In your retirement strategy, you’ve likely put a good deal of thought into putting away enough money to enjoy your golden years. However, it is important to remember that that 69% of Americans turning 65 are going to require some sort of extended care1 and to include this in your planning to preserve your lifestyle and legacy.
When considering the very real possibility of a long stay in a skilled nursing facility, many people delay or ignore planning, believing their families will take responsibility for their care, or that Medicare will pay for it - an assumption that could be wrong and costly. Once people are faced with the need for skilled care, it is often too late to come up with alternative ways to pay for care.
Why not rely solely on Medicare?
The elderly have medical needs that are varied and changing. Medical needs can range from a quick visit to the doctor, to hospitalization with the possibility of a long stay or transfer to a skilled nursing facility. If an individual needs continued care at a skilled nursing facility, he or she may find it difficult, if not impossible, to have their stay covered by Medicare.
There are two classifications for hospital admission: Admitted and Under Observation. For Medicare to cover a stay in a skilled nursing facility, several requirements must be met, two of which are:
- The patient must be checked into the hospital under the Admitted classification.
- The patient must have been in the hospital for three consecutive days or more, not counting the discharge day or pre-admission care (see three-day rule), before being transferred to the skilled nursing facility.
This is not a comprehensive list as there are other required provisions such as time left in Medicare benefit period, receiving care in a Medicare certified facility, and approval of a doctor for skilled nursing care, etc.
For those individuals who were admitted to the hospital classified as Under Observation, or for fewer than three days, they will be responsible for all costs from day one of obtaining care at a skilled nursing facility. This is critical to know as Under Observation is a common classification for hospital admittance.
You have been approved by Medicare, but...
Let's say you meet all of the requirements and Medicare will cover the cost for a stay in a skilled nursing facility; however, costs for a stay beyond 20 days come out of your pocket:
- You pay nothing for days 1-20.
- You pay a daily coinsurance premium of $185.50 (2021) for days 21-100.
- You pay all costs if you are in a skilled nursing facility longer than 100 days.2
Related Reading: Nursing Home Costs and How to Afford Them
To summarize, Medicare will pay for short-term skilled nursing facility care under a specific set of circumstances. If you need care beyond 20 days, or do not meet the requirements, you will be responsible for some, or all, of the costs.
Finally, while Medicare may pay for some care in a skilled nursing facility, some of the most common types of care are called custodial care. Most nursing homes and assisted living facilities are categorized as custodial.3 Medicare will not cover any custodial care.
Medicare is very complex and can be confusing. It is important to speak with a qualified professional before making any decisions. We are always here to help you plan for the unexpected. If you have questions or concerns, please go to Schedule an Appointment or call 800-925-2050.
Additional Resources
Questions to Ask About Medicare
If you are new to Medicare, there are several questions you should consider.
Caring for Aging Parents
One of the most difficult conversations to have involves talking with an aging parent about extended medical care.
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The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
1.The Motley Fool, September 2, 2018
2. “Skilled Nursing Facilities And The Medicare Three-Day Rule: What You Need To Know”, Forbes, 2021 https://www.forbes.com/sites/forbesfinancecouncil/2021/08/10/skilled-nursing-facilities-and-the-medicare-three-day-rule-what-you-need-to-know/?sh=44d10e473021
3."Does Medicare cover long term care?", Humana, 2021 https://www.humana.com/medicare/long-term-care-coverage#:~:text=Medicare%20does%20not%20provide%20long,a%20long%2Dterm%20care%20hospital