Medicare & Medicare Supplements

Many people believe that the Medicare program will pay most of their long-term care expenses after age 65. Others think that Medicare supplement (Medigap) insurance covers most long-term care services not reimbursed by Medicare. In this section we will examine exactly what benefits Medicare and Medigap insurance provide in the area of long-term care — and why these benefits do not adequately meet long-term care needs.

Medicare is a federal healthcare benefits program. It helps pay for medical services (such as hospital stays and physician visits) of people age 65 and older, as well as some persons under 65 who are disabled or suffer permanent kidney failure (end-stage renal disease). A Medicare beneficiary may choose the original Medicare plan or (where available) a Medicare Advantage plan.

The original Medicare plan operates on a fee-for-service basis and has two parts:

• Medicare Part A primarily covers inpatient care in hospitals.
• Medicare Part B primarily covers physician services, outpatient hospital care, and some other medical services not covered by Part A.

Medicare Advantage (Part C) is a program under which private-sector health insurance plans provide coverage to Medicare beneficiaries, including HMOs and PPOs. Medicare Advantage plans provide Part A and Part B benefits as well as some additional benefits.

The Medicare Modernization Act created Medicare Part D, a prescription drug benefit program that began operating in January 2006.

Many Medicare beneficiaries also buy Medicare supplement (Medigap) insurance — private health insurance that fills some gaps in Medicare coverage by paying some of the deductibles, copayments, and coinsurance amounts that beneficiaries must otherwise pay themselves.

Those at least 65 years old and eligible for retirement benefits from Social Security or the Railroad Retirement system can enroll in Medicare Part A without paying a premium. Those 65 and over who do not fall into one of these categories can enroll in Part A but must pay a premium. Medicare Part A coverage is also extended to persons of any age who are disabled or suffer permanent kidney failure.

Anyone 65 or over can enroll in Medicare Part B, but all must pay a monthly premium. The standard Part B premium is $202.90 per month. Part B premiums are adjusted according to income through the Income-Related Monthly Adjustment Amount (IRMAA):

• Single persons with a modified adjusted gross income (MAGI) over $109,000 pay higher premiums.
• Married couples filing jointly with a MAGI over $218,000 pay higher premiums.
• For those subject to IRMAA, total monthly Part B premiums range from $284.10 to $689.90 across five income tiers.

These thresholds are based on the beneficiary’s tax return from two years prior and are adjusted annually for inflation.

The Medicare program was created to help pay the medical expenses of the elderly. Medicare does provide very limited benefits under limited circumstances in two areas associated with long-term care — nursing home care and home healthcare. But these benefits do not meet the need for ongoing personal care or supervisory care, which is the focus of long-term care.

A Medicare beneficiary can receive benefits for care in a skilled nursing facility only if all of the following conditions are met:

• The individual has had an inpatient hospital stay of at least three consecutive days within the last 30 days.
• The individual needs skilled care. If he needs only personal or supervisory care, he is not eligible for benefits.
• A physician has determined there is a medical necessity for skilled care — meaning skilled care is required for the diagnosis and treatment of a medical condition. Benefits are paid to those recovering from an acute illness or injury, not those needing care indefinitely to cope with a chronic impairment.
• The skilled nursing facility is certified by Medicare.

In theory, Medicare can pay up to 100 days of nursing home benefits. But in practice this rarely happens, as few people continue to meet the medical necessity requirement for very long. Most people recover within a few weeks; others become chronically impaired and no longer need skilled care for the treatment of a medical condition.

In those cases where Medicare continues to pay benefits beyond 20 days, the beneficiary must make a daily copayment of $217 per day for days 21 through 100. All benefits end after 100 days.

Medicare Part A pays benefits for home health care, but only if strict conditions are met:

• The beneficiary must need home care within 14 days after a stay of at least three consecutive days in a hospital or skilled nursing facility.
• A physician must certify the medical necessity of intermittent skilled nursing care or physical, speech, or occupational therapy. (A need for only personal or supervisory care is not sufficient.)
• The physician must certify that the beneficiary needs to receive care at home and must develop a plan of care.
• The beneficiary must be homebound — unable to leave home, or able to do so only with major effort, infrequently, and for urgent purposes only.
• Care must be provided by a Medicare-certified home healthcare agency.

If all these conditions are met, Medicare pays for intermittent skilled nursing care and therapy, and in some cases other supportive services. There is a limit of 100 visits, and as with nursing home benefits, the duration is severely limited by the medical necessity requirement.

Medicare Part B provides the same home healthcare benefits as Part A, with two exceptions:

• To receive Part B benefits, a person need not have had a prior hospital or skilled nursing facility stay.
• Part B benefits are not limited to 100 visits (though still limited by medical necessity).

There is no set limit to the number of visits Part B can cover, but because of the medical necessity requirement, people seldom continue to qualify for benefits for very long. Consequently Part B coverage also fails to meet the needs of those requiring long-term care.

Many Medicare beneficiaries buy private Medigap insurance. Medigap policies pay some of the deductibles, copayments, and coinsurance amounts required by Medicare. Medigap policies may include two benefits for services associated with long-term care:

• At-home recovery benefits — help pay for personal care in the insured’s home while recovering from an illness or injury and receiving Medicare benefits for skilled care at home. But the insured must initially meet the stringent conditions for Medicare home health care benefits, and benefits are limited in scope and duration.
• Daily copayment coverage — most Medigap plans cover the $217 daily copayment that Medicare charges after the 20th day of nursing home care. But this applies only to those recovering from an injury or illness and meeting Medicare’s medical necessity requirement — and since people seldom continue to meet this requirement much beyond 20 days, this benefit is not often paid for very long.

Neither of these benefits goes very far in meeting the needs of those requiring long-term care for an extended period. Medicare Advantage plans similarly do not provide any substantial coverage in the area of long-term care.

Prescription drugs are often a significant expense of those receiving long-term care. The Medicare Modernization Act established Medicare Part D, a prescription drug benefit program available since January 1, 2006. Medicare beneficiaries choose whether to participate in Part D and pay an additional monthly premium.

Part D benefits are most commonly provided by private prescription drug plans (PDPs). All plans must provide a minimal level of benefits at least actuarially equivalent to Medicare’s standard benefit.

The Medicare Part D standard benefit is adjusted annually for inflation. Key features for 2026 are as follows:

• The annual deductible for Part D is up to $615 (plans may set a lower deductible).
• After the deductible, the beneficiary pays a copayment or coinsurance for covered drugs, and the PDP pays the remainder.
• The coverage gap (“donut hole”) was eliminated as of 2025 under the Inflation Reduction Act and no longer exists in 2026.
• Once a beneficiary’s total out-of-pocket drug costs reach $2,100, the PDP covers 100 percent of costs for covered drugs for the remainder of that year.
• Insulin products are capped at $35 per month; recommended vaccines are covered at no cost.

PDPs offer a wide variety of benefit packages, many superior to the standard benefit. Some require no deductible or a smaller deductible, and some charge lower copayments. The average stand-alone Part D premium is approximately $34.50 per month.