Medicare vs. Medicaid: who pays for nursing home care?

Many families are surprised to learn that Medicare and Medicaid play very different roles in paying for nursing home care. Here is the simple version: Medicare pays for short rehab stays. Medicaid pays for long-term care.

Medicare covers a limited stay in a skilled nursing facility while a person recovers from a hospital visit, such as after a stroke, a fall, or surgery. That coverage runs out quickly. When someone needs to live in a nursing home for months or years, Medicare does not pay for it. Medicaid, a separate program for people with limited income and assets, is the largest payer of long-term nursing home care in the United States.

This guide explains what each program covers, who qualifies, and where to get help with your own situation. It describes the programs in plain terms, but it is not financial or legal advice. Rules and dollar amounts change, and they differ by state.

Medicare Part A can pay for care in a skilled nursing facility (SNF), but only under specific conditions and only for a limited time:

• The stay must follow a qualifying hospital stay — generally at least 3 days as an admitted inpatient (time spent under "observation status" usually does not count).
• The person must need skilled care, such as nursing care or physical therapy, that can only be given in a facility — not just help with daily activities.
• Coverage lasts up to 100 days per benefit period, and many stays end sooner if the person stops making progress or no longer needs skilled care.

The cost to the patient rises during those 100 days:

• Days 1–20: Medicare pays in full for covered services.
• Days 21–100: the patient owes a daily coinsurance. This amount changes every year — as of recent years it has been roughly $200 or more per day. Check medicare.gov for the current figure.
• After day 100: Medicare pays nothing for the stay.

A "benefit period" starts when someone is admitted to a hospital or SNF and ends after they have been out of facility care for 60 days in a row. A new benefit period can restart coverage, but only after another qualifying hospital stay. People on Medicare Advantage plans may have different cost-sharing and rules, so check with the plan directly.

Most people in nursing homes are not there for short-term rehab. They live there because they need daily help with things like bathing, dressing, eating, using the bathroom, and moving safely. This kind of help is called custodial care.

Medicare does not pay for custodial care when that is the only care a person needs — not in a nursing home, and not at home. This is one of the most common and costly misunderstandings in elder care. Families often assume Medicare will cover a parent's nursing home bill, then learn it will not once the short skilled-care benefit runs out.

Nursing home care paid out of pocket often costs $8,000 to $12,000 or more per month, depending on the area. Because of that, most families who need long-term care eventually turn to the program described next: Medicaid.

Medicaid is a joint federal and state program that covers health care for people with limited income and assets. Unlike Medicare, Medicaid does pay for long-term nursing home care, including custodial care, for as long as the person qualifies and needs it. It is the single largest payer of nursing home care in the country.

Two things make Medicaid different from Medicare:

• It is need-based. You must meet financial limits on income and assets, plus a medical need for nursing home-level care.
• It is run by each state. The federal government sets broad rules, but each state sets its own limits, applications, and program names (for example, Medi-Cal in California). The rules where you live are what matter.

Many people enter a nursing home paying privately, spend their savings on care, and then apply for Medicaid once their assets fall below their state's limit. Nursing homes that accept Medicaid cannot evict a resident simply because they switched from private payment to Medicaid, as long as the facility is Medicaid-certified. You can read more about how the program works at medicaid.gov.

Medicaid eligibility rules are detailed and vary by state, but a few ideas come up in almost every case:

• Income and asset limits. Each state sets limits on how much monthly income and how many countable assets (savings, investments, extra property) a person can have. Some assets, often including a primary home up to a value limit and one vehicle, may not count. The exact numbers differ by state and change over time.
• Spend-down. People with assets above the limit often become eligible after spending those assets on their own care or other allowed expenses. Some states also let people with higher income "spend down" by paying medical bills.
• The look-back period. When someone applies for Medicaid long-term care, the state reviews their financial records — generally the past 5 years. Giving away money or property, or selling it for less than it is worth, during that window can trigger a penalty period during which Medicaid will not pay for nursing home care.
• Spousal impoverishment protections. When one spouse enters a nursing home and the other stays at home, federal rules let the at-home spouse keep a protected share of the couple's income and assets. These protections exist specifically so the healthy spouse is not left with nothing.

Because the stakes are high and the rules are technical, do not rely on general articles — including this one — to make decisions. Talk to your state Medicaid office, a SHIP counselor, or an elder law attorney about your own situation before moving money or applying.

Here is a side-by-side summary of how the two programs treat nursing home care:

Some people qualify for both programs at the same time. They are called dually eligible, and for them Medicare pays first for covered services while Medicaid picks up long-term care and many out-of-pocket costs.

On The Care File and on official CMS records, most facilities are listed as "Medicare and Medicaid certified." This means the facility has been inspected and approved to accept payment from both programs. Certification matters to families for two practical reasons:

• Payment flexibility. A dually certified facility can take a resident through a Medicare-covered rehab stay and keep them as a long-term resident on Medicaid later, without forcing a move.
• Oversight. Certified facilities must meet federal health and safety standards, get inspected regularly, and report staffing and quality data — the same data this site translates for you.

A facility certified for only one program limits your options. For example, a Medicare-only facility may ask a resident to leave once their short-term coverage ends and they need Medicaid to pay. If long-term Medicaid coverage may be in your family's future, it is worth asking the facility directly: "Are you Medicaid-certified, and do you have Medicaid beds available?" Some certified facilities cap the number of Medicaid residents they accept.

Besides Medicare and Medicaid, families typically pay for nursing home care in two other ways:

• Private pay. Paying from savings, income, or the sale of assets. This is common in the first months or years of a stay, and some facilities give private-pay residents more choice of rooms or move-in timing.
• Long-term care insurance. Some people bought policies years ago that pay a daily or monthly benefit toward nursing home or home care. Policies differ widely in what triggers benefits and how long they last, so read the policy and ask the insurer for a written explanation of coverage.

For state-specific, free, and unbiased help:

• SHIP (State Health Insurance Assistance Program) offers free one-on-one Medicare counseling in every state. Find your local program at shiphelp.org.
• Your state Medicaid office handles applications and can explain your state's income and asset limits. Find it through medicaid.gov.
• The Eldercare Locator, a federal service, connects you with local aging agencies that can help with care planning. Visit eldercare.acl.gov or call 1-800-677-1116.
• An elder law attorney can advise on Medicaid planning, the look-back period, and protecting a spouse — especially important before transferring any assets.

The earlier you understand the payment picture, the more options your family will have. If a hospital discharge is coming, ask the discharge planner directly which payer will cover the stay they are recommending, and for how long.