Does Medicare Pay for Assisted Living?

For example, Medicare will not pay for most eye exams, dental care, hearing aids, and cosmetic surgeries. Most notably, it does not cover the cost of long-term care, including assisted living facilities or any other long-term residential care, such as nursing homes or memory care.

Health services covered under Medicare are provided to assisted living residents, the same as they are for other Medicare beneficiaries living independently. But, does Medicare pay for assisted living facilities themselves? This service does not, in fact, pay any residency costs or day-to-day custodial care, such as help with bathing, dressing, and eating.

Medicare might pay for short-term stays in skilled nursing

Medicare Part A will cover the cost of an initial 100-day stay at a skilled nursing facility under specific conditions:

• The illness or injury must have required a hospital stay of at least three days. Some examples include a stroke, fall, pneumonia, heart attack, or surgery.
• After being discharged, a doctor must order continuing care, meaning 24-hour care at a skilled nursing facility for the condition that caused the hospitalization.
• The patient must have been admitted to a Medicare-certified facility within thirty days of the hospital stay.
• The patient must require skilled care such as physical therapy, speech therapy, or other rehabilitative treatment.
• The hospital stay must have been inpatient and not merely time spent in an emergency room or under observation. Also, the day of discharge does not count toward Medicare’s 3-day minimum stay requirement.
• Medicare will also pay for any conditions that develop during a stay at a skilled nursing facility. An example of this would be an infection that occurs during rehab from surgery.

How does one pay for assisted living?

Now that you know Medicare will not help pay for a long-term stay at an assisted living or skilled nursing facility, you might be concerned about how you will pay those high costs for care if you ever need them. Along with retirement savings, there are some options you might want to consider.

• Long-term care insurance: These policies cover expenses associated with an extended stay in an assisted living community, skilled nursing facility, or home care. While these policies are expensive, they could pay for themselves quickly if you need long-term care services. A new type of hybrid policy combines long-term care insurance with annuities or life insurance.
• Life insurance cash value: It’s possible to convert some whole life insurance policies into an income stream to help pay for long-term care.
• Home equity: Many older adults have built up considerable equity in their homes. A reverse mortgage can help you tap that equity to provide a source of untaxed monthly cash. Be sure to study and understand the fees, interest rates, and conditions that come with this product before you commit to it.
• Selling your home: The simplest method is to sell it outright and use the proceeds for long-term care. However, you might want to remain in your home for now. One option is to sell your large home and move into a smaller one. Another approach is to sell your house to one of your adult children and pay them rent. If it makes financial sense, the child could then gift you the rent value, up to $15,000 per year, with no tax consequences.

Be sure to talk to your accountant, an experienced financial planner, or an attorney to help you determine which of these methods makes the most sense for your specific situation.