The belief that Medicare covers nursing home stays is common and costly. Here is what Medicare actually pays for, and how Medicaid, savings and long-term care insurance cover the rest.

This guide is general information, not insurance, tax or legal advice. Rules, limits and deadlines change each year, so check HealthCare.gov, Medicare.gov or your insurer for your situation.

Many families learn the rules about Medicare and nursing homes at the worst possible moment, after a hospitalization, when a discharge planner asks where a parent will go next. The belief that Medicare pays for nursing home care is common, and planning around it can be expensive. Here is what Medicare actually covers, and what pays for long-term care instead.

The Myth: Medicare Pays for the Nursing Home

The myth persists for understandable reasons. Medicare pays hospital and doctor bills, so it seems natural to assume it covers the facility’s bill too. The phrase “skilled nursing facility” sounds like a nursing home, and a facility can in fact be both. The National Council on Aging notes that many caregivers assume Medicare covers nursing home costs, and that the assumption can be costly.

The confusion also comes from mixing up Medicare and Medicaid. The names sound alike, but the jobs differ. Medicare is federal health insurance mainly for people 65 and older and some younger people with qualifying disabilities. Medicaid is funded jointly by the federal government and the states, and it pays health care bills for people whose income and, in some cases, resources fall below set limits. Our guide to Medicare basics explains the parts of Medicare and when to enroll.

The Fact: Medicare Covers Short-Term Skilled Care, Not Long-Term Stays

Medicare.gov is direct about this: the program generally does not pay for extended nursing home stays. What Part A covers instead is limited, short-term skilled care in a Medicare-certified skilled nursing facility after a hospitalization. Skilled care is treatment that takes the training of licensed professionals, or staff working under their direction, to be given safely.

To get that coverage, several requirements must line up:

• A qualifying inpatient hospital stay of at least 3 days in a row, counted from the day you were admitted and not counting the day you leave.
• Admission to the skilled nursing facility within a short time, generally 30 days, of leaving the hospital.
• A doctor’s certification that you need daily skilled nursing or therapy care.

Even then, coverage is temporary. Medicare covers up to 100 days per benefit period. Days 1 through 20 are covered in full, and daily coinsurance applies for the rest of the stay through day 100. A benefit period ends once you have gone 60 days in a row without inpatient hospital or skilled nursing care. Our guide to health insurance terms defines coinsurance and benefit periods in plain English.

Some exceptions exist. Doctors in certain Accountable Care Organizations operate under a waiver that removes the 3-day hospital requirement, and some Medicare Advantage plans waive it too. Plans usually help pay for nursing home care only when the facility has a contract with the plan.

Myth: Hospital Observation Time Counts Toward the Three Days

Important: Time in the emergency room or under hospital observation does not count toward the 3-day qualifying stay, even if you are there overnight. Ask hospital staff before discharge whether the stay was as an inpatient, because the answer can decide whether Medicare pays for the care that follows.

That single detail is one of the most common reasons coverage falls apart. Patients labeled “outpatient getting observation services” rather than inpatient can lose skilled nursing coverage entirely. If a hospital changed your status after an admission, you can appeal stays going back to January 2009, and an approved appeal may restore Part A coverage for the hospital and skilled nursing services.

Myth: Custodial Care Is Covered Because It Happens in a Nursing Home

Custodial care is non-medical help with daily routines such as bathing, getting dressed or eating. It does not require a nurse, and Medicare does not cover it when it is the only care you need. Most long-term nursing home residents need exactly this kind of care, so Medicare generally does not pay for these stays.

Medicare does not stop once someone moves in. It still covers hospital care, doctor services, prescription drugs and medical supplies while a person is a resident. Part B covers doctor visits and therapy even inside the facility. You can also change your Medicare drug plan whenever you need to during a nursing home stay.

Myth Versus Fact: Medicaid, Private Pay and Long-Term Care Insurance

Medicare.gov notes that most nursing home residents begin their stays as private payers. From there, three routes can cover custodial care:

• Private pay. Families pay from savings, income or home equity until funds run low.
• Medicaid. Not every nursing home takes Medicaid, so it pays to confirm before choosing a facility. Eligibility is usually based on income and resources, the rules differ from state to state, and income limits are often higher for nursing home residents. Someone who never qualified before can qualify in a nursing home, and many residents eventually spend down their assets while living there.
• Long-term care insurance. Policies vary widely. Some cover only nursing home care; others also cover adult day care, assisted living, medical equipment and informal home care. Check any policy for limits tied to pre-existing conditions.

How Nursing Homes Charge and What a Month Can Cost

Private-pay rates vary by facility and by state. Assisted living in the United States averages about $4,500 per month, roughly $54,000 a year, and nursing home care generally costs more because it includes 24-hour supervision and skilled nursing staff. Because residents who pay privately can eventually spend down to Medicaid eligibility while living in a facility, ask any home you are considering whether it accepts Medicaid.

Where to Check Coverage Questions Before You Decide

Before anyone moves in, get answers in writing. Ask the hospital whether the stay counts as inpatient. Ask the facility whether it is Medicare certified and whether it accepts Medicaid. If there is a Medicare Advantage plan, ask what nursing home coverage it offers and whether the facility is in its network. Medicare.gov explains skilled nursing facility coverage in detail, and your state Medicaid office can explain eligibility where you live. Before signing admission papers, ask the hospital’s discharge planner and the facility’s admissions office to confirm who pays after day 100.

Frequently asked questions

Does Medicare ever pay for a nursing home?
Yes, in one limited situation. Part A covers short-term skilled care in a Medicare-certified skilled nursing facility after a qualifying 3-day inpatient hospital stay, for up to 100 days per benefit period, with days 1 through 20 covered in full.

Who pays for long-term nursing home care?
Most residents begin by covering the cost themselves. Medicaid pays for custodial nursing home care for people who meet income and resource rules, and long-term care insurance may help if the policy covers that type of care.

Does hospital observation status count toward the 3-day rule?
No. Time in the emergency room or under observation does not count toward the qualifying inpatient stay, even if you are there overnight. Ask hospital staff whether the stay was as an inpatient.

Can Medicare still be used while living in a nursing home?
Yes. Medicare continues to cover hospital care, doctor visits, prescription drugs and medical supplies, and you can change your Medicare drug plan whenever you need to during the stay.