Does Medicare Pay for Long Term Care?

by Karl on May 11, 2011[printfriendly]


 One of the most common phone calls I receive in the office is when someone’s mother or father is admitted to the hospital. In this time of crisis, answers are not easy to come by.

How does their health insurance work? What does Medicare pay for? Once the parent is discharged, what happens, where do they go, how is it paid for, what are our options? What do we do if mom or dad is going to have to go to a nursing home? How do we pay for it?

This confusion is expected as the senior health care system can be a very confusing and overwhelming process. The first thing to do is to understand the basis for today’s system. You need to break down the system into two parts: in the hospital and out of the hospital.  

When someone age 65 or older is admitted to the hospital, they are under the Prosepctive Payment System that Congress created in 1983. At time of admittance, the person is assigned only one of 473 Diagnostic Related Groups (DRG’s) by the business office. This is important because Medicare compensates the hospital a flat dollar amount for the DRG assigned to the patient.

Let me give you an example. Say that my father is admitted to the hospital with lung problems and the DRG is four days. If my father is discharged in three days, then the hospital makes one day of profit. If my father is discharged in five days then the hospital loses money and cannot bill the patient for the one extra day.

Back in the good old days, I remember when my grandfather was in the hospital and the nurse asked him if he felt well enough to go home because if he didn’t, he could stay a few extra days until he felt better.

Today, it is all about the money. Once a patient is no longer getting better or worse, in other words, is deemed to be “stable”, then the patient is discharged either to home or a Medicare certified nursing home or rehabilitative (rehab) facility.

Now, comes the second part: out of the hospital. In order for Medicare to pay for rehab care the patient must have been in the hospital for three consecutive days (72 hours). Then, no later than thirty days after discharge from the hospital, be admitted to a Medicare certified nursing facility. 

If these criteria are met, then for 2011, day’s one through twenty in the rehab facility are paid for 100% by Medicare. For days twenty one through one hundred, your co pay is for this year is $141.50 per day. From day 101 and beyond, regardless of your condition, you are responsible for all of the facility costs.

Keep in mind, that in order for this reimbursement schedule to happen, you must either be getting better or getting worse. Like the hospital, once you are deemed to be stable, you come off the Medicare reimbursement schedule and must pay for all costs.

In California, most patients will come off of Medicare reimbursement around week three and must begin private paying from this point forward.  The business office will advise you when this is expected to take place.

If the facility has long-term care beds, then the patient may be able to stay in the same facility. But if the facility is strictly short-term care or rehab, then the patient must find another facility or go home.

How does the patient’s health insurance fit into this? It all depends on what type of plan that the senior patient is on. Is it a Medicare supplement plan or PPO, or is it a Medicare Advantage plan like an HMO?

Medicare supplement insurance, also called Medigap, is private health insurance designed to supplement Medicare. A premium is paid for this coverage which is age rated.

There are ten standardized Medigap plans, A-G, K-N. In most states, you can go to any doctor or hospital that accepts Medicare without pre-authorization. Under plans C through G, M and N, days one through twenty are completely paid for by Medicare. For days twenty one through one hundred, the Medicare co-pay for 2011 is $141.50 which is covered by the Medigap policy. From day one hundred one and beyond, the patient is responsible for the full cost.

For Medicare Advantage plans such as an HMO like Secure Horizons, SCAN and Kaiser, the patients may have a co-pay from day eleven of $100. It is best check the benefits booklet or call the customer service department.

If someone goes to a facility without going to the hospital first, then you must private pay from day one.

Once the patient comes off Medicare reimbursement, if qualified, Medi-Cal will help to pay for the nursing home costs. If going to the facility directly from home, then, if qualified, Medi-Cal may help to pay for the nursing home costs from day one.


 Karl Kim is a Certified Financial Planner™, Certified in Long-Term Care, and the President of Retirement Planning Advisors, Inc. in La Mirada, CA. He is a Medi-Cal Specialist and has submitted over 1000 applications with a 99.9% success rate over the past 20 years. He can be reached at 714-994-0599.    

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{ 2 comments… read them below or add one }

Brandywine September 19, 2011 at 5:36 pm

Begun, the great itnrenet education has.


Rena September 19, 2011 at 5:36 pm

Very valid, pithy, scuicnct, and on point. WD.


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