advocate.