How Does Anyone Pay For This?! -- Understanding Medicare, Medicaid, and Private Pay Assisted Living
I get this question all the time.
”Will Medicare cover this?”
“Does Medicaid cover this?”
”How does anyone afford this?”
While I can’t answer the third one very well as that might have us looking at all sorts of complexities within our health care system, I can certainly answer the first two and help provide some understanding.
Navigating the complexities of healthcare coverage can be challenging, especially when it comes to understanding the differences between Medicare and Medicaid and how they relate to assisted living. It’s important to know what these programs cover and what they don’t, particularly since assisted living is typically a private pay service — private pay meaning, it’s out of pocket and typically not covered by any sort of insurance. Here’s a guide to help you understand these essential services and make informed decisions for your loved ones.
What is Medicare?
Medicare is a federal health insurance program primarily for people aged 65 and older, though it also covers some younger individuals with disabilities. It consists of four parts:
Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care.
Part B (Medical Insurance): Covers certain doctors' services, outpatient care, medical supplies, and preventive services.
Part C (Medicare Advantage Plans): An alternative to Original Medicare that allows beneficiaries to receive Part A, Part B, and sometimes Part D coverage through private insurance companies.
Part D (Prescription Drug Coverage): Covers the cost of prescription drugs.
What is Medicaid?
Medicaid is a joint federal and state program that provides health coverage for low-income individuals and families, including the elderly, people with disabilities, and pregnant women. Unlike Medicare, Medicaid is means-tested, meaning eligibility is based on income and asset levels.
Coverage Limitations for Assisted Living
One critical thing to understand is that neither Medicare nor Medicaid typically covers the full cost of assisted living. Here's how each program approaches it:
Medicare: Does not cover assisted living costs. Medicare may cover short-term stays in skilled nursing facilities, home health care, or hospice care, but it does not pay for long-term care or custodial care in an assisted living facility.
Medicaid: May cover some costs associated with long-term care, including assisted living, but this varies by state. Medicaid might help with the cost of personal care services provided in an assisted living facility, but it usually doesn’t cover room and board.
Assisted Living: Private Pay
Given the limitations of Medicare and Medicaid, assisted living is predominantly a private pay service. This means that residents or their families typically pay out-of-pocket for the cost of assisted living. Here are some ways to manage these expenses:
Personal Savings and Assets: Many families use personal savings, retirement funds, or the proceeds from selling a home to cover assisted living costs.
While the situation varies from family to family, from my personal experience, I’ve seen families split the costs between siblings and parents, which really helps along the cost of assisted living.
Long-Term Care Insurance: This type of insurance can help cover the cost of assisted living, but policies and coverage can vary widely. There might be some hoop jumping like special ways you have to fill out their info, but for the most part, this can cover a good chunk of assisted living from my own experience with residents who have invested into it.
Veterans Benefits: Veterans and their spouses may qualify for Aid and Attendance benefits, which can help offset the cost of assisted living. Keep in mind though that just because a loved one has served in the military does not mean that they’ll receive VA benefits that cover assisted living. Usually it requires that they served during a time of war — best to check with a VA office which we can happily help connect you with.
Family Contributions: Sometimes, family members contribute to the cost of assisted living for their loved ones. — as mentioned above, a combination of family contributions and private personal pay inevitably usually factor into how to cover the cost of assisted living.
Planning Ahead
Understanding the financial aspects of assisted living and the limitations of Medicare and Medicaid is crucial for making informed decisions. It’s advisable to plan ahead, explore all available options, and consult with a financial advisor or elder law attorney to create a comprehensive plan for long-term care.
Personally, in my own family and in my country of origin, we have a saying that, “We all get there.” It’s not shameful to be in assisted living and to need some help — and it’s important to recognize that a majority of us will need some form of help some day whether that’s just a little extra oversight with meal prep or safety — or if that’s full day-to-day care with bathing, dressing, toileting, and grooming.
In summary, while Medicare and Medicaid provide essential health coverage, they do not typically cover the cost of assisted living. Assisted living remains a private pay service, requiring careful financial planning and consideration of various funding sources. By being informed and prepared, you can ensure the best possible care for your loved ones.