Nursing Homes: Medicare vs. Medicaid

There are more than 18,000 nursing homes in the United States.  There are 3 ways to pay for nursing home care: private pay funds, Medicare insurance or Medicaid insurance.  However, the nursing home must accept Medicaid insurance as a payment option and not all of them do.

Medicaid insurance provides medical coverage for low-income seniors and the financial qualifications vary for each state but usually require no more than $2,000 or so in assets and owning a home may or may not be included in that number.

As nursing home care can easily cost up to $80,000 a year, and as Medicare only covers short stays in a nursing home, it is important to ask the right questions about payment when entering a nursing home.  This is necessary even if you are just going into the nursing home for rehabilitation after a major medical procedure. 

Some nursing homes will say they accept Medicaid but it may only be available for current residents who are forced to go onto Medicaid after spending down all of their assets.  The nursing home may not take new admissions who rely on Medicaid for payment.

This is because the government establishes a reimbursement rate for Medicaid and the nursing home may choose to focus on private pay and Medicare clients instead.  Although Medicaid will provide for a permanent long-term stay in a nursing home, this means that the bed will continue to be reimbursed at the Medicaid rate until the senior passes away.  The nursing home is losing out on the ability to charge more for the bed through Medicare or private pay.

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