Managing the Costs of Long-Term Care: Your Guide to Navigating Medicare & Medicaid Coverage

No matter what your current health status is, it’s always important to be realistic about what the future could hold. Why? Because around 70% of Baby Boomers will need long-term care at some point in their lifetime, and it’s likely younger generations will face similar realities as they age.1   

 Whether you’re serving as a caregiver for aging loved ones or thinking about your own future care needs, it’s important to remember that long-term care costs can add up quickly—and insurance doesn’t always cover it. 

Let’s take a look at how long-term care is handled under both Medicare and Medicaid. 

Understanding Medicare Coverage 

There’s a common misconception that long-term care is covered under your (or your parents’) Medicare policies. The reality is, Medicare policies do not provide long-term care services. Rather, Medicare Part A covers the costs of short-term stays in a skilled nursing facility or rehab center (as long as certain conditions are met, which you can review here).   

Generally speaking, Medicare will cover up to 100 days in a skilled nursing facility per benefit period: 

• Days 1 – 20 are fully covered, though if you’re on a Medicare Advantage Plan you may have a copay 

• Days 21 – 100 cost $204 per day 

 If you stay beyond 100 days, you will be responsible for all costs incurred.  

 It’s important to emphasize that Medicare Part A will cover the costs associated with short-term medical care, but not custodial care. 

 Medical care at a skilled nursing facility includes: 

• Your room and meals 

• Nurses 

• Physical and occupational therapy 

• Medication 

• Medical supplies and equipment used at the facility 

 Custodial care refers to care that helps a person complete daily living activities, such as getting dressed, using the bathroom, and preparing a meal. Medicare does not cover the costs associated with custodial care if it’s the only type of care needed. 

Qualifying for Medicaid 

Medicaid is the primary payer for long-term care costs. However, you or your parents will need to be eligible for Medicaid—namely, all other assets will need to be spent down in order for them to fall under the income threshold. 

Medicaid is operated through the state in which you reside, and each state typically has its own income requirements which may be based on you or your parents’ modified adjusted gross income (MAGI) and countable assets. 

Countable assets vary by state but could include: 

• Cash, checking, and savings accounts 

• Certificates of deposit (CDs) 

• Stocks and bonds 

• Life insurance policies 

• Additional vehicles 

• Investment properties 

 Some assets will be exempt from counting toward Medicaid eligibility. Examples of potentially exempt assets include: 

• Primary home 

• One vehicle 

• Burial spaces 

Be Mindful of the Medicaid Look-Back Period 

To fall within the asset and resources Medicaid limit, people will sometimes transfer ownership of property and assets to a child or trust. Doing so essentially helps them “spend down” their estate faster, so they can qualify for Medicaid and receive long-term care coverage. 

It’s important to be aware, however, that some states implement a “look back” period (usually five years, or 60 months) in which they will review all asset transfers. If the agency determines the look-back rule has been violated, they will implement a penalty—usually delaying Medicaid eligibility for the individual. 

 For this reason, if you or your parents think you may eventually want to apply for Medicaid, it’s critical to start planning ahead—well behind the actual need for it arises.  

Thinking About Long-Term Care? We Can Help 

Whether you’re being proactive about your future care needs or wondering how to best handle care for your aging loved ones right now, there are plenty of options and questions to consider. 

 To help, we created this Long-Term Care Discussion Guide, which offers key information for caregivers and those who are curious about covering the costs of long-term care.  

 Feel free to download now, or reach out to our team to schedule time to talk with our advisors. 

 Sources: 

¹Cost of Care Survey 

²SNF Care Coverage