Paying for care: how it actually works

The assumption

Most people believe Medicare pays for long-term care. It does not. Medicare is health insurance: it covers medical treatment, and it covers short, skilled, clinician-ordered care after a qualifying event, under specific conditions and for a limited period. Ongoing help with bathing, dressing, meals and supervision is not medical treatment, and Medicare generally does not pay for it.

Families find this out at the worst possible moment, usually days after a hospital discharge, having already made decisions on the assumption that it was covered.

What actually pays

Out of pocket. The largest single source, and the one nobody plans for.

Medicaid. The main public payer for long-term care in the United States, including, in every state, some form of home and community-based services so that care does not have to mean a facility. It is means-tested, the rules differ by state, and the rules for a married couple differ again in ways that surprise people. Waiting lists are common for the home-based programs.

Long-term care insurance. If a policy exists. Worth finding out early, because benefits often require a waiting period and specific documentation from the start.

Veterans benefits. Separate provision exists, including for some surviving spouses. Under-claimed, partly because the application is slow and partly because people assume wartime service is required in circumstances where it is not the only factor.

Programs that reduce the bill rather than pay it. Prescription assistance, energy assistance, property tax relief for older homeowners, and food benefits. None of them pays for care and together they can free up more monthly money than families expect.

Three mistakes that are expensive

Giving assets away to qualify. Medicaid looks back over a period of prior transfers, and a well-meant gift to a grandchild can create a penalty. Do not move money on the basis of advice from the internet, including this page.

Waiting to apply. Benefit applications take weeks or months. Starting the slow thing early costs nothing if it turns out not to be needed.

Assuming a no is final. Denials are frequently procedural, and appeals succeed more often than families expect. When a no is not final.

Find out what the money actually has to cover

Before comparing what pays, write down what is being paid for, because families routinely budget for the wrong thing. Ongoing personal help, a one-off adaptation to the house, medication costs, transport, and somebody being present at night are five different expenses with five different funding routes, and only some of them are care.

It is common to find that the largest recurring cost is not care at all. It is a house that is expensive to run, a car that is no longer driven but still insured, or a set of subscriptions nobody has looked at in six years.

Where to get real advice

Your State Health Insurance Assistance Program offers free, unbiased counselling on Medicare, and every state has one. Your Area Agency on Aging can point to benefits counselling locally. For anything involving assets, an elder law attorney is the right professional, and one consultation early is usually cheaper than the mistake.

What this page cannot tell you

Whether you qualify, what the limits are in your state, and what any of it costs where you live. Eligibility rules change, vary by state and turn on details of your situation. A wrong answer about Medicaid costs a family real money, so we will not state a threshold to a national audience as though it were universal.