Is Medicare Failing Your Parents? Here’s What You Need to Know.

Sarah had never worried about her father’s medical bills.

When he broke his arm two years ago, he told her not to worry about the hospital bill.

He was covered. He had Medicare.

But when he had his first stroke, Sarah realized her mistake: she’d never talked to him about what Medicare actually covered.

She knew that Medicare was complicated, but she didn’t expect it to be downright confusing.

There were Parts A, B, C, D, then something called Medicare Advantage, and something else called Medigap. Wasn’t Medicaid a thing too?

Sarah felt like someone had barfed a can of alphabet soup — and left her with the mop.

She was relieved, though, when the hospital social worker suggested that Sarah’s father could be discharged to a skilled nursing facility if the doctor ordered it. Her father could recover there, and she could take a breath. Great idea.

But there was a catch.

Medicare would only fully cover the first 20 days in the nursing facility.

After that, Sarah and her father would have to pay $209.50 a day.¹ Even if he stayed in the nursing facility for “only” 40 days, they’d have to find nearly $4,000.

And if he needed to stay indefinitely, Medicare would stop paying altogether after 100 days.

Why? One simple reason:

Medicare doesn’t pay for long-term care.

Medicare was created in 1965 as part of President Johnson’s massive push to fight poverty through federally funded programs.

It was meant to do two things: protect retirees from large hospital bills and offer them affordable health insurance for regular healthcare, like doctor’s visits.

You could say that Medicare has accomplished its main goal.

But it isn’t enough.

Long-term care was not and still isn’t on the menu.

In fact, the original legislation specifically banned Medicare from covering assisted living.

Many people don’t understand what Medicare covers. That’s a big problem.

23% of adults in the US incorrectly believe that Medicare will pay for long-term care. That misconception is even more widespread for older Americans — 45% of those 65+ think Medicare will cover assisted living costs. It won’t.

I’ll say again: Medicare, the main insurance program for Americans aged 65 or older, will not cover long-term care or assisted living.

But why should you worry about Medicare and what it covers? It’s not like there’s going to be a quiz or something, right?

Wrong.

The better you understand Medicare, its benefits, and its shortfalls, the less you’ll stress when the unthinkable happens.

And if the unthinkable already happened, hopefully this still helps. (Also, sorry that it happened.)

Medicare explained in 157 words (or less!).

“Original Medicare” has two parts:

• Part A covers hospital admissions, short skilled nursing care, and hospice.

• Part B covers doctor’s visits, diagnostics, and other outpatient services — but not regular vision or dental care. Virtually all doctors accept Part B insurance, but you usually have to pay 20%. You can purchase an additional “Medigap” policy to help cover things like co-pays, deductibles, and coinsurance.

Medicare has added two parts in recent decades:

• Part C (“Medicare Advantage”) is similar to employer-sponsored health plans. It essentially turns Medicare into more comprehensive private insurance — which often does include vision and dental. The main tradeoff is that you’re limited to a specific hospital network.

• Part D helps pay for prescriptions, and you sign up for it separately or as part of a Part C/Medicare Advantage plan.

You can remember the parts of Medicare like this:

• A = Acute Care

• B = Broad Coverage

• C = Company Insurance

• D = Drugs

What about Medicaid?

Medicaid was created alongside Medicare. The program was meant to catch those who couldn’t afford health insurance, including people with disabilities and some older Americans.

Medicaid is a partnership between the federal government and the states. They fund Medicaid together, but the states manage the program under broad federal guidelines.

States sometimes have their own names for Medicaid, like Apple Health in Washington State and Medi-Cal in California.

Today, Medicaid has expanded to become the largest payer for long-term care in the US, covering 61% of care costs nationwide.

So unlike Medicare, Medicaid can cover long-term care.

But there’s a catch — you have to be “poor” enough to need it.

Above the poverty line? Medicaid could still help.

In the world of Medicaid, being financially needy isn’t necessarily about not having money. In many states, you can still qualify if you don’t have enough money to pay for the care you need.

This is called “Income Spend Down.” It’s when your care is so expensive that what little income you have left meets the Medicaid threshold.

So even if someone has a large pension and Social Security payment, they could qualify for Medicaid if they’re paying a lot for care.

Don’t get me wrong — qualifying for Medicaid isn’t simple. It takes professional help to do it right.

But when Medicare falls short, Medicaid might be the answer.

Talk to your parents now.

The biggest mistake I see people make is that they ignore the issue of long-term care. They don’t talk to their parents until it’s too late.

Make sure you know what kind of Medicare or health coverage your parents (or you) have — and what it covers. If they’re not yet retired, talk to them about their options.

Act now, plan ahead, worry less. That’s my advice.