Medicaid and long-term care — the coverage Medicare won't provide

This article is for educational purposes only and does not constitute medical, legal, or financial advice. Every family situation is different, and you should consult with appropriate professionals about your specific circumstances.

Your parent falls and breaks their hip. They spend three weeks in the hospital, then move to a skilled nursing facility for rehabilitation. Medicare covers the hospital stay. Medicare also covers the skilled nursing care for a limited time—up to one hundred days if they meet certain criteria, though most people get covered for much less. Physical therapy, occupational therapy, medical oversight—all covered by Medicare while they're recovering.

Then six weeks in, your parent still needs help. They can't walk independently yet. They can't safely get in and out of the shower. They need someone to manage their medications and remind them to eat. The doctor says they're no longer making medical progress. They're in what Medicare calls "custodial care." The hospital sends you a notice: Medicare coverage ends in three days. You have that long to figure out what happens next.

This is the gap. This is the crisis point where Medicare becomes irrelevant and Medicaid becomes essential. And if you don't understand the difference between skilled care and custodial care, or if you haven't planned for what comes after skilled care ends, you're about to face $8,000 to $12,000 monthly bills with no insurance to help you pay them.

Why Long-Term Care Is the Gap Medicare Simply Cannot Fill

Medicare was designed as acute care insurance. It pays for hospital stays, doctor visits, medical treatment, and rehabilitation after medical events. It assumes you'll recover and go home. It assumes your care needs are temporary. This assumption works fine if you're sixty-seven and need three weeks of skilled nursing after a hip replacement. You recover, go home, life resumes.

But that assumption breaks down when recovery doesn't happen. When your parent is eighty-six and has had a stroke that affects their mobility and cognition, they might recover some function with therapy, but they'll never fully recover. They'll always need help. That's not a temporary condition that Medicare covers. That's a permanent change in your parent's ability to care for themselves.

The distinction Medicare makes is between skilled care and custodial care. Skilled care involves medical oversight and therapy. A nurse administering medication, monitoring important signs, and coordinating with doctors,that's skilled. Physical therapy to help you regain walking ability,that's skilled. These things Medicare covers. But once your parent's condition stabilizes and they're not making medical progress, Medicare considers them to not need skilled care anymore.

Custodial care is help with daily living. Bathing, dressing, eating, toileting, medication reminders that don't require medical judgment, transportation. These are what your parent actually needs if they've had a stroke or have advanced dementia or are simply frail with age. But Medicare doesn't cover custodial care. Period. It doesn't matter if your parent needs it for the rest of their life. It doesn't matter if they can't do it themselves. Medicare's position is that custodial care is custodial, not medical, and therefore it's not Medicare's responsibility.

This gap is enormous. It's the reason long-term care insurance exists. It's the reason families go bankrupt. It's the reason Medicaid matters so much. Medicaid covers exactly what Medicare won't: indefinite custodial care in nursing homes, assisted living, home care, and community-based settings.

What Medicaid Covers for Long-Term Care

If your parent qualifies for Medicaid, and their state includes long-term care coverage in its Medicaid plan, then Medicaid covers nursing home care indefinitely. Not for ninety days. Not until they reach some limit. Indefinitely. As long as your parent lives and meets Medicaid eligibility requirements, Medicaid pays for their nursing home care. The facility gets paid by Medicaid. Your parent is covered. There's no bill after the initial Medicaid coverage begins, beyond a small monthly amount your parent retains for personal needs.

This coverage is extraordinary from a financial perspective. Unlimited nursing home care for potentially decades is something no private insurance could offer at an affordable price. But it exists in Medicaid. It's one reason Medicaid is so important for long-term care planning.

Nursing homes covered by Medicaid must accept Medicaid patients and follow Medicaid regulations. Some nursing homes are Medicaid-heavy, meaning most of their residents are on Medicaid. Others have a smaller percentage of Medicaid residents. Some nursing homes refuse to take Medicaid patients at all, which means if your parent is on Medicaid, those facilities aren't available to them. This creates two classes of nursing homes: the ones available to wealthy private-pay patients and the ones available to Medicaid patients. Quality varies, but your parent's access to facilities depends partly on their payment source.

Assisted living coverage varies dramatically by state. Some states include assisted living under Medicaid. Others don't. Some states cover it partially. Some require a co-payment. Assisted living is less intensive than nursing home care. Your parent typically has their own apartment or unit but can access meals, medications, activities, and emergency assistance. For families who want their parent in community-based care rather than an institutional nursing home setting, Medicaid coverage for assisted living can be ideal. But it's only available in certain states. In states without Medicaid-covered assisted living, families pay privately for assisted living until their parent's assets run out and they need nursing home care, at which point Medicaid takes over.

Home health and personal care services are also covered by Medicaid in most states. If your parent can stay home with help, Medicaid might cover home health aides, personal care attendants, meal preparation, light housekeeping, and other in-home services. This is often the preference for families and for older adults. Staying home is better than moving to a facility. But Medicaid's coverage of home care is usually more limited than nursing home coverage. The number of hours might be restricted. The duration might be limited. The rules vary by state. But if available and if your parent wants to remain home, Medicaid home care coverage can allow it.

Medicaid Versus Private Pay: Understanding the Cost Difference

A nursing home bed costs money. In 2024, the national average for nursing home care is around $8,000 to $10,000 per month. In expensive areas like California or the Northeast, it can be $12,000 to $15,000 or more monthly. Over a year, that's $96,000 to $180,000. Over five years, that's nearly a million dollars.

If your parent is private pay,meaning they're paying out of pocket, not using Medicaid,they pay this full cost. The facility sends them a bill. Your parent or their family pays it from savings, investments, or income. Many families watch this drain away life savings at a rate of $10,000 per month. Families that had $200,000 in savings watch it become $100,000, then $50,000, then nothing. The savings that were meant to provide security disappear into nursing home costs. This is the private pay reality.

Then, when the money is gone, the family applies for Medicaid. Your parent's savings are depleted. Their income is probably below the Medicaid limit. They qualify. Medicaid takes over paying the nursing home. The family finally gets a break from the monthly bills. The money stops disappearing.

This scenario,private pay until assets are exhausted, then Medicaid,is so common it's almost standard. Families don't plan this way because they choose to. They plan this way because they don't know there are other options, or because they can't afford to plan proactively. Their parent needs care. They don't have Medicaid. They pay out of pocket. When the money runs out, Medicaid becomes available.

But there's a trap in this approach. The years of private pay before Medicaid kicks in consume resources that could have been preserved through earlier planning. If your parent had worked with an elder law attorney years before needing care, they might have transferred assets legally and been Medicaid-eligible from the start. The money that went to private pay years one, two, and three could have been saved. Instead, the family chose the path of least immediate friction: pay out of pocket until the money is gone.

This is why planning matters. If your parent might need care, understanding Medicaid now,before the crisis,gives you options. You might be able to become Medicaid-eligible earlier and save money. Or you might decide private pay for a year or two makes sense in your situation. But the decision should be deliberate, not accidental.

Planning for Medicaid Coverage Before the Need Arises

The look-back period matters more for long-term care planning than for any other scenario. You cannot apply for Medicaid last-minute and expect to get immediate coverage if you've been giving away money or transferring assets.

If your parent is sixty-five and you know they might need care at seventy-five, you have ten years to plan. But the look-back is only five years. So transfers made more than five years ahead are safe. Transfers made within five years might be penalized. This timeline is important because it determines when you can start planning.

If your parent is seventy-eight and suddenly has a stroke, and you think they might need nursing home care, the look-back clock is already running. Any transfers you make now, or any major financial decisions, will be examined. You can't rapidly move assets around to make them Medicaid-eligible. You're stuck with your parent's current situation,their current assets, their current income, their current resources. If they have too many assets to qualify for Medicaid, they don't qualify. That's it. They'll pay privately until the assets are depleted.

This is why planning early is protective. The families who maintain options and flexibility are the ones who planned years before crisis. By the time care is needed, all the asset changes are outside the look-back period. No penalties apply. Medicaid eligibility is clean.

But planning requires thinking about long-term care before your parent needs it. Most families don't. They assume their parent will be fine, or they assume the family will figure it out when the time comes. Then the time comes, and they're scrambling.

The Spend-Down Reality: Your Parent's Money Goes First

Medicaid isn't free money. It's not charity. In most states, Medicaid only pays for your parent's care after your parent has spent down their own resources to a certain level. The state wants your parent to use their own money first. When the money is gone or nearly gone, Medicaid takes over.

This spend-down is a key concept. It means your parent uses their savings, their investments, their income,essentially all available resources,to pay for care. Once resources reach the Medicaid threshold for their state, Medicaid kicks in and pays the remaining costs for as long as your parent lives.

This policy assumes people use their own money before the government pays. It's fair from a policy perspective. If your parent saved $500,000 over their lifetime, they should use it for their care before asking the public program to pay. But it's devastating from a family perspective. Your parent's savings disappear. The inheritance your siblings thought they'd receive vanishes. The resources your parent wanted to leave behind are gone.

But this is the Medicaid reality in most states. A few states have different approaches, but the majority require spend-down. Understanding this upfront prevents shock later. Your parent might be on Medicaid, but they've already spent everything they had. The government pays, but only because your parent has nothing left.

Planning Medicaid Coverage: The Emotional and Practical Reality

For many families, accepting Medicaid for their parent feels like a failure. You feel like you didn't save enough. You feel like you're asking for government help. You feel like your parent is "on welfare," a phrase heavy with uncomfortable meaning. But Medicaid isn't failure. It's a program designed for exactly this situation,for people who need long-term care and can't pay for it privately.

Shifting your mindset helps. Your parent paid taxes their whole life. They contributed to the system. Medicaid is part of the social infrastructure. Using it when needed isn't shameful. It's what it's there for.

From a practical perspective, once your parent is on Medicaid, focus on making sure the care they receive is good. Medicaid pays the bill, but it doesn't guarantee quality. Advocate for your parent. Visit the facility regularly. Ask questions. Make sure they're eating, being treated with dignity, and receiving appropriate care. The payment source doesn't determine care quality, but your involvement as an advocate does.

How To Help Your Elders is an educational resource. We do not provide medical, legal, or financial advice. The information in this article is general in nature and may not apply to your specific situation. If you are concerned about a loved one's cognitive health or safety, consult with their healthcare provider or contact your local Area Agency on Aging for guidance and support.