Does Medicare Help Pay For Assisted Living Facilities?

Jacob Reno
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What is Medicare?

Medicare is a government insurance program administered by the United States Department of Health and Human Services. While Medicare was started in 1965, the full rollout of Parts A and B took place during the period of 1972 through 1984. Part A focuses on hospitalization while Part B focuses on outpatient services. Both have some prescription coverage that is either very limited or non-existent in some cases. Because Medicare is the largest single payer of health care services, it has been blamed for driving up the price of health care significantly.

Part A reimburses patients admitted into approved hospitals, skilled nursing facilities, and hospices for covered services. Part B, the outpatient portion, covers physician services, outpatient x-rays, laboratory services, treatments and durable medical equipment (DME). Part C is the Medicare Advantage Plan; it includes Part A and B benefits but often includes additional services like vision, dental and prescription drugs. Part D is the prescription drug benefit and allows beneficiaries to get low-priced prescription drugs that are administered through private companies. Part D is optional but is the default for new beneficiaries starting January 1, 2006.

The Part B premium is typically based on your income and can be deducted from your Social Security check. If you can’t pay the premium, you can purchase a high-deductible Medicare supplement policy to help cover your out-of-pocket expenses.

What Is An Assisted Living Facility?

An assisted living facility (ALF) is a person's residence, but it's intended to function like a residence. A licensed custodian or a care provider stays on-site round the clock and provides assistance with basic daily needs like dressing, eating and self-hygiene.

If you can't take care of yourself anymore and need some help and extra supervision to ensure your wellness, this might be the best option for you.

One of the biggest differences between assisted living facilities and retirement homes is that assisted living facilities are geared toward people who have some ability to take care of themselves, but need a bit of backup. Retirement homes, on the other hand, are designed for people who have a greater need for help and supervision.

Assisted living facilities provide a selection of services that include:

  • A doctor and nurses or medical staff on-site
  • A 24-hour call button
  • A calendar of weekly events
  • Services to help with housekeeping chores and grocery shopping

What Does Medicare Cover For Assisted Living?

Medicare does not pay for a stay in assisted living, but does assist with expenses for some services provided to residents in assisted living. And Medicare does pay for a stay in a skilled nursing facility (SNF), which is a place that specializes in long-term care.

For seniors with the proper level of medical care needed and deemed as eligible, Medicare will cover stays in a skilled nursing facility. However, there are some restrictions that may not allow you to stay in your local facility, even if it is the one that is best for you.

There are strict guidelines on who can get Medicare coverage for a stay in a skilled nursing facility.

The first step for your loved one is to meet the conditions to be eligible for coverage.

A person who is eligible for Medicare must be 65 years of age or older. Most people are eligible for Medicare at 65, regardless of their marital status.

Eligibility is also extended to people with certain disabilities who are under 65 years of age.

If you are not eligible for Medicare, your condition will be reviewed for disability under Social Security regulations.

If you are eligible for Medicare, but you are not receiving ongoing critical care that you need at home, you are not eligible for coverage at a nursing facility.

Why You Should Care About The Cost In The Decision-Making Process?

Unless you have hundreds of thousands of dollars set aside to pay for a nursing home or a caregiver for your parents, you probably consider Medicare to be your safety net option. Medicare is the universal health insurance fund for those who are age 65 and over and people with certain disabilities. It was signed into law by President Johnson on July 30, 1965. When it was first created, only about 20 percent of seniors had health insurance, and it helped millions of seniors afford better health care.

It is a retirement benefit that provides government health insurance for people who have worked and paid into the system. It is a great insurance plan that helps provide you with coverage you may need. This is a benefit that most of us hope to have in our later years, but you should know that Medicare does not cover all of your medical expenses. If you expect to be admitted to a nursing home or to be receiving Fall Medicare benefits, you need to understand that.

Medicare and Assisted Living

While the answer to how does Medicare help pay for assisted living facilities is a bit of a mixed bag, the fact is that typically, our elderly loved ones can qualify for Medicare and other government programs. This is certainly worth researching before you consider purchasing an elder parent insurance plan or private payment facility.

What can you expect when Medicare applies to Assisted Living Costs?

Medicare can help with some of the costs of Assisted Living Facilities. The costs that are covered by Medicare will vary based on what level of care you need. Here is a quick breakdown of what may be covered.

A Stay in an ICF/IID

Part A is broken down into two sections: Hospital Insurance and Medical Insurance

Hospital Insurance pays for the treatment of certain medical conditions in hospitals.

Medical Insurance covers the costs of covered services that are not related to a hospital stay.

Medicare Part A works alongside your other medical insurance (think: Medicaid, COBRA) and only covers hospital costs

Part B, which includes medical insurance, covers the costs of any other services that are not eligible for Part A. Part B may be available to you if you are eligible for Part A or if you are eligible for Social Security benefits.

Who Pays For Assisted Living (Other Alternatives To Medicare)?

It’s fairly easy to find information on who pays for assisted living facilities. Medicare will cover nursing home care, and often, Medicare will pay for an assisted living facility following complications or a hospital stay.

The trick is that it’s difficult to find information on who pays for an assisted living facility while the individual is still able to live at home, other than the family or a friend. The assisted living facility, like home health agencies, will bill Medicare; but a good amount of the assisted living cost will be billed to the individual or family, not Medicare. Remember that Medicare does not cover the full cost of assisted living, so most individuals need to look to their private insurance or if they have enough assets, a Medigap plan or long term care insurance to cover the remainder of the costs.

What Is The Average Cost Of Assisted Living In Your Community?

The good news is that Medicare will pay the same amount for care at an assisted living facility that they would pay for in a nursing home. The bad news is that Medicare does not pay the full cost, so the best practice is for families to look at each facility with the average cost of care priced in.

1. Medicaid

Medicaid is a joint state and federal program that helps pay for medical care if you are eligible. This program is not exactly the same as Medicare, and it only helps with healthcare costs for low income seniors, people with disabilities, or people going through a medical crisis.

In order to qualify for Medicaid assistance, you need to have very limited assets … maybe a few hundred or a thousand dollars, and that's it. In comparison, Medicare allocations have no limits and can be used towards medical costs, assisted living, and skilled nursing facilities. Although Medicare is intended to help people with medical costs as they age, it does not necessarily pay for medical costs you already have.

If you are the only person in your household making money, this is usually not an issue, since your Social Security income will not count towards your income bracket. However, if you are married (and your spouse is under age 65), your spouse's salary will count toward your income limit. If your spouse has the same income, the two of you will likely both be eligible for Medicaid. However, if you are married and one of you is making significantly more than the other, you may be deemed ineligible for this financial program as your partner's income will weigh you down financially.

2. Private Funding

A majority of seniors want to live at home for as long as possible, and many do. Those that can, are the lucky ones. The unfortunate ones may need assistance from family caregivers or move into assisted living facilities or long-term care facilities. There is good news, however, as Medicare covers one nursing home stay in your lifetime. But, healthcare costs are steadily increasing, and many individuals also need help paying for daily living expenses such as assisted living. There are some steps you might take to help cover assistance costs …

One option is to speak with people who are knowledgeable and experienced in finding care for seniors. Seniors may be at a stage where they can’t live at home anymore, but they are still able to help around the home. In this case, there may be part-time jobs available for seniors, and seniors can also lend a helping hand to those around them. Other seniors may need to focus on their health problems to avoid more serious issues. There are certainly jobs out there for seniors that can help them stay active, such as volunteering.

3. Long-Term Care Insurance

Assisted living facilities care for the elderly and injured in their homes, as required. Even with looming healthcare costs, Medicare does not cover assisted living. The only exception is if you are clinically disabled and need special equipment to help you with daily activities – such as personal computers, special wheelchairs, home oxygen, and specially outfitted showers. Such equipment would be covered under Medicare Part A (Hospital Insurance).

One thing Medicare will pay for, though, is long-term care insurance. Long-term care insurance covers a variety of health care costs for people with chronic illnesses or disabilities. Long-term care insurance covers assisted living, adult day care, home-delivered meals, and private duty nursing.

4. Reverse Mortgages

If you own a home outright, you might be in a position to take out a type of mortgage called a reverse mortgage. This is available to all owner-occupied homes and to some homes that are owned by renters but is not available to multiple-family homes or vacation homes.

A reverse mortgage is designed to provide a fixed monthly payment that you can use to cover housing, medical, or other expenses as they become necessary. Within the reverse mortgage, you can take the money in a lump sum or in smaller checks throughout the year, and since the transaction is not actually a loan, there is no need to repay it later.

If you are interested in taking out a reverse mortgage, you should start talking to a lender and a lawyer before you decide whether a reverse mortgage is right for you. This way, you will be prepared to make an informed decision and the transaction will be smooth. Making a decision without being aware of all the facts could lead to problems later.

5. Life Insurance

The idea of using your life insurance to help pay for an assisted living facility is generally a good one, especially if it's going to be your main source of funding. Why? Well, if you ever become eligible for benefits, you're going to have to submit documentation of your financial needs before any assistance will be granted. During the application process, you'll be required to have all of your finances categorized in detail. If you have a long history of financial stability (a high credit score, a retirement account, assets, etc.), calculating your needs will be easier. Plus, you can probably make those expenses work in order to maintain your independence.

If you don't meet those requirements or if you don't have a significant amount of money set aside, your application will likely be approved. They might grant you support on a temporary basis during the time that you apply for Social Security Disability or Medicaid. However, they'll also be able to find alternatives for your care, like a less expensive assisted living facility, until you can qualify for more long-term support.

Another reason why life insurance is a good option is because it can be a relatively quick and easy way to create the funds you need. In short, you can still qualify for assistance, but it may end up being on a more stringent timeline.

6. Department of Veterans Affairs (VA)

The Department of Veterans Affairs Residential Assistance for Veterans and Their Families (RAP) program can help qualifying veterans and their families pay for assisted living facilities, adult day care, skilled nursing facilities, home health care, or hospice care. There are income limits and basic requirements that must be met (such as disability status).

Known as the VA Aid and Attendance Benefit, it provides a monthly tax-free stipend to eligible veterans (spouses, dependent children, and other dependents). There is an asset test that comes into play, and one must complete a VA application.

7. Not for Profits

Profits and non-profits are intrinsically different entities from a care standpoint. Non-profits are rarely motivated by profits. They, ideally, want to do a lot of good for the world. For this reason, they can’t be as accountable to their clients.

When Non-profits get allocated resources (money, time), they have to go through a lot of red tape. There isn’t a lot of incentive to try out new treatments, to maximize the amount of care given, or to reduce wait time.

On the other hand, for profit institutions are answerable to their investors (also called stockholders) who demand financial returns. This motivates them to take care of their assets and try out new treatments. They also run the business with an eye to cutting costs. This, in theory, reduces wait times and increases the quality of care they provide.

Additionally, they are protected by the law of Mergers and Acquisitions. When a non-profit starts to run into financial troubles, they are generally required to merge with another non-profit organization, if they can find one, to self-preserve. When for-profits run into financial troubles, they get sold to another for-profit company. This allows the new company to merge and unify their resources.

8. Other Options

If you're over your 65 and you do not have Medicare, you're going to need to have a plan to cover your health costs. Trying to figure out who is responsible for what can be confusing: the federal government and Medicare, your state, your former employer, or yourself. If you're also receiving social security checks, your doctors may also be allowed to take your social security checks as payment. Medicare does not cover nursing or assisted living, so if you're not prepared for this payment, you're going to be responsible for it on your own.

The bottom line when it comes to health care for seniors is that it can be a scary business, but if you know the facts, you can feel better about what your options are.

How To Pay For Assisted Living With Medicare And Other Alternatives

One of the biggest issues with Medicare is that it doesn't help pay for assisted living. Here are some of their other shortcomings.

Medicare only covers one month in a skilled nursing facility for rehabilitation and recovery after an accident.

It doesn't pay for assisted living.

It doesn't cover what most retirees really need in retirement, long term care insurance.

Medicare does, however, pay for an extensive number of health care services.

For example, Medicare will cover up to 100 days of skilled nursing care in a hospital.

However, because of the high cost of hospital care, many retirees look towards an assisted living facility as a far less expensive option.

To cover these expenses beyond the 100 days under Medicare, you’ll want to purchase long term care insurance.

This important coverage can pay for 30-60 days per year in an assisted living facility without paying a cent.

The remaining days are usually covered by Social Security and/or a Medicare supplement plan.

We’ve shared more detailed info about whether Medicare covers assisted living facilities here and in an earlier article about seniors care.

What Is The Average Cost For Assisted Living Facilities?

An EMTALA (Emergency Medical Treatment and Active Labor Act) lawsuit is a claim for money damages against a hospital seeking out-of-pocket expenses it should have paid to you.

Let’s say you are a resident in a hospital under observation, undergoing diagnostic tests, or have been admitted to the hospital for treatment or observation.

EMTALA provides protections against discrimination and a level of protection and privacy for you. It also gives you the right to be notified of your eligibility and the right to opt out of the bills. You are also supposed to be given the opportunity to appeal and dispute the charges with your insurance company.

This law also applies to you if you are boarding at a hospital to be treated elsewhere, or if a doctor refuses to perform surgery on you.

EMTALA is a Federal law, but it is enforced off the books. The government has no way of tracking all violations, so it is up to the individual to take action. This can be a difficult lawsuit to win. The best way to ensure that the case gets as much public exposure as possible is to contact consumer advocates such as Bet Tzedek, National Health Law Program, Public Citizen or the Patient Advocate.

The federal government has also strongly encouraged hospitals to be fully transparent about the charges for care.

Does Medicare Cover Assisted Living For Dementia?

Assisted living provides a residence and high-quality care. You can use an assisted living facility when you can no longer do things you used to do, but you are still physically, mentally and socially capable of living on your own.

Also, you may require assistance with some day-to-day tasks but don’t need the 24/7 care that residents in a nursing home receive. If you need help with physical or emotional limitations, this type of residence is a good option to consider.

Assisted living facilities are generally less expensive than nursing homes. The level of care needed usually determines the monthly rates. Assisted living communities provide a package of services, which varies from one facility to another.

They provide meals, housekeeping services, laundry services, transportation to medical appointments, and access to exercise equipment, wellness programs, social activities, and other convenience services. Assisted living facilities are not just for the elderly. Most of the facilities and communities offer services for people with disabilities who require supervision, assistance, or both. It’s also fairly common to find assisted living facilities that provide both types of care under one roof.