How to Pay for Long-Term Care

While long-term care facilities are expensive, they’re often less costly than hiring 24-hour care at home. These facilities can can also offer short-term rehabilitation with the goal of returning home. If you or your loved one may need care, it pays to know the payment options upfront.

Medicare

Medicare is a federal benefit that will pay for the cost of a limited number of days of inpatient rehabilitation at a skilled facility. This is often called "sub-acute rehab" or "post-acute care."

Many people experience a short-term, inpatient rehabilitation stay as a result from a hip fracture, stroke, or a cardiac condition. However, there are many other reasons someone could need physical, occupational, or speech therapy—and consequently access this coverage. 

To be eligible for Medicare, you must:

  • Be over age 65,
  • Have a documented disability
  • Have end-stage renal disease

If you qualify, Medicare provides excellent coverage of costs. But, it's important to know that this coverage is only for a short time and is only available under certain circumstances. Medicare does not pay for care on an ongoing basis.

Accessing Coverage

The financial benefit of Medicare is not something you have to apply for or file a claim explaining your need. You automatically qualify for these benefits if you have Medicare Part A and Medicare Part B coverage.

Generally, if you receive a Social Security benefit or a Railroad Retirement Board benefit, you will be covered under Medicare Part A and Part B.

Covered Costs

Medicare will cover the daily rate for inpatient physical therapy, occupational therapy, and/or speech therapy. It also covers medications, treatments, and medical supplies during this time.

But does Medicare pay the whole cost? The short answer: It depends on how long you're receiving care. The longer answer: Medicare will cover 100 percent of the first 20 days of rehabilitation in a long-term care facility, as long as you continue to meet criteria (see below) to qualify for coverage during those 20 days.

Beginning on day 21, you will be responsible for a co-payment per day. Then, Medicare will pay the remainder of the charge per day for up to 100 days. 

You can purchase insurance coverage to pay this co-payment by buying a supplemental policy, also called Medigap insurance. Many supplemental policies cover the full co-payment, so there's no out-of-pocket expenses for your inpatient rehabilitation stay.

Note, Medicare will pay for care coverage more than once. If you've previously used it, you must have 60 days where you didn't use it to become eligible again. Facilities must also be certified by Medicare to provide inpatient rehabilitation.

100 Days of Inpatient Rehabilitation

Many people are under the false impression that Medicare will automatically provide 100 days of coverage. Medicare will provide this benefit for up to 100 days, but due to the criteria established (see below), many people only receive a few days or weeks of this coverage.

There is no guarantee as to the number of days that Medicare will pay; rather, it depends on each individual's needs and assessment.

Criteria

There are certain conditions under which medicare will pay. The following criteria must be met:

Three-Day Hospital Stay

You must have had a three-day hospital stay that was considered an “in-patient” stay by the hospital. This means that if you were only classified as an “observation” patient, Medicare will not cover services.

Additionally, if your hospitalization was classified as inpatient but you were only there over the course of two midnights (the time they use to mark another day), Medicare will not cover the stay.

You should ask at the hospital whether your stay has been deemed inpatient or observation, as well as verify that you have met the three-day stay requirement to access Medicare benefits .

Timing Requirements

If you met the three-day stay hospitalization requirement, you can use the Medicare benefit right after your hospital stay by transferring directly to the facility for rehabilitation. 

For example, you could decide to go straight home from the hospital after you had a hip surgery. Three weeks later, you could still choose to be admitted to a facility for rehab and access the Medicare benefit to get your stay and therapy paid for by Medicare.

Note, the reason you enter a facility must be the same for which you were hospitalized.

Medical Criteria

You must also continue to meet criteria for Medicare coverage while at the facility. This criteria is based on the Medicare Data Set (MDS) assessment which the staff must repeatedly conduct at set intervals to determine your functioning.

The MDS is a detailed evaluation completed by staff members from several different areas, including nursing, dietary services, activities, and social work. It measures your current abilities and progress towards your goals.

If you continue to require skilled care, such as physical, occupational, or speech therapy, or care provided or supervised by licensed nursing staff, Medicare will pay for your inpatient rehabilitation stay. As soon as you don't need this care (according to the MDS), you will receive a written notice warning you that Medicare will no longer cover these services.

Medicare Advantage Plans

Some opt out of the traditional Medicare plan and instead chose what’s called a Medicare Advantage plan. This is Medicare coverage administered by another group instead of the federal government.

Medicare Advantage plans (also called Medicare Part C) provide similar coverage as compared to the traditional Medicare plan, with a few exceptions:

  • Some Advantage plans don’t require a three-day inpatient hospital stay. They may provide financial coverage at a facility even if the person is admitted right from their home or has stayed less than three days at a hospital.
  • Some Advantage plans have certain facilities that they consider in-network (or preferred) and others that are specified as out-of-network. If the inpatient rehabilitation care facility is not in your Advantage plan’s network, your services may not be covered or may be covered at a reduced rate.
  • Many Advantage plans require prior authorization by the insurance plan for services to be covered, while traditional Medicare does not. This prior authorization involves sending your medical information to the insurance plan for review. Then, the Advantage plan makes a determination about whether they will or won't cover your rehabilitation. If the prior authorization is not conducted or your stay is not approved, the Advantage plan will not pay.

Long-Term Care Insurance

Long-term care insurance is insurance you can purchase that pays for a certain amount of time in a care facility. The cost and amount of coverage varies significantly according to length of coverage you purchase and whether you opt for full or partial coverage.

Additionally, most long-term care insurance companies have a list of conditions or medications that can make an individual ineligible for coverage or significantly increase the cost. Those often include neurological conditions, like Alzheimer’s disease or other dementias, Parkinson’s disease, some heart conditions, and the use of certain psychotropic medications.

If you apply for long-term care insurance when you are younger and generally healthier, you will pay premiums over a long period of time (but usually at a much lower rate). If you apply when you’re older, when the likelihood of needing a facility increases, your monthly rate for long-term care insurance will be much higher.

Whether long-term care insurance is right for you depends on many factors, so you will want to speak with your insurance agent about cost and coverage options.

Medicaid

Many people set aside money for their care later in life, but sometimes the cost of that care eats that money up very quickly, even if they've tried to plan well and save. If your financial resources have been exhausted, you can then apply for Medicaid.

Medicaid is federal government assistance that is administered by each state for those whose money has been depleted. An individual must qualify financially (by having less than $2,000 in countable assets) and qualify medically (by meeting a level of assessment that shows that they actually need care).

Medicaid also has some provisions to prevent impoverishment for a spouse of a care facility resident who will continue to live in their own home or in another facility.

Veterans Administration Aid and Attendance

If you and/or your spouse are a veteran, you may be eligible for financial assistance through the Veterans Administration. You need to submit an application which may take approximately three months to be processed.

After approval, you will be eligible for a monthly benefit per person who served. This money can then be used to help pay for care.

Private Pay (Out-of-Pocket)

One other way to pay for care in a facility is to pay out-of-pocket, or what’s often referred to as private pay. Paying privately for facility care usually means that you have many options of facilities to choose from, since most prefer private pay or Medicare clients, rather than Medicaid.

Paying privately for facilities is expensive though. Costs can often range from $250 to $350 per day and more, which can result in $80,000 to $125,000 per year. And that may only be for a semi-private or shared room. (Some facilities offer private rooms for an additional fee per day.)

A Word From Verywell

Planning ahead and knowing your options can be very helpful if you're faced with the possibility of paying for long-term care. Additionally, some community agencies and care facility staff members are available to help you access your potential benefits.

While the expenses of long-term care are significant, we hope that it is reassuring to know that there are different options available to help cover those costs if, like many, you're unable to pay fully.

Was this page helpful?

Article Sources

Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial policy to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.