Does Medicare Help With Assisted Living?

Medicare, the federal health insurance program, generally does not cover the long-term, non-medical costs associated with assisted living facilities. These facilities offer residential care and support with daily activities. This article explores specific services Medicare may cover in certain situations and outlines other financial assistance options for individuals seeking assisted living solutions.

Understanding Medicare’s Coverage Limitations

Medicare’s design focuses on medically necessary care rather than long-term custodial support. To understand why assisted living costs are typically excluded, it is important to differentiate between “skilled care” and “custodial care.” Skilled care involves medical services or rehabilitation therapies requiring licensed professionals, such as registered nurses or physical therapists. This care is prescribed by a physician to improve a condition or maintain function.

Custodial care provides personal care and assistance with routine daily tasks that do not require medical training. This non-medical support can be provided by non-licensed caregivers. Assisted living facilities predominantly offer custodial care, including help with Activities of Daily Living (ADLs) and Instrumental Activities of Daily Living (IADLs).

ADLs are fundamental self-care tasks essential for personal well-being. These include bathing, dressing, eating, personal hygiene, and transferring (moving in and out of a bed or chair). When individuals require assistance with these basic tasks, it signifies a need for supportive care.

IADLs involve more complex tasks necessary for independent living within a community. These activities require advanced cognitive and organizational skills. Examples include managing finances, preparing meals, shopping, managing medications, and using transportation. Assisted living facilities provide structured environments that offer support with both ADLs and IADLs.

Medicare Parts A (Hospital Insurance) and B (Medical Insurance) cover medically necessary services and treatments, not long-term daily support. Since assisted living primarily provides custodial care rather than skilled medical care, its costs fall outside the scope of Original Medicare coverage. This distinction is fundamental to understanding Medicare’s limitations regarding residential long-term care facilities.

Medicare Coverage for Related Care Services

While Medicare does not cover the residential costs of assisted living, it covers specific medically necessary services individuals residing in or transitioning to assisted living might require. These coverages pertain to medical treatments, rehabilitation, and prescription drugs, which are distinct from the daily living support provided by assisted living facilities.

Medicare Part A, Hospital Insurance, covers short-term stays in a Medicare-certified Skilled Nursing Facility (SNF) under specific conditions. This coverage is for rehabilitation following an inpatient hospital stay, not for long-term care. To qualify, an individual must have had a qualifying hospital stay of at least three consecutive inpatient days. Admission to the SNF must generally occur within 30 days of hospital discharge for a condition related to the hospital stay.

Medicare Part A can cover up to 100 days of skilled nursing care per benefit period. For the first 20 days, Medicare covers the full cost. A daily coinsurance applies for days 21 through 100, which is $209.50 in 2025. Covered services in a SNF include skilled nursing care, physical therapy, occupational therapy, speech-language pathology services, a semi-private room, and meals.

Medicare Part B, Medical Insurance, covers a range of outpatient medical services. This includes doctor’s visits, certain preventive services, durable medical equipment (DME), and some home health services. For home health services to be covered, an individual must be homebound and require intermittent skilled nursing care, physical therapy, speech-language pathology services, or continued occupational therapy. Medicare Part B does not cover 24-hour home care, meal delivery, or general assistance with ADLs unless these are provided alongside and incidental to skilled care. The standard monthly premium for Medicare Part B is $185.00 in 2025, with an annual deductible of $257.

Medicare Part C, Medicare Advantage Plans, are offered by private insurance companies approved by Medicare. These plans must provide at least the same coverage as Original Medicare (Parts A and B). Some Medicare Advantage Plans may offer limited supplemental benefits that could indirectly assist individuals in assisted living. These include transportation to medical appointments, meal delivery after a hospital stay, or specific in-home support services. However, these plans do not provide comprehensive coverage for the overall costs of assisted living.

Medicare Part D provides Prescription Drug Coverage, helping beneficiaries manage medication costs. These plans are offered by private insurance companies and can be purchased as standalone plans or as part of a Medicare Advantage Plan. Each Part D plan maintains a list of covered drugs, known as a formulary. Costs can vary based on the plan and specific medications. Enrolling in a Part D plan when first eligible is important, as a late enrollment penalty may apply if there is a gap in creditable prescription drug coverage.

Medicare Part A also covers hospice care for individuals who are terminally ill and have a life expectancy of six months or less, as certified by a physician. Hospice care can be provided in various settings, including an individual’s home, a hospice facility, or an assisted living facility. This benefit covers all services related to the terminal illness, such as nursing care, medical equipment, and medications for pain and symptom management. Medicare’s hospice benefit does not cover the room and board costs associated with living in an assisted living facility.

Exploring Other Financial Assistance Options

Given that Medicare does not broadly cover assisted living costs, many individuals and families explore alternative financial strategies. These options range from government programs to private insurance and personal asset utilization, each with distinct eligibility requirements and benefits.

Medicaid

Medicaid is a joint federal and state program providing health coverage to low-income individuals. It can be a significant funding source for long-term care. Many states offer Home and Community-Based Services (HCBS) waivers that can help cover the cost of services provided in an assisted living setting. Eligibility for Medicaid is determined by strict income and asset limits, which can fluctuate annually. Medical necessity for the care must also be established to qualify for benefits. These waivers aim to provide care in less restrictive environments than nursing homes, supporting individuals in assisted living communities.

Long-Term Care Insurance

Long-term care insurance is a private insurance policy designed to cover the costs of long-term care services, including assisted living. These policies typically begin paying benefits when a policyholder needs assistance with a certain number of ADLs, often two or more, or has a cognitive impairment. Policies are generally more affordable when purchased at a younger age and before health conditions develop. Policy terms, including daily or monthly benefit amounts and elimination periods (a waiting period before benefits begin), vary widely.

Personal Funds and Assets

Personal funds and assets represent a common method for covering assisted living expenses. This includes using savings accounts, investment portfolios, retirement funds, and income from pensions or Social Security benefits. For some, selling significant assets, such as a family home, becomes a necessary step to generate the capital needed to pay for care. This direct payment method offers immediate access to funds but can quickly deplete accumulated wealth.

VA Aid & Attendance Benefit

For eligible veterans and their surviving spouses, the Department of Veterans Affairs (VA) offers the Aid & Attendance benefit. This benefit can help offset assisted living costs. It is an enhanced pension available to those who meet specific service, medical, and financial criteria. To qualify, a veteran must have served during a period of war, typically for at least 90 days with at least one day during wartime, and have an honorable discharge. The applicant must also demonstrate a medical need for aid and attendance, such as requiring assistance with at least two ADLs. Financial eligibility is assessed based on income and assets, with unreimbursed medical expenses, including assisted living costs, often deductible from income.

Reverse Mortgages

Reverse mortgages allow homeowners, typically age 62 or older, to convert a portion of their home equity into cash. Funds can be received as a lump sum, monthly payments, or a line of credit, providing flexibility for covering assisted living expenses. The loan does not require monthly mortgage payments and is generally repaid when the homeowner sells the home, permanently moves out, or passes away. While reverse mortgages can provide significant liquidity, considerations include closing costs and interest accrual, which reduce home equity and potential inheritance. At least one borrower must continue to live in the home, though brief absences for care (typically up to 12 months) are often permitted. Reverse mortgage proceeds generally do not impact Medicare or Social Security benefits, but they can affect eligibility for needs-based programs like Medicaid.

Life Insurance Policies

Life insurance policies can also serve as a financial resource for assisted living costs through various mechanisms.

Accelerated Death Benefit (ADB) Rider: This allows policyholders who are terminally or chronically ill to access a portion of their policy’s death benefit while still alive. These funds are typically tax-free and can be used for any purpose, including long-term care expenses. The amount received reduces the final death benefit paid to beneficiaries.
Life Settlement: An existing life insurance policy is sold to a third party for more than its cash surrender value but less than its death benefit. This provides a lump sum for care, with the buyer taking over premium payments and receiving the death benefit upon the policyholder’s passing.
Viatical Settlement: Similar to life settlements, but specifically for policyholders with a terminal illness.
Hybrid Products: Some life insurance policies may offer the option to convert into a long-term care insurance policy or be structured as a hybrid product combining life insurance with long-term care benefits.

State and Local Programs

Some state and local governments offer specific non-Medicaid programs or grants to assist with assisted living costs. These programs vary widely by location and may have unique eligibility criteria, often targeting specific populations or care needs. Exploring resources through local aging agencies or social services departments can uncover such localized support options.