Does Medicare Cover Nursing Home Care for Dementia?
Understand Medicare's specific coverage for nursing home care due to dementia, distinguishing between short-term skilled and long-term custodial needs.
Navigating healthcare coverage for dementia, especially nursing home care, can be challenging. Many individuals mistakenly believe Medicare, the federal health insurance program for those aged 65 or older and certain younger people with disabilities, covers all long-term care needs. This often leads to confusion and unexpected financial burdens for families. Understanding Medicare’s specific provisions and limitations for nursing home services is important for informed planning.
Medicare’s General Coverage of Nursing Home Services
Medicare’s coverage for nursing home services is highly specific, distinguishing between “skilled nursing facility (SNF) care” and “custodial care.” SNF care involves medical or rehabilitative services requiring licensed healthcare professionals. Examples include physical therapy, occupational therapy, speech therapy, intravenous injections, wound care, or complex medication management. This medically necessary care is temporary, aimed at recovery from illness or injury.
To qualify for Medicare Part A coverage of SNF care, a beneficiary must first have a qualifying inpatient hospital stay of at least three consecutive days, not counting the day of discharge. Admission to the SNF must occur within 30 days of leaving the hospital. The skilled services must be required daily and provided in a Medicare-certified facility.
Medicare Part A covers up to 100 days of SNF care per benefit period. For the first 20 days, Medicare covers 100% of approved costs. For days 21 through 100, a daily co-insurance amount applies, which is $209.50 in 2025. Beyond 100 days, the individual is responsible for all costs.
In contrast, custodial care provides assistance with activities of daily living (ADLs), such as bathing, dressing, eating, using the toilet, and moving around. This care can be provided by non-medical personnel and does not require licensed professionals. Original Medicare does not cover long-term custodial care if it is the only type of care needed.
Dementia Care Under Medicare
Applying Medicare’s coverage rules to dementia care requires recognizing the distinction between medical and personal care needs. Medicare covers medically necessary skilled services in an SNF following a qualifying hospital stay. For instance, if a person with dementia is hospitalized for pneumonia and then requires short-term physical therapy to regain mobility in an SNF, that therapy would be covered. Similarly, skilled nursing for medication management or wound care related to a dementia complication could be covered. These services must be part of a short-term recovery plan, not ongoing maintenance.
Long-term nursing home care for individuals with dementia often involves extensive assistance with ADLs and supervision for safety, which falls under custodial care. As dementia progresses, care needs transition from skilled medical interventions to primarily custodial support. At this point, Medicare coverage ceases because the care no longer meets the definition of medically necessary skilled nursing services.
Medicare Part B, which covers outpatient medical services, may provide benefits for individuals with dementia, even if not in a nursing home. This can include doctor visits, cognitive assessments to diagnose and manage dementia, and some outpatient therapy services. For homebound individuals, Part B may also cover intermittent skilled nursing care, physical therapy, occupational therapy, or speech-language pathology services in the home. However, these home health services are not a substitute for comprehensive nursing home care and do not cover 24-hour supervision or ongoing personal care.
Medicare Advantage plans, offered by private companies approved by Medicare, must cover at least everything Original Medicare covers. While some Medicare Advantage plans might offer additional benefits, they are still subject to the same distinctions between skilled and custodial care for long-term nursing home services. Therefore, a Medicare Advantage plan will not cover long-term custodial care for dementia more broadly than Original Medicare.
Alternative Funding for Long-Term Dementia Care
Given Medicare’s limited coverage for long-term nursing home care, individuals and families explore alternative funding sources for dementia care. One option is Medicaid, a joint federal and state program providing healthcare coverage for low-income individuals. Unlike Medicare, Medicaid covers long-term custodial care in nursing homes for those who meet strict income and asset requirements.
Eligibility criteria vary by state, but involve asset limits, often around $2,000 for a single individual, and income limits. Many states also have a “spend-down” process, where individuals with income or assets above the limits can use excess funds on medical expenses, including nursing home costs, until they reach the eligibility threshold. A five-year look-back period is applied to financial transactions to prevent asset transfers made solely to qualify for Medicaid.
Long-term care insurance is another private option designed to cover costs not covered by Medicare, including custodial care in nursing homes, assisted living facilities, or in-home care. These policies have benefit triggers, such as needing assistance with a certain number of ADLs or experiencing cognitive impairment. It is advisable to purchase long-term care insurance before a dementia diagnosis, as policies are medically underwritten and a prior diagnosis may lead to denial of coverage. Policies may also include an “elimination period,” a waiting period before benefits begin, during which costs must be paid out-of-pocket.
Many individuals initially pay for long-term dementia care through private funds, often called “private pay.” This involves using personal savings, pensions, retirement accounts, or proceeds from asset sales to cover substantial nursing home care costs. This approach can be financially depleting, potentially leading to a transition to Medicaid once personal resources are exhausted.
Veterans and their surviving spouses may be eligible for Aid and Attendance benefits through the Department of Veterans Affairs. This pension program provides additional financial assistance to those requiring aid for daily living activities, who are housebound, or are nursing home patients due to mental or physical incapacity. While these benefits help offset long-term care costs, they do not cover the entire expense of nursing home care, which can range from $5,000 to $10,000 or more per month.