Custodial & Skilled Care: What Medicare Pays

By Jennifer Turner

Medicare provides health coverage for more than 65 million Americans. Medicare, however, will only pay for short-term skilled nursing care. Consider certain medical situations to help your clients.

So, what happens if Mom broke her hip, is recovering in skilled nursing, but her Medicare coverage is running out and she still needs care? Who pays for her continued stay? What if Dad had a stroke, no longer requires skilled nursing care, and cannot live independently? Who pays then? What about when Medicare won’t cover the cost of skilled nursing care because certain criteria, such as a 3-day qualifying hospital stay is not met or one is not expected to recover from their injury or illness? Who pays then?

Adding further concern for many persons who receive Medicare coverage of skilled nursing care is the hefty daily coinsurance (the patient’s share of cost is $204/ day) for most days of skilled nursing care. Is there financial help for this?

When considering who pays for nursing home care, the length of one’s nursing home stay comes into play. Because Medicare varies the amount they will pay based on the length of time, other payers do as well. There are 3 periods of time; 1-20 days, 20-100 days, over 100 days.

Medicaid offers another option for paying for nursing care. In addition to paying for skilled nursing care, Medicaid will pay for non-medical, long-term nursing home care. While Medicaid will pay up to 100% of the cost (indefinitely as long as there is a need), a nursing home resident must contribute nearly all their income towards nursing home care as a Patient Liability. Note that Medicaid coverage is only provided for persons with limited financial means. For some people, the continuum from Medicare coverage of skilled nursing care to Medicaid coverage is fairly straightforward. For people who have income and assets greater than the allowable limits, it is a more complicated process, but not an impossible one.

In addition to discussing Medicare and Medicaid-funded nursing home care, this article will address the benefits of supplement insurance policies and how they are related to paying for nursing care. These plans, which include Medigap, Medicare Advantage plans, and employer-sponsored retiree health plans, can save seniors thousands of dollars. This is because they pick up some of the costs Medicare does not.

Click this link to a chart which shows who pays for nursing home care.

Medicare (Part A) Coverage of Nursing Home Care

Medicare will only pay for short-term skilled nursing care. This is intensive medical care for persons who are in the process of recovering from an illness or injury. Examples include stroke recovery, rehabilitation after breaking a hip, and wound care following an operation.

Medicare Part A (hospital insurance) will cover up to 100 days of skilled nursing facility care per benefit period for persons who meet the eligibility criteria. Medicare will pay 100% of the cost for the first 20 days. In 2024, for days 21 – 100, the Medicare beneficiary must pay a coinsurance of $204 / day. This is their “share of cost”, or in other words, it is an outof-pocket expense for which they are responsible. A benefit period starts the day a Medicare beneficiary is admitted to the hospital or skilled nursing facility. The benefit period ends after 60 consecutive days with no need for hospitalization or skilled nursing care. A Medicare beneficiary is permitted unlimited benefit periods.

Skilled vs Custodial Care

• Days 1-20

Medicare pays 100% of the cost for Short-Term Nursing Facility Care

• Days 21-100

The Medicare Beneficiary Pays $204/Day Days 21+ is Custodial Care

• After 100 Days

The Medicare Beneficiary is Responsible for 100% of the Cost for Custodial Care

Qualifying for Medicare’s Short-Term Skilled Nursing Facility Care

For Medicare to pay for skilled nursing care, the following eligibility criteria must be met:

• One must have Medicare Part A (hospital insurance).

• One must have a 3-day qualifying hospital stay (more below in the next section).

• One must be admitted to a skilled nursing facility within 30 days of the 3-day qualifying hospital stay. Care must be required for the same condition that required treatment during the 3-day hospitalization or for another condition that developed while receiving skilled nursing for the original condition treated during hospitalization.

• A physician has determined skilled nursing care is required on a daily basis.

• Skilled nursing care is provided in a Medicare-certified facility.

After Medicare payments end…

Medicare Will No Longer Pay, but Nursing Home Care is Still Needed. Now What?

• Private pay is one option. Nursing home care, however, is extremely expensive. Most persons cannot afford to pay privately, or cannot afford to do so for long.

• Long-term care insurance is another option, but again, one that is unavailable to many persons. The cost of such a policy is very high, and if one does not already have long-term care insurance, it is very unlikely an insurance company would sell them one with the current need of nursing home care.

For persons who are “dual eligible” (enrolled in both Medicare and Medicaid), Medicaid will pay for nursing home care for persons who meet all of Medicaid’s criteria for nursing home care.

Persons who are not enrolled in Medicaid, can apply. As long as a Medicaid application is pending, a nursing home resident cannot be forced to leave. It is not recommended that a relative or friend pay for care during this time. If approved for Medicaid coverage, Medicaid will pay for care from the date of one’s application. It may also pay for any days between Medicare coverage ending and one applying for Medicaid. It is possible to have retroactive Medicaid coverage for up to 3 months prior to Medicaid application. This means if one meets all Medicaid’s eligibility criteria during this period, Medicaid may pay for nursing home care during this time.

Do I Need to Change Homes if I Go From Medicare-Funded to Medicaid-Funded Nursing Care?

One does not usually have to switch homes if care becomes Medicaid-funded rather than paid for by Medicare. Most facilities that accept Medicare also accept Medicaid. Furthermore, many facilities offer both short-term skilled nursing facility care and long-term nursing home care.

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Jennifer Turner, joined Integrity Advisors in 2020 –a natural move as she became a healthcare advocate after 23 years as a high school teacher with a master’s in education. Jennifer cherishes developing a reliable rapport with each one of her clients. Jennifer loves helping her clients find the coverage that will help them live full, happy, and healthy lives.