Medicare vs. Medicaid for long-term care
These two programs sound alike and are constantly confused. One is insurance for people over 65 regardless of income. The other is welfare with a means test. Only one of them pays for the long term.
The single most expensive misunderstanding in senior care is thinking Medicare will pay for a nursing home. It will not — not for the long term. Here is the division of labor.
| Comparing | Medicare | Medicaid |
|---|---|---|
| Who qualifies | Age 65 or over, or under 65 with a qualifying disability. No income limit. | Low income and limited assets, with state-specific limits. |
| Funded by | Federal, with premiums and deductibles. | Federal and state together. |
| Nursing home | Up to 100 days per benefit period of skilled care, after a qualifying hospital stay. Custodial care is not covered. | Ongoing custodial and skilled care, once eligible. |
| Assisted living | Not covered. | Sometimes, through home- and community-based services waivers, with waiting lists. |
| In-home care | Skilled nursing or therapy at home only, and only for a limited period. | Personal care and, in many states, home health aide hours. |
| Duration | Defined benefit periods. | As long as eligibility is maintained. |
What Medicare actually covers
Medicare Part A covers inpatient skilled nursing facility care for up to 100 days per benefit period when all of these are true:
- You had a qualifying inpatient hospital stay, in most cases at least three consecutive days as an inpatient. Medicare Advantage plans have been permitted to waive this requirement; traditional Medicare has not.
- A doctor orders skilled nursing or therapy because your condition requires it.
- The facility is Medicare-certified and the care is for a condition treated during the hospital stay.
- You still need skilled care. Once you need only custodial help, coverage ends, regardless of the 100-day clock.
Days 1–20 are covered in full. Days 21–100 require a daily coinsurance amount set each year by CMS, after which Medicare pays the remainder. Beyond day 100, there is no coverage unless a new benefit period is established after another qualifying hospital stay.
That last point is the one families miss: the clock is not a guarantee. Many stays end on day 20 or 30 because the person no longer needs skilled care. Needing help with bathing, dressing, meals, and medication is not skilled care.
What Medicaid covers
Medicaid is the country's primary payer for long-term care. It pays for nursing home care and, through home- and community-based services waivers, for assisted living and in-home care in most states. Coverage is not automatic even once you qualify financially — waiver slots are limited, and waiting lists are common in some states.
Financial eligibility in most states means:
- Income: at or below $2,982 per month for a single applicant (300% of the $994 SSI rate). Some states use a different threshold.
- Countable assets: no more than $2,000 for a single applicant. The home is usually exempt if a spouse lives there or the applicant intends to return.
- Spousal protection: when one spouse needs care and the other stays at home, the community spouse may keep a protected share of assets and a minimum monthly income. The exact numbers are published annually and vary by state.
Most applicants do not start out eligible. They spend down — legally, with guidance — before applying. Read the spend-down rules, because doing it incorrectly can trigger a penalty period of months or years.
The practical order of operations
- Use Medicare for the short-term skilled stay after a hospitalization.
- Pay privately from income and savings while the person needs the care.
- Work the other funding sources: long-term care insurance, VA benefits, home equity.
- Consult an elder-law attorney before spending down, not after.
- Apply for Medicaid when assets are near the limit, and expect paperwork.
Keep reading
How to pay for assisted living · Assisted living vs. nursing home · Medicaid spend-down rules
Medicare vs. Medicaid FAQ
Does Medicare pay for nursing home care?
Only for short-term skilled care, up to 100 days per benefit period, and only after a qualifying inpatient hospital stay. Days 1 to 20 are covered in full; days 21 to 100 require a daily coinsurance payment. Custodial care — help with bathing, dressing, and meals — is not covered.
What is the difference between Medicare and Medicaid?
Medicare is federal health insurance available at 65 or after certain disabilities, with no income test. Medicaid is a joint federal-state program for people with low income and limited assets. Medicaid is the program that pays for long-term care.
Will Medicaid take my parents house?
Not while a spouse lives in it, and not while the owner intends to return home. After the Medicaid recipient dies, the state may seek recovery from the estate, which can include the house. States vary widely, so ask the state agency directly.