Does Medicare Cover Long-term Care?

Many Americans are grossly underinsured against the risk of devastating long-term care costs. According to the 2016 annual Cost of Care Survey from Genworth, the average cost for a semi-private room in a long-term care skilled nursing facility is $82,125 and rising while the average assisted living facility costs $43,539 per year, on average. Both are enough to swallow most or all of the income produced by many pensions and other sources of retirement income.

Medicare Generally Does Not Cover Long Term Care Costs

The vast majority of long term care expenses are not covered under Medicare. Instead, long term care costs for chronic conditions not related to a very recent hospitalization and must be funded either via private long term care insurance or paid for out of pocket.

What Nursing and Rehab Care Does Medicare Cover?

Medicare will only pay for nursing home, rehab facility or custodial care under the very limited circumstances:

    • You have been admitted to a Medicare-certified nursing facility within 30 days of a hospitalization
    • You were hospitalized for not less than three days
    • You require skilled care, and not just custodial care and assistance with activities of daily living, such as assistance with bathing, dressing, toileting and feeding yourself. Examples of skilled care include specialized physical therapy or other types of therapy requiring the attention of licensed professionals.

Even if you meet all three conditions, Medicare will only cover your costs for a limited period of time. And the longer you remain in the nursing facility, the more you will have to pay out of pocket. For the first 20 days, Medicare will cover 100 percent of your costs. But for days 21 through 100, you must pay $140 per day out of pocket for long term care costs directly related to your prior hospitalization.

After day 100, you must pay all nursing home/long term care costs out of pocket.
To put things in perspective, only 20 percent of all nursing home stays last for less than three months, according to data from the American Association for Long Term Care Insurance. The average nursing home stay was 2.3 years for men, and 2.6 years for women. 24 percent of all nursing home stays last three years or longer, and 12 percent last for longer than five years.

Long term care costs aren’t limited to skilled nursing homes. Most long term care insurance policies cover a broad continuum of care, from in-home care and assistance to adult day care facilities to assisted living facilities – none of which are covered under Medicare.

Long term care insurance may also cover hospice care, as well. Every company has different specific benefits and exclusions.

America’s poorest may receive some coverage via Medicaid – after spending their liquid assets down to poverty level. Generally, states will allow families receiving Medicaid benefits to keep their homes, but when the beneficiary dies, the state Medicaid recovery program will put a lien on the home and other assets, effectively seizing them and preventing you from passing these assets along to your heirs and loved ones until the state recovers what it paid out in Medicaid benefits on your behalf.

The extremely wealthy, of course, can absorb the costs of long-term care.

But for most of us in the middle, some form of long term care insurance is necessary to protect retirement nest eggs and incomes against the risk of being consumed by high costs for long term or nursing home care. However, do not rely solely on Medicare to cover long term care or nursing home expenses.

If you have any questions, please call Mike Braun of Franklin Benefits Group LLC at 610-427-8122 or mikebraun@franklinbenefitsgroup.com.

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