In a previous post titled Long Term Care: What Does Medicare Actually Cover?, I described the possible out-of-pocket financial impact someone may face by receiving care in a private-pay skilled nursing facility (SNF) versus a Medicare-certified SNF.

In a nutshell, Medicare Part A will cover medically necessary skilled nursing care—for a limited time and limited amount—if certain requirements are met and if the facility is Medicare-certified. Beyond that, the recipient of services is required to pay 100 percent of the cost of care, out-of-pocket. The national average daily cost of skilled nursing care for a semi-private room is around $235; a private room is even more.

However, 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.

To give you an idea of the financial exposure a person would face in a private-pay skilled nursing facility, compared to a Medicare-certified facility, for the first 100 days, the average cost difference would total just over $10,000. (Note that that is for one benefit period. Benefit periods can reset if someone is out of the skilled nursing facility for a period of time and then goes back. So, the word “total” isn’t entirely accurate.)

>> Related: What is a Medicare-Certified Senior Care Center?

Paying for skilled nursing care at a CCRC

A question that often arises among prospective residents of continuing care retirement communities (CCRCs, or “life plan communities”) is how this Medicare coverage and pricing structure would apply to the CCRC’s on-site healthcare center and the care services provided there.

CCRCs provide residents with priority access to care services across a full continuum of care, including skilled nursing care within the healthcare center. Residents must be able to live independently in order to enter into a CCRC contract, which provides them with priority access to various levels of care that may be necessary in the future. CCRCs offer a great option for those who want to continue living active lives today but also recognize the importance of having easy access to care when needed.

>> Related: What is a “Continuum of Care”?

The application of Medicare coverage to a CCRC is really no different than what I described in my aforementioned post. Medicare will not be involved if the resident is either living independently or receiving assisted living services, unless there are doctor visits or a hospital stay. If, however, the CCRC resident is receiving skilled nursing care in the on-site healthcare center, and the healthcare center is Medicare-certified, then such services may be reimbursed by Medicare in accordance with the criteria I described in my post. Of course, if the CCRC’s healthcare center is not Medicare-certified then the resident would be responsible for the cost of services beginning on day one, per the terms of their CCRC contract.

The cost impact of your CCRC contract choice

CCRCs offer a variety of residency contract structures, which impact the cost of care services if and when needed. For example, some CCRCs offer an all-inclusive “lifecare” contract. Under this contract type, if the resident requires skilled nursing care, they will continue paying the same monthly rate they were paying prior to requiring care. In this case, once the resident begins receiving care, Medicare would pay the applicable reimbursement rates to the CCRC, even though the resident is still paying the same monthly rate as before. After Medicare reimbursement runs out, the CCRC is on the hook for the difference between the cost of providing care and the monthly service fee being paid by the resident.

Other CCRCs offer a fee-for-service contract. In this case, the resident’s monthly service fee will increase if and when care is received. Some CCRCs offer a modified version of a fee-for-service contract whereby the resident will pay more when care is received but with some form of a discount applied. For example, before paying the full market rate for care services, the resident may first receive a certain number of days in the healthcare center at no additional cost. Or, there may be a discount applied to the cost of care services received. Under this type of CCRC contract, the resident’s increased cost will be offset by Medicare-reimbursements for up to 100 days, in accordance with the chart I provided in the previous post.

>> Related: Learn more about CCRC contracts

Understanding the cost of your care

As you can see, there is a cost difference between receiving skilled nursing care services from a Medicare-certified provider versus a private pay healthcare facility. Relative to the cumulative cost of care over a number of years the difference could ultimately prove to be somewhat marginal. Nonetheless, it is important to understand whether the healthcare center within the CCRC you are considering is Medicare-certified or not so that you can make an informed choice about what’s best for you.

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