Key Facts About Medicare & Nursing Homes
- •Medicare covers skilled nursing care for up to 100 days only—and only after a qualifying hospital stay
- •80% of nursing home residents rely on Medicaid, not Medicare, for long-term care
- •Medicare never covers long-term custodial care (help with bathing, dressing, eating)
- •The 3-day hospital stay rule catches many families off guard—"observation status" doesn't count
The Uncomfortable Truth About Medicare and Nursing Homes
Here's something that shocks most families: Medicare—the health insurance program that covers 65 million Americans—does not pay for long-term nursing home care.
It's one of the most common and costly misconceptions in senior care. People assume that after paying Medicare taxes for decades, they'll be covered when they need a nursing home. Then the bills arrive, and reality hits hard.
Medicare will pay for some nursing home care—but only under specific circumstances, for a limited time, and only for "skilled" care. Once you understand these rules, you can plan accordingly. This guide explains exactly what's covered, what isn't, and what your options are.
What Medicare Actually Covers: The 100-Day Breakdown
According to Medicare.gov, Medicare Part A covers skilled nursing facility (SNF) care—but only when all of these conditions are met:
Requirements for Medicare SNF Coverage
- You had a qualifying inpatient hospital stay of at least 3 consecutive days
- You enter a Medicare-certified skilled nursing facility within 30 days of leaving the hospital
- You need skilled nursing care or skilled therapy services (physical therapy, occupational therapy, speech therapy)
- The services must be medically necessary and provided on a daily basis
If you meet all these requirements, here's what Medicare pays:
| Time Period | Medicare Pays | You Pay |
|---|---|---|
| Days 1-20 | 100% of approved costs | $0 |
| Days 21-100 | All costs above daily coinsurance | $204.00/day (2025) |
| Days 101+ | $0 | 100% of all costs |
Source: Medicare.gov 2025 Costs
What This Actually Costs You
Let's say you need 60 days of skilled nursing care after a hip replacement:
- Days 1-20: $0
- Days 21-60 (40 days × $204): $8,160
- Total out-of-pocket: $8,160
Many people have Medicare Supplement (Medigap) policies that cover some or all of the daily coinsurance. Check your policy.
The 3-Day Hospital Stay Rule: The Trap Nobody Warns You About
This is where families get blindsided. Medicare requires a 3-day inpatient hospital stay before it will cover any skilled nursing facility care. Sounds simple. It isn't.
The "Observation Status" Trap
Hospitals increasingly place patients in "observation status" instead of admitting them as inpatients. You can spend 3 days in a hospital bed, receive the same care, eat hospital food, wear a hospital gown—and none of it counts toward the 3-day requirement.
According to the Centers for Medicare & Medicaid Services, observation status is technically outpatient care, even though you're in a hospital bed.
This matters because: if you're discharged from "observation" to a nursing home, Medicare won't pay a dime.
Protect Yourself: Ask This Question
Within 24 hours of any hospital stay, ask: "Am I admitted as an inpatient, or am I in observation status?"
If you're in observation status and believe you should be admitted, you have the right to ask the doctor to change your status. Hospitals must provide written notice (the Medicare Outpatient Observation Notice, or "MOON") if you've been in observation for more than 24 hours.
Counts Toward 3 Days
- ✓Formal inpatient admission
- ✓Day of admission counts
- ✓Midnight-to-midnight stays
Does NOT Count
- ✗Observation status (any length)
- ✗Emergency room time
- ✗Day of discharge
What Medicare Will NEVER Cover
Here's the hard truth that catches families off guard: Medicare is designed for acute medical care, not long-term support. These services are explicitly excluded from Medicare coverage:
Medicare Does NOT Cover:
Long-Term Custodial Care
- • Help with bathing and dressing
- • Assistance with eating
- • Toileting and incontinence care
- • General supervision for safety
- • Medication reminders (non-skilled)
Extended Nursing Home Stays
- • Any care beyond 100 days
- • Room and board for long-term residents
- • Care without prior hospital stay
- • Care when you're not improving
- • Dementia care (unless skilled need)
The distinction comes down to "skilled" vs. "custodial" care:
| Skilled Care (Medicare Covers) | Custodial Care (Medicare Doesn't Cover) |
|---|---|
| IV medications and injections | Help getting dressed each morning |
| Physical therapy after surgery | Assistance walking to meals |
| Wound care requiring nursing skill | Bathing and personal hygiene help |
| Tube feeding management | Feeding assistance (without tube) |
| Speech therapy after stroke | Supervision for dementia safety |
The "Improvement" Requirement
Even if you're receiving skilled care, Medicare requires that you be making progress. If a doctor determines you've reached "maximum improvement" and are receiving maintenance care, Medicare coverage can end—even before 100 days.
Medicare vs. Medicaid: The Critical Difference
These two programs have similar names but serve completely different purposes. Understanding the difference is essential for nursing home planning.
| Feature | Medicare | Medicaid |
|---|---|---|
| What It Is | Federal health insurance | Federal-state assistance program |
| Who Qualifies | Age 65+ or disabled | Low income/assets (any age) |
| Nursing Home Coverage | Up to 100 days skilled care | Long-term care, indefinitely |
| Requires Hospital Stay? | Yes (3+ days inpatient) | No |
| Covers Custodial Care? | No | Yes |
| Asset Test? | No | Yes (strict limits) |
The Typical Path
Most nursing home residents follow this pattern: They enter a facility after a hospital stay, with Medicare covering the first weeks of rehabilitation. When Medicare coverage ends—either at 100 days or when skilled care is no longer needed—they transition to private pay or Medicaid. According to KFF research, roughly 62% of nursing home residents are covered by Medicaid at any given time.
How to Qualify for Medicaid Nursing Home Coverage
Since Medicare won't cover long-term care, Medicaid becomes the primary payer for most nursing home residents. But qualifying isn't automatic—there are strict financial requirements.
Income Limits (2025)
Most states use the "300% rule"—income must be below 300% of the SSI Federal Benefit Rate:
Some states have lower limits. Many allow "income spend-down" or Qualified Income Trusts.
Asset Limits (2025)
Countable assets must typically be below:
Excludes primary home (with equity limits), one vehicle, personal belongings, and prepaid burial.
Protecting a Spouse's Assets (CSRA)
If one spouse needs nursing home care while the other remains at home, the Community Spouse Resource Allowance (CSRA) protects some assets. According to Medicaid.gov, in 2025 the community spouse can typically keep:
- The family home
- One vehicle
- Up to $154,140 in countable assets (varies by state)
- A monthly income allowance (the MMMNA) if their income is low
The 5-Year Look-Back Period
Medicaid reviews all financial transactions from the past 5 years (60 months) when you apply. If you gave away assets—to children, to charity, to anyone—during that period, you may face a penalty period during which Medicaid won't pay for your care.
This is why planning ahead matters. Transferring assets to qualify for Medicaid must be done carefully and well in advance. An elder law attorney can help navigate these rules legally.
When to Consult an Elder Law Attorney
Consider professional help if you have:
- Assets significantly above Medicaid limits
- A spouse who will remain at home
- A home you want to protect for heirs
- Made gifts or transfers in the past 5 years
- Complex financial situations (trusts, annuities, business interests)
Other Ways to Pay for Nursing Home Care
If Medicare won't cover long-term care and you don't qualify for Medicaid, here are other options:
Long-Term Care Insurance
If you purchased a policy before needing care, it may cover a daily or monthly benefit for nursing home costs. Policies vary widely—check your coverage limits, elimination periods, and benefit triggers. Unfortunately, buying coverage after health problems develop is typically not possible.
VA Benefits for Veterans
Veterans may qualify for Aid and Attendance benefits, which can provide up to $2,500+/month for nursing home care. The VA also operates Community Living Centers (nursing homes) for eligible veterans. Eligibility depends on service history, disability rating, and financial need.
Private Pay / Personal Savings
With nursing home costs averaging $8,000-$10,000 per month nationally (and much higher in some areas), private pay depletes savings quickly. Many families pay privately until assets are spent down to Medicaid eligibility levels.
Use our Cost Calculator to estimate nursing home costs in your state.
Life Insurance Conversion
Some life insurance policies can be converted to pay for long-term care through "accelerated death benefits" or by selling the policy (life settlement). This trades death benefit for immediate care funds.
Reverse Mortgages
Homeowners 62+ can tap home equity through a reverse mortgage to pay for care. However, this only works while you're living in the home—if you move to a nursing home permanently, the loan becomes due. Consult a HUD-approved counselor before proceeding.
Practical Next Steps
1. Verify a Facility's Certification
Not all nursing homes accept Medicare or Medicaid. Before choosing a facility, confirm:
- Is it Medicare-certified for skilled nursing?
- Does it accept Medicaid for long-term care?
- Are there Medicaid beds available? (Some facilities limit Medicaid patients)
You can verify certification on our facility search or Medicare Care Compare.
2. Ask About Payment Transitions
If you're entering on Medicare and may need to transition to Medicaid later, ask the facility:
- "Do you allow residents to transition from Medicare/private pay to Medicaid?"
- "Will I have to move rooms or leave if I go on Medicaid?"
- "How many Medicaid beds do you have, and is there a waiting list?"
3. Start Medicaid Planning Early
Given the 5-year look-back period, the time to plan is before you need care. If a parent is in their 70s and healthy, now is the time to consult an elder law attorney about:
- Asset protection strategies
- Irrevocable trusts
- Spousal protection planning
- Long-term care insurance options
4. Know Your State's Medicaid Rules
Medicaid is administered by states, so rules vary significantly. Income limits, asset exemptions, and application processes differ. Contact your state's Medicaid office or browse facilities by state to start researching options in your area.
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Sources
This guide references official government sources and reputable research organizations:
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