Although Medicare is usually thought of as coverage for hospital stays (Part A) and doctor visits (part B), it also has an application to senior living. When I speak to groups of people who are considering moving to a retirement community—specifically continuing care retirement communities (CCRCs)—I’m often asked how Medicare plays into the decision. I’ll address this in another post next week, but first, it’s important to understand a few important details about Medicare.
Neither Medicare nor Medicare supplement plans provide coverage for assisted living—if that is the ONLY type of care needed. Assisted living, sometimes referred to as custodial care or personal care, involves non-medical care, such as assistance with bathing, dressing, eating, toileting, etc. No matter whether such services are received in the home or in a community-based setting, Medicare will not cover the cost of assisted living services.
Medicare Part A will, however, cover medically necessary skilled nursing care—for a limited time and limited amount—if certain requirements are met, including but not limited to:
- The recipient of care must have first had an “admitted” hospital stay of at least three days or longer.
- Admittance into the skilled nursing facility must take place within 30 days of the hospital stay.
- A physician must decide that daily medical nursing care or rehab is necessary.
- Care must be provided in a Medicare-certified facility. (Medically necessary services provided at home by a Medicare-certified home healthcare agency may also qualify for Medicare coverage.)
Typically, Medicare’s coverage of skilled nursing care follows a serious medical occurrence, such as a stroke, heart attack, fall, or major surgery.
Don’t confuse Medicare with Medicaid
Given that the names of each program are so similar there is often confusion between what is covered by Medicare and Medicaid. Medicaid is a government safety net program that only applies for those who essentially no longer have the assets and income available to pay for necessary care. Unlike Medicare, Medicaid actually will cover some of the costs of assisted living services for those who qualify.
Medicare reimbursable amounts
The full cost of skilled (medically necessary) nursing care—including the cost of a semi-private room, meals, therapies, medications, and more—will be covered by Medicare for the first 20 days. Between 21 and 100 days, if you are deemed to still be in need of such services, Medicare will pay $167.50 per day in 2018. (Whether or not you are still deemed to be in need of such services may be a point of debate in some cases.) This reimbursable amount is less than the national average daily cost of skilled nursing care for a semi-private room, which hovers around $235 according to Genworth Financial. Therefore, many people will still end up paying for some amount of care out of their own pocket during those 80 days. Also, if a private room is preferred over a semi-private room, this could increase the out-of-pocket cost further.
If care should be required for more than 100 days, then Medicare ceases to provide coverage, and the recipient of services is then required to pay 100 percent of the cost out-of-pocket. The 100-day period can reset if at least 60 days pass between occurrences and if the other stipulations are met.
Cost difference in private pay facilities
Not all skilled nursing facilities are Medicare-certified. Often referred to as “private pay” providers, these facilities do not accept Medicare and, therefore, residents must pay out-of-pocket for services beginning on day one.
The following chart compares the total cost exposure one would face in a private-pay facility versus a Medicare-certified facility:
|Medicare-Certified Facility||Private Pay Facility*||Difference||Total Days||Total Difference b/w Medicare Certified and Private-Pay|
|Days 1-20||$0||$235||$235||20 days||$4,700|
|Days 21-100||$167.50||$235||$67.50||80 days||$5,400|
*National average daily cost of semi-private room in a skilled nursing facility. Genworth 2018 Cost of Care Survey
As the chart illustrates, in 2018, the maximum financial exposure a person would face in a private-pay skilled nursing facility compared to a Medicare-certified facility for the first 100 days is just over $10,000. However, a resident’s Medicare supplement policy may cover some or all of the co-pay during days 21-100, thereby lowering the out-of-pocket exposure.
I had a chance to be in touch with Sean McCarthy of United Medicare Advisors (UMA) about this. UMA compares rates across more than 30 different carriers to help people get the coverage they need at the lowest possible rate, saving customers an average of $584 per year. “Many people don’t realize that in addition to the other benefits provided by a Medicare supplement policy, it can also help fill some of the gaps that are left by basic Medicare when it comes to skilled nursing care,” said McCarthy. “It’s important for people to understand where their exposure is so they can plan appropriately, and a licensed Medicare advisor can be a valuable resource in helping someone understand the options.”
Remember that after 100 days, Medicare does not pay anything, so all care received at that point would be out-of-pocket, regardless of whether or not it is received in a Medicare-certified facility.
Be sure to check back next week to learn how Medicare impacts the CCRC decision process.
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