How Much Does Medicare Pay for Assisted Living?

Assisted living facilities offer a blend of housing, supportive services, and healthcare tailored to individuals who require assistance with daily activities but do not need the intensive medical care provided in a nursing home. These facilities typically provide non-medical personal care, supervision, meals, and social activities. Understanding the specific scope of Medicare coverage is essential for financial planning. Medicare primarily covers medical care, not non-medical care, which forms the basis of what it will or will not cover in these settings.

Medicare’s Coverage for Long-Term Care

Medicare primarily covers medically necessary treatments and skilled care, not long-term custodial care. Skilled care involves services provided by, or under the supervision of, licensed medical professionals, such as registered nurses or physical therapists. This includes services like intravenous injections, complex wound care, or specialized rehabilitation therapies.

Custodial care involves assistance with routine daily activities, often called Activities of Daily Living (ADLs). These activities include bathing, dressing, eating, using the restroom, and moving around. Assisted living facilities predominantly provide this personal, non-medical support.

Medicare does not cover the costs of custodial care, whether provided in a home setting, an assisted living facility, or a nursing home. The program is not designed as long-term care insurance. Therefore, primary expenses in an assisted living facility, such as room and board, meals, and personal care services, are not covered by Medicare.

Medicare Coverage within Assisted Living Settings

While Medicare does not cover the residential and custodial aspects of assisted living, it will still cover medically necessary services for a resident. Medicare benefits apply just as they would if the individual lived in their own home.

Medicare Part B covers outpatient medical services, including doctor visits, medically necessary outpatient therapies, and durable medical equipment. For example, if a resident needs to see a physician, undergoes physical, occupational, or speech therapy, or requires a wheelchair, Medicare Part B covers these costs. These services are covered when prescribed by a doctor and deemed medically necessary.

Medicare Part D provides coverage for prescription drugs through private plans. Residents can enroll in a Medicare Part D plan to cover medication costs. These plans have formularies, which are lists of covered drugs, and may have different cost-sharing structures.

Medicare Part A primarily covers inpatient hospital stays and can also cover short-term skilled nursing facility (SNF) care under specific conditions. If an individual has a qualifying hospital stay of at least three consecutive days, Medicare Part A may cover up to 100 days of skilled nursing care in a Medicare-certified SNF. This coverage applies if the skilled care is for a condition treated during the hospital stay and is required daily. This coverage is for skilled care and rehabilitation, not for the ongoing custodial care provided in assisted living.

Alternative Funding for Assisted Living

Given Medicare’s limited coverage for primary assisted living costs, exploring alternative funding sources is important. These options address expenses associated with room, board, and personal care services in these facilities.

• Private pay is the most common method for covering assisted living costs, utilizing personal savings, pensions, retirement accounts, or other assets. This direct payment method offers flexibility in choosing a facility and services.
• Long-term care insurance covers a broad range of long-term services, including care in assisted living facilities. Policyholders pay regular premiums, and the insurance provides a daily or monthly benefit once eligibility criteria, such as needing assistance with a certain number of ADLs, are met after an elimination period.
• Medicaid, a joint federal and state program, provides healthcare coverage for individuals with limited income and resources. Medicaid may cover assisted living costs for eligible individuals through Home and Community-Based Services (HCBS) waivers or other state-specific programs. Eligibility often involves strict income and asset limits, typically around $2,901 per month for income and $2,000 in assets for individuals, though primary residences are often exempt.
• Veterans and their surviving spouses may be eligible for benefits such as the Aid and Attendance Pension. This benefit provides additional funds to those who meet specific service requirements and need assistance with ADLs. These funds can help offset assisted living costs.
• Reverse mortgages allow homeowners aged 62 and older to convert a portion of their home equity into cash without selling the property. Funds from a reverse mortgage can be used for any purpose, including assisted living expenses. The loan generally becomes due if the borrower moves out for more than 12 consecutive months.
• Annuities and life insurance policies can also provide funds for long-term care. Some annuities offer riders that can double or triple the contract value for qualified long-term care expenses. Life insurance policies can have accelerated death benefits or long-term care riders, allowing policyholders to access a portion of the death benefit to cover care costs while living.