Does Medicare pay for assisted living? What you need to know

If you’re a senior or care for one, you might wonder: does Medicare pay for assisted living? The answer is that it doesn’t — a fact that many people aren’t aware of. “One of the biggest misconceptions I hear is that Medicare covers assisted living,” says Richard Mabe, a licensed nurse and regional director of resident care at Waltonwood Senior Living. “It doesn’t, and that surprises a lot of families I talk to.”

Here, we’ll take a close look at what is covered by Medicare, alternative ways to pay for assisted living and how to best navigate planning for and financing assisted living care.

How does Medicare pay for assisted living? 

Unfortunately, Medicare doesn’t pay for room and board or the daily care people get in assisted living facilities. “Medicare is really designed for short-term, medically necessary care,” Mabe explains. “It covers things like hospital stays, doctor visits and rehab, but not the everyday support that assisted living provides, like help with bathing, meals or managing medications.”

“It [Medicare] will cover care at doctors offices, hospitals and specialists that accept Medicare. It will not cover any services provided by the assisted living facility.”

— Dan Hardle, health insurance and Medicare expert

What’s confusing to many people is that Medicare does typically cover other medical care while you live at an assisted living facility — but that Medicare coverage essentially functions the same way it did when you were living at home, explains Dan Hardle, health insurance and Medicare expert and the chief executive officer at Medicare Advocates. “It will cover care at doctors offices, hospitals and specialists that accept Medicare. It will not cover any services provided by the assisted living facility.”

Which costs might be covered by Medicare in assisted living?

Although Medicare won’t cover the cost of living in an assisted living facility, it may cover certain medical services that you could receive while staying at an assisted living facility.

According to Mabe, some of the services Medicare may cover while you’re staying in assisted living include:

• Certain Medicare-approved medical items and medical devices.
• Outpatient rehabilitation services.
• Durable medical equipment, such as walkers or wheelchairs.
• Prescription drugs.

As an example, let’s say a person needs rehabilitation after a hospital stay, and they’re ready to be discharged back to their assisted living facility. Medicare may pay for a physical therapist to visit them in the facility and provide physical therapy sessions — but that’s not the same as paying for the actual stay at the assisted living facility.

In some states, seniors are eligible for the Program of All-Inclusive Care for the Elderly (PACE), which is funded by both Medicare and Medicaid. The PACE program may cover certain services that people in assisted living use — such as physical therapy, occupational therapy or nutrition counseling — but it does not cover the cost of living in an assisted living facility.

Does Medicare cover short-term assisted living stays?

Many people wonder if Medicare will cover a short-term assisted living stay after a hospital discharge. The answer is no, it doesn’t cover this. “In reality, [Medicare] coverage for short‑term recovery usually applies only in a skilled‑nursing facility and only after a qualifying hospital stay,” Mabe says.

Part of the confusion comes in understanding the different levels of care, Mabe says. “Skilled nursing is round‑the‑clock medical care, like IVs, wound care and daily therapy,” he explains. On the other hand, “assisted living focuses on everyday tasks like meals, bathing and dressing, but it doesn’t handle diagnostics or prescriptions.”

Does Medicare cover hospice care in assisted living?

Another service that Medicare pays for is hospice care, which is care provided at the end of life. “Medicare pays for hospice care in full, and that care can be delivered in assisted living,” says Mabe. But again, even if the caretakers are covered, the room and board at the assisted living facility can’t be paid for by Medicare.

Frequently asked questions about Medicare and assisted living

Can I use Medicare Advantage for assisted living?

Medicare Advantage (Medicare Part C) is a selection of private health insurance plans for seniors that are subsidized by the federal government. Medicare Advantage does not cover assisted living.

Does Medicare part B cover assisted living?

Medicare part B covers medical and preventative care for seniors, but it doesn’t cover assisted living. 

Does Medicare cover memory care facilities?

Unfortunately, even if you are diagnosed with dementia, Medicare will not cover your stay in a memory care facility.

Alternatives to Medicare for assisted living costs

In essence, there are three main ways to pay for assisted living, says Scott Maibor, a life insurance and Medicare expert and the managing director of Senior Benefits Boston, LLC. These are:

• Long-term care insurance.
• Self-pay.
• Medicaid.

Let’s take a closer look at each of these options. 

Long-term care insurance

In order to use long-term care insurance to pay for assisted living, you typically need to have purchased the insurance in advance of when you want to move to assisted living. Most long-term insurance companies will not sell policies to seniors who are of advanced age or who have serious medical conditions. 

“There’s no single answer for everyone, but most families have more funding options than they realize.”

— Richard Mabe, senior living director

Self-pay

Self-pay is exactly as it sounds: it’s using your income, assets, savings and other financial resources to pay for assisted living care. This cost can add up quickly, though, since assisted living costs an average of $5,900 per month in the U.S.

“For self-pay clients, I highlight the cost — emotionally and physically — on the family and how devastating the cost of care can be on community spouses who may survive for decades more with no savings,” Maibor emphasizes. While the ease or difficulty of this route will depend on your personal finances, these are important factors to consider before deciding to self-pay for assisted living.

Medicaid

Medicaid will pay for assisted living in some instances — but you have to find an assisted living facility that accepts Medicaid. Not all of them do. Moreover, you have to qualify for Medicaid, if you don’t already.

“Medicaid requires that you meet the state’s definition of being destitute,” says Maibor. “Not only must you meet stringent income and asset requirements, there is a looking back period — generally five years — where if you moved assets out of your name within that period, they will be moved back into your name if you need assistance.”

If you don’t meet the financial and income requirement for Medicaid, Mabe suggests working with an elder law attorney, who may be able to help you create a trust to improve Medicaid eligibility and protect your savings.

Read more:

How much does Medicaid pay for assisted living?

Other ways to pay for assisted living 

These aren’t the only possible routes for paying for assisted living. According to Mabe, other options include:

• Life insurance riders. These often allow policyholders to access funds early for care.
• VA Aid &  Attendance benefit. Veterans and surviving spouses may qualify for this benefit, which is a monthly payment that covers care costs.
• Reverse mortgages. Some families choose to tap into home equity to pay for assisted living through a reverse mortgage.

How to financially plan for assisted living 

While learning that Medicare doesn’t cover assisted living can be distressing, it can also be helpful knowledge as you plan your retirement or a loved one’s care. 

The best plan to pay for assisted living is a plan that starts as early as possible. Mabe recommends people begin planning for future care needs as early as in their 40s or 50s, if possible. That’s the time to ask questions like:

• Do I need long-term care insurance?
• Are my retirement contributions realistic?
• What assistance programs might I qualify for later?

It’s best to be clear-eyed and realistic about what’s to come. “People often delay because they assume they’ll never need help or that they’ll age at home indefinitely,” Mabe says. “But things change, and when you’ve already explored your options, you’ll make better and less stressful choices when the time comes.”

Hardle offers the following tips for how to financially plan for assisted living and other long-term care needs:

• Analyze your income and expenses.
• Consider funding from other sources, such as savings and investments.
• Research your insurance options, such as Medicaid, long-term care and life insurance add-ons.
• Create a budget and financial plan to save for necessary future care.

Finally, he adds, if you need assistance with planning or savings, you might consider employing the help of a financial planner or eldercare attorney.

One final tip from a Medicare expert

Many people are taken aback when they learn that Medicare doesn’t cover the cost of assisted living. The good news is that there are still options for you if you need help paying for assisted living.

“There’s no single answer for everyone, but most families have more funding options than they realize,” says Mabe. Even taking small steps, like speaking to a financial advisor or learning about local Medicaid programs, can give you an advantage later.

“The more you plan ahead, the more choices you’ll have when it matters most,” Mabe concludes.