# Does Medicare cover long-term care?

By James Ustby, CFP®, APMA®. Canonical URL: https://jamesustby.com/retire-does-medicare-cover-long-term-care

> No. Medicare covers short rehabilitation after a hospital stay, not the ongoing help with daily living that most people mean by long-term care. That cost is paid by you, by long-term care insurance, or, once assets are nearly gone, by Medicaid. Every retirement plan has to pick one of those three on purpose, because not choosing is choosing the first one.

## What Medicare actually covers

Medicare Part A pays for skilled nursing care for a limited number of days after a qualifying hospital stay, with daily copays after the first stretch, and only while you are improving. Once care becomes custodial, meaning help with bathing, dressing, eating, and moving, Medicare stops. Most long-term care is custodial.

## What it costs

A private room in a nursing home runs well over $100,000 a year in much of the country, and assisted living and home care are not far behind for full-time help. The numbers vary by state, and the government publishes them. The cost that matters is not the headline, it is what happens to the spouse at home when the household is paying for two lives at once.

## The three ways to handle it

Self-insure: set aside enough that a multi-year care event does not break the plan, which usually takes a large portfolio. Insure: traditional long-term care insurance, or a hybrid policy that combines life insurance with a care benefit so the premium is not lost if care is never needed. Medicaid: available only after assets are spent down to a very low level, with rules that vary by state and look-back periods on transfers. Most middle-income households end up in the second category, and the decision is cheaper to make at 55 than at 70.

## The question to answer before the product

How would the household pay for three years of care for one of you, while the other one keeps living at home? If the answer is a plan, good. If the answer is silence, that is the need. The insurance conversation comes after that, not before.

## A worked example

| Item | Amount |
|---|---|
| Couple, both 64, portfolio $900,000, spending $80,000 a year |  |
| One spouse needs three years of care at $110,000 a year | $330,000 |
| Household spending during those years | $80,000 plus $110,000 per year |
| Portfolio after the care event, before any growth | roughly $570,000 |
| Survivor's remaining retirement, funded by | a portfolio 37 percent smaller than the plan assumed |

This household can self-insure, barely, and the survivor pays for it. A hybrid policy bought at 58 would have cost a fraction of that and left the portfolio intact. Neither answer is wrong. Not deciding is.

## Questions people ask next

### Does Medicare Advantage or a Medigap plan cover long-term care?

No. Medicare Advantage plans may add limited in-home support benefits, and Medigap fills Medicare's copays and deductibles, but neither pays for ongoing custodial care.

### What is a hybrid policy?

A life insurance or annuity contract with a long-term care benefit attached. If care is needed, it pays for care. If it is never needed, the death benefit goes to heirs. Premiums are typically fixed.

### How much care will I need?

Government estimates say most people turning 65 will need some long-term care, and a meaningful share will need it for more than two years. Women need it longer on average than men.

## Sources

- [Medicare.gov: Long-term care](https://www.medicare.gov/coverage/long-term-care)
- [Medicare.gov: Skilled nursing facility care](https://www.medicare.gov/coverage/skilled-nursing-facility-snf-care)
- [Administration for Community Living: How much care will you need](https://acl.gov/ltc/basic-needs/how-much-care-will-you-need)

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Author: James Ustby, CFP®, APMA®, Wealth Advisor, LPL Financial, Durham and Chapel Hill, North Carolina. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Examples are hypothetical and for illustration only. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC. Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP® and CERTIFIED FINANCIAL PLANNER® in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.