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Doesn't Medicare pay for long-term care?

Long-term Care Insurance
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In general, no. Medicare -- which covers some healthcare costs for retirees -- covers only "medically necessary" care. In some cases it will cover nursing home or home healthcare, but only after a three-day stay in the hospital, and only for services provided by "skilled medical professionals," such as registered nurses and physical therapists.

Medicaid -- which pays some healthcare costs for the impoverished, both young and old -- covers some "custodial care" for seniors, but only after your income and assets fall below certain levels. Medicaid is the more common source of public funds for long-term senior care.

Confused? Maybe the clearest way to consider long-term care is to break living expenses into two categories. The first category includes medical expenses such as doctor and hospital treatment and prescription drugs. The second covers more fundamental living expenses such as safe shelter, nutrition, and bathing.

Private and public insurance is available to cover both expense categories should you become seriously ill or disabled. The type of private insurance you buy, however, depends on whether you are of retirement age or not, as does the order of payment -- public, then private, or vice-versa.

In the table below, the major insurance options for the totally disabled, private and public, are broken out by category of expense and age. The first item in each block is usually exhausted first before moving on to the one below it. The last option is always Medicaid.

Total, Long-term Disability:
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