Key Takeaways
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Medicare does not fully cover long-term care, and understanding your options early can help you plan better.
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Failing to prepare for long-term care costs can put a significant financial strain on you and your family.
Long-Term Care and Medicare: What You Need to Know Now
Many people assume that Medicare will take care of all their long-term care needs when they get older. Unfortunately, this is far from the truth. Long-term care can be one of the biggest expenses in retirement, and waiting too long to understand what Medicare covers—and what it doesn’t—can lead to serious financial consequences. Let’s break down the key facts you need to keep in mind.
1. Medicare’s Coverage for Long-Term Care is Extremely Limited
One of the most misunderstood aspects of Medicare is its role in covering long-term care. While Medicare does cover some healthcare services related to extended care, it does not pay for custodial care, which includes help with daily activities such as bathing, dressing, and eating.
What Medicare Covers
Medicare primarily covers medically necessary services, including:
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Skilled nursing care for a limited time after a hospital stay.
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Home health services under specific conditions.
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Hospice care for terminal illnesses.
What Medicare Does Not Cover
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Custodial care at home or in a nursing facility.
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Assisted living facility costs.
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Long-term nursing home stays beyond 100 days.
Understanding these limits is crucial because long-term care can be costly, and many people are caught off guard when Medicare does not pay for the services they expect.
2. The 100-Day Limit for Skilled Nursing Care
Medicare does provide coverage for skilled nursing facility (SNF) care, but only for a short period and under strict conditions. After a qualifying hospital stay of at least three days, Medicare covers up to 100 days of SNF care. However, this coverage is not free—copayments kick in after the first 20 days.
What Happens After 100 Days?
Once you reach the 100-day limit, you are responsible for all costs associated with the nursing home. This can be financially devastating if you haven’t planned ahead. The average cost of a private room in a nursing home is over $100,000 per year, making long-term care planning essential.
3. Medicare Advantage Plans May Offer Some Benefits—But Not Much
Some people turn to Medicare Advantage (Part C) plans hoping for better long-term care benefits. While some plans may offer limited extra benefits for home care or adult day services, they still do not cover long-term nursing home stays or custodial care.
Why This Matters
If you rely solely on a Medicare Advantage plan for long-term care coverage, you may still face significant out-of-pocket costs when you need help with daily living activities. Planning for these expenses in advance is crucial.
4. Medicaid Can Help—If You Qualify
Medicaid is a joint federal and state program that does cover long-term care, including nursing home stays. However, Medicaid eligibility rules are strict and require spending down your assets before you qualify.
The Medicaid Spend-Down
To qualify for Medicaid in 2025, most states require you to have assets below $2,000 for an individual and $3,000 for a couple (not including your primary home and certain exempt assets). This means many middle-class retirees must spend their savings before Medicaid steps in.
Planning for Medicaid
If Medicaid will be part of your long-term care strategy, you should start planning years in advance. Some states have five-year lookback periods on asset transfers, meaning you can’t simply give away money to qualify faster.
5. The Sooner You Plan, The Better Your Options
The biggest mistake people make is waiting too long to think about long-term care. Without a plan in place, you may be left scrambling when the need arises.
When Should You Start Planning?
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In your 50s and early 60s, before retirement, is the best time to explore long-term care options.
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Once you reach 65 and enroll in Medicare, you should review your long-term care plan regularly.
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If you wait until your 70s or 80s, your options for coverage and financial assistance become much more limited.
How You Can Prepare for Long-Term Care Costs
Consider Savings and Investments
Setting aside money specifically for long-term care expenses can help you stay prepared. Some retirees use health savings accounts (HSAs) or investments to cover future care needs.
Look Into Hybrid Long-Term Care Policies
Some insurance options combine life insurance with long-term care benefits. These hybrid policies allow you to access benefits if you need care while still providing a payout to beneficiaries if you don’t use them.
Talk to a Licensed Agent
A licensed agent listed on this website can help you understand your Medicare options and assist you in planning for long-term care expenses. Don’t wait until it’s too late—exploring your choices now can make a big difference in your financial security.
