Health care at any level is expensive, but at the top of the list is nursing home care.
The national annual median cost of care for a private room in a nursing home is now $102,200, according to Genworth’s 2019 Cost of Care Survey. Adult day health care services (based on five days per week per year) cost an average $19,500 a year, the survey says. Paying those bills is beyond most people’s reach. One option is to turn to Medicaid.
“Nursing homes are one of most expensive levels of care, and most people don’t have that money,” says Amie Clark, co-founder and senior editor of The Senior List, a sister site to SeniorLiving.org. “Medicaid is a financial resource for many people,” says Clark, a former long-term care ombudsman who worked in skilled nursing facilities before starting her company specializing in geriatric care management and senior housing advisory.
Medicaid is a federal program, but it gives each state the power to make decisions on coverage and benefits for its Medicaid recipients, including seniors who are dually eligible for both Medicare and Medicaid.
According to Medicare Interactive, an online resource from the Medicare Rights Center, every state has a Medicaid program for individuals who need nursing home or long-term care, which is also called Institutional Medicaid. This covers some inpatient, comprehensive services as institutional benefits. The Centers for Medicare and Medicaid Services says the word “institutional,” in reference to Medicaid requirements, means specific benefits authorized in the Social Security Act. These are hospital services, nursing facilities and other services for both those under and over age 65.
These institutions are residential facilities that assume total care of the individuals who are admitted. They must be licensed and certified by the state and must also meet federal laws and regulations for skilled nursing care requirements and guidelines. These facilities are subject to regular surveys to maintain their certification and operating license.
Medicaid will provide general health coverage and coverage for nursing home services, including room and board, nursing services, rehabilitative services, pharmaceutical services, medical social services, meals and other care. Medicare covers some skilled nursing facility care, up to 100 days per benefit period. If patients do not meet Medicare’s requirements for this benefit or reach Medicare’s limit of covered care, then Medicaid may pay for this care.
The requirements for Institutional Medicaid to pay for nursing home care include proving a medical need for nursing home level of care or meeting nursing home functional eligibility criteria, and meeting income and asset levels below certain guidelines. Some states may have higher Medicaid income guidelines for nursing care, or a spend-down program that allows you to deduct certain medical expenses from income to help meet income qualifications.
States determine whether you need a nursing home level of care differently. Medicare Interactive says that, in general, states assess your needs by measuring your ability to perform activities of daily living such as bathing, dressing and going to the bathroom.
Institutional Medicaid does not pay for medical services outside the nursing care, such as going to a doctor or specialist’s office. Medicare still pays for most of that first, and Medicaid offers secondary coverage of the remaining costs, such as coinsurances, copayments and deductibles.
Medicare Interactive says to consider the following if you are thinking of applying for Institutional Medicaid:
- It considers both you and your spouse’s income and assets for income eligibility. However, you typically can set aside a certain amount of your income and assets for your spouse to keep, and this will not be counted when you apply for Medicaid.
- If you qualify, you can keep a small amount of your income for a personal allowance. This amount varies by state. The rest of your income must be paid to the nursing home.
- In most states, Institutional Medicaid has a look-back period of up to five years – your state will count any assets you transferred in those past years to determine eligibility. If Medicaid determines that you moved some assets in violation of the Medicaid rules, you may lose some or all of your nursing home coverage.
- If you own your home, talk to an elder law attorney to learn how it will affect your Medicaid eligibility and coverage, because home equity may count as an asset. When you no longer need long-term care, or when you are deceased, such assets may be used to repay Medicaid for care that it covered for you.
And remember that being on Medicaid should have no bearing on the quality of care you or your loved one receive. “The people providing the care probably have no idea what the payer source is,” Clark says. “So once you’re in there, I don’t think it has any effect on the kind of care they give.”