When Medicare Won't Pay for Nursing Home Care

Medicare does not consider nursing home care to be medically necessary. This means it doesn't pay for it except under specific circumstances, such as a recent hospitalization followed by a healthcare provider's assessment that you require skilled care for at least five days a week. Even if you meet these requirements, Medicare will only pay for short-term care.

This article discusses whether Medicare benefits will cover nursing home care and under what circumstances. It also goes over some of your options if you need care that isn't covered by Medicare.

What Is a Nursing Home?

The Centers for Medicare and Medicaid Services (CMS) does not consider most nursing home care to be essential. This is because nursing homes provide care that does not have to be performed by a skilled or licensed medical professional such as a doctor, nurse, or therapist (e.g., clinical psychologists, physical therapists, occupational therapists, and speech therapists).

For example, nursing homes often provide assistance with bathing, cleaning, cooking, dressing, hygiene, and even walking or mobilizing. Nursing home employees who provide this type of assistance do not have to have medical training.

Unfortunately, many seniors in nursing homes are there for reasons of safety. They are unable to live independently due to dementia or other medical conditions, and they may not have family or loved ones who can support them.

According to the February 2019 Vital Health Statistics report by the U.S. Department of Health and Human Services (HHS), the majority of people in nursing homes require care. The percentages of people needing help are considerable:

• Bathing: 96.7%
• Dressing: 92.7%
• Eating: 59.9%
• Toileting: 89.3%
• Transferring In or Out of Bed: 86.8%
• Walking: 92%

An Increasing Need for Nursing Home Care

According to the same HHS report, there were 1.7 million licensed nursing home beds available in 2016 and 1.4 million long-term residents in those beds. Around 16.1% of those residents were between 65 and 74 years old. Around 25.5% were between 75 and 84 years old, and 43.5% were 85 years and older.

It is estimated that 10,000 baby boomers will turn 65 every day through 2030. Life expectancy is also on the rise. For 2021, life expectancy in the U.S. averaged 76.4 years (73.5 years for men, 79.3 years for women), an increase from 70.1 years in 1960. Unfortunately, living longer increases the odds of having multiple chronic medical conditions. With this comes an increased risk of debility.

The Real Cost of Nursing Home Care

According to the Genworth Cost of Care Survey, the average monthly cost in the United States for a shared room in 2021 is $7,908 per month. For a private room, it is $9,034 per month. This means the average nursing home costs a resident $94,900 per year for a shared room and $108,405 for a private room.

The average payout for Social Security retirement benefits in January 2022 was $1,660.90 per month for a total of $19,930.80 per year. This makes nursing homes too expensive for the average Social Security recipient. There are alternatives for people who need nursing home care, however, these are only available under specific circumstances.

Does Medicare Pay for Nursing Home Care?

Skilled nursing care is care provided by registered nurses under the supervision of a doctor. This type of care may be required if you or your loved one experiences a medical event such as a stroke, heart attack, or broken bone.

Medicare pays for nursing home care if you were recently admitted to the hospital and you require skilled care at least five days per week. To qualify for this Medicare Part A coverage, you need to have been admitted to the hospital as an inpatient for at least three days. The day you are transferred to the skilled nursing facility does not count as one of the three days.

CMS defines inpatient care in very specific ways. Legislation put forth in October 2013, known as the Two-Midnight Rule, only considers you for inpatient care (as covered by Medicare Part A) if your stay is expected to last longer than two midnights and if your level of care is considered medically necessary. This means you cannot be in the hospital receiving care that could just as easily be administered elsewhere.

If you don't meet these qualifications, you will be placed under observation, care that is covered by Medicare Part B.

If you do get approval for skilled nursing care, Medicare Part A covers the first 20 days for you. For days 21 to 100, you will pay $194.50 per day (as of 2022). After 100 days, you are required to pay for your own care.

What Services Does Medicare Pay For?

Some of the services Medicare will cover during your stay in a skilled nursing facility include:

• Medical transportation between facilities
• Your room and meals 
• Care from a healthcare provider
• Physical, occupational, or speech-language therapy
• Dietary counseling
• Medications
• Medical supplies and equipment
  

What to Do When Medicare Stops Paying for Nursing Home Care

You may have other options once Medicare stops paying for nursing home care. These options will vary depending on your circumstances.

Medicaid Coverage for Nursing Home Care

Because Medicare only offers short-term nursing home care, many people turn to Medicaid. According to the 2019 Vital Health Statistics report, 61.2% of residents in nursing homes used Medicaid as their payment source.

Not everyone qualifies for Medicaid. Eligibility differs for children, pregnant women, and other adults. States that expanded Medicaid under the Affordable Care Act opened eligibility to single individuals without children, but other states may exclude those individuals from coverage.

Medicaid is intended for people with low incomes. Eligibility is based on your monthly income and your assets. These assets include:

• Annuities
• Bank accounts
• Automobiles (excluding your primary vehicle)
• Bonds
• Cash amounts exceeding $2,000
• Cash surrender value of life insurance policies (applies to "whole life" and "universal life" policies, not term life policies)
• Keogh plans
• IRAs
• Money market funds
• Mutual funds
• Pension funds
• Real estate (excludes your primary residence up to a certain value depending on the state)
• Stocks
• Stock options

Each state ultimately sets its own financial threshold for eligibility, but the federal government sets a minimum requirement for each state. You will need to look up requirements for your state to see if you qualify.

Many seniors spend down their assets to qualify for Medicaid. Others try to protect their assets by transferring them to family and loved ones.

If you choose the latter, make sure to consult an elder law attorney to discuss your options, since the transfer must not have occurred within 60 months of your Medicaid application. Transfers that occur during this look-back period could result in penalties from Medicaid, potentially delaying your care coverage for months to years. This will depend on how much money you transfer and in what state you live.

Private Coverage for Nursing Home Care

It is possible to purchase long-term care (LTC) insurance to help pay for nursing home care. These insurance plans are used to pay for around 10% of nursing home expenses in the United States.

LTC insurance can be helpful if you need care, but premiums tend to be expensive and out of range for many people. These premiums tend to get higher the older you get, especially if your health is on the decline. Individuals over 65 years old and who have chronic medical problems could see monthly premiums in the thousands of dollars. Insurance companies can also deny coverage based on pre-existing conditions.

Long-term care insurance pays out when you have a triggering event that requires nursing home or long-term home health care. Those payouts can be put towards care-specific services, but the amount will be based on your specific LTC insurance plan. They may or may not cover the full cost of care, and the payouts may only last a certain length of time.

Other Options to Pay for Care

If you can't afford to pay out of pocket, there may be other options for obtaining care after Medicare stops paying. These options will depend on how much support you have from family and what alternatives are available in your state or local area. For example:

• At-home care may be an option if it is safe for you to continue living in your home and/or you have a support network that can help ensure your well-being. Medicare does pay for certain home health therapies and services such as physical therapy, home health aide, and medical equipment. These services could help make it possible for you to continue to live independently.
• Non-profit care is available in some places. These facilities provide physical therapy and other services to people who qualify. Some disease-specific foundations may also offer financial assistance if you need care but can't afford it.
• Appealing your case may help if you feel that you still need care and that you meet Medicare's requirements. 
  

Summary

The cost of nursing home care far exceeds the average Social Security retirement benefit, leaving the cost out of reach for many people.

Unfortunately, Medicare only covers nursing home care for a short period and only after an inpatient hospital stay. The majority of people turn to Medicaid for coverage but this could require you to spend down your assets to become eligible. Some people may turn to long-term care insurance instead.