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When a parent receives a terminal diagnosis, starting hospice care is usually the next step. Hospice is often provided in a person’s own home, but for those who are already living in a nursing home, receiving this care in a space that caters to all their medical needs can make the most sense. One of the most important factors after deciding hospice is necessary is how to pay for it. Medicare is the most common form of payment, but other options exist to cover costs, such as Medicaid, private pay, and long-term care insurance.

Key Takeaways

Medicare is the most common way to pay for hospice care services. Medicare covers nearly all costs associated with hospice care in a nursing home but won't pay for room and board.
Medicaid also covers hospice in nursing homes. Although hospice is generally provided in a patient's home, Medicaid will also cover services in an inpatient facility.
Medicaid and Medicare can work together to cover all costs. While Medicare won't cover services like room and board, outside care, or prescriptions unrelated to a terminal illness and related conditions, Medicaid will.
Private funds may also be used to pay for hospice. These funds may include personal savings, long-term care insurance policies, and retirement funds.

What is hospice care?

Hospice provides care for people who are terminally ill and have a life expectancy of six months or less. Hospice is typically provided where the patient lives and is focused on comfort and quality of life, not curative treatments. A specially trained interdisciplinary team of medical professionals, counselors, and caregivers provide a variety of medical and emotional supports for both the patient and their family.^[01]

Using Medicare to pay for hospice care in a nursing home

For adults age 65 and older, Medicare Part A (hospital insurance) will cover the entire cost of hospice services in Medicare-certified facilities. However, your loved one may have a copay of up to $5 for their prescriptions to manage pain and symptoms.^[02]

When hospice is activated, a multidisciplinary hospice team will provide services and work with seniors and their families to provide the most beneficial care. During hospice, the nursing home staff will continue to provide assistance with daily activities like baths and meals.

Eligibility requirements for Medicare’s hospice benefit

Receiving Medicare hospice benefits is generally pretty simple. Ensure your parent is enrolled in Medicare Part A and meets the following requirements:

A hospice doctor and primary care provider certify that your parent has a terminal illness with a life expectancy of six months or less.
Your parent accepts comfort care instead of care to cure their illness.
Your parent signs a statement choosing hospice care instead of other Medicare-covered treatments for their terminal illness and related conditions. ^[03]

Under Medicare, hospice recipients get two 90-day benefit periods of care followed by an unlimited number of 60-day benefit periods. After the first 90-day benefit period, a doctor or hospice medical director must recertify that a hospice patient is still terminally ill.

If your parent decides they want to change where they receive hospice care, this can be done once during each benefit period.^[03]

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Hospice benefits covered under Medicare

Some specific services a hospice team might provide that are covered under the Medicare benefit include:

Doctors’ services
Nursing care
Medical equipment and supplies
Physical and occupational therapies
Prescription drugs
Short-term inpatient respite care for pain and symptom management
Any other Medicare-related services needed to manage terminal illness and related conditions ^[03]

Hospice benefits not covered under Medicare

While the Medicare benefit covers the full costs of hospice care, note that there are some things Medicare will not cover:

Treatments intended to cure an illness or related conditions. Hospice care is intended to provide comfort and quality of life for a patient as opposed to a cure for their condition. However, should your parent decide they no longer want hospice services, they can stop care anytime.
Care from any provider outside of the chosen hospice team. Hospice care must come from the chosen hospice provider who arranges all care and services related to the terminal illness and related conditions. Your parent can still see their primary care provider if they choose.
Room and board. The hospice benefit won’t cover room and board at a nursing home. If your parent is receiving hospice care in another setting and the hospice team determines your parent needs short-term inpatient or respite care, Medicare will cover those costs. Your parent may have a small copay for the stay.
Care received for outpatient or inpatient care or ambulance transportation. Medicare will not cover the costs of care if they’re unrelated to a patient’s terminal illness. ^[03]

Using Medicaid to pay for hospice care in a nursing home

Medicaid is a federal- and state-run program that helps low-income individuals receive needed health care services. Medicare and Medicaid cover all the same care and services related to hospice; however, some states may offer additional coverage.^[04] Although hospice care is commonly provided in residential settings, Medicaid considers facilities like nursing homes a patient’s home.

Eligibility to receive Medicaid’s hospice benefit

In order to receive Medicaid’s benefits to cover hospice care costs, your parent must meet financial eligibility requirements and be:

Age 65 or older
A resident of the state where they receive Medicaid
A U.S. citizen or permanent resident ^[05]

Similar to Medicare, in order to receive Medicaid benefits for hospice, your parent must have an official diagnosis of a terminal condition, accept comfort care rather than curative care, and sign an election statement for care with a specific, Medicaid-certified hospice provider.^[04]

States have different requirements for eligibility, so check state requirements where your parent will receive care.

Ways Medicaid assists Medicare in covering costs

Because there are expenses that Medicare doesn’t cover, utilizing Medicaid can help families cover costs and save money where they can.

Room and board. While Medicare won’t pay for your parent’s room and board expenses, Medicaid will. Medicaid covers room and board costs for those who need it at certified nursing facilities.
Copays and premiums. After Medicare pays for hospice-related care, there are sometimes copays and premiums left to pay, but Medicaid will cover those costs.
Prescription drugs. Under the hospice benefit, Medicare will only cover medications related to a patient’s terminal illness. For seniors who are receiving hospice care, and are dually eligible for Medicare and Medicaid, Medicaid may cover prescriptions for other conditions or illnesses not covered by Medicare. ^[03]

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Additional ways to pay for hospice in a nursing home

Although most seniors qualify for Medicare, there are situations — like if your parent is not 65 years old yet and has no disability — where families might need to pay for hospice care in a nursing home out of pocket. The financial options below may help cover room and board or other costs that Medicare does not.

Veterans benefits

The standard medical benefits package from the Veterans Health Administration will cover the complete costs of hospice care for eligible veterans. Veterans may also qualify for nursing home coverage.^[06]

Long-term care insurance

Many long-term care policies cover care in various settings, including nursing homes. Long-term care insurance can also help offset related costs by covering room and board expenses that Medicare or other plans might not pay for.^[07]

Life insurance

In some cases, life insurance policies can be used to pay for care. Options include taking a loan from the policy’s cash value or surrendering the policy entirely in exchange for the cash value.

Some policies may feature an “accelerated death benefit,” which is a cash advance that’s subtracted from the payment the beneficiary receives upon the death of the policyholder. The owner of the policy must be terminally ill with a limited life expectancy (usually under 24 months) or be unable to perform basic activities of daily living.^[08]

Private health insurance

Many health insurance plans provide at least some coverage for hospice care. Encourage your parent to check with their insurance provider to learn if their policy covers hospice care and what the eligibility requirements are.^[09]

Private pay

Although it’s unusual, hospice care can be paid for out of pocket if. Your parent’s retirement income, like savings or funds from a 401k or pension, can also be utilized to cover room and board or other care costs.^[10]

Charity care

Some hospice organizations offer care at no cost for people who are uninsured or underinsured. Most hospice providers have financial support staff who can help families determine costs and how to pay.^[09]

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References

[1] National Institute on Aging. (2021, May 14). What are palliative care and hospice care?
Centers for Medicare & Medicaid Services.Hospice care.
Centers for Medicare & Medicaid Services. (2023, March). Medicare hospice benefits.
Centers for Medicare & Medicaid Services. Hospice benefits.
Centers for Medicare & Medicaid Services. Medicaid Eligibility.
Department of Veterans Affairs. (2023, February 15). Geriatrics and extended care.
LongTermCare.gov. (2020, February 18). What long-term care insurance covers.
LongTermCare.gov. (2020, February 18). Using life insurance to pay for long-term care.
National Hospice and Palliative Care Organization. How is hospice care paid for?
National Institute on Aging. National Institutes of Health. (2022, November 2). Paying for long-term care.

Meet the Author

Michaela Kitchen

Michaela Kitchen is a copywriter at OurParents. She focuses on senior living trends, resources relevant to the families of seniors, senior lifestyle tips, and health care. Previously, she worked in television and print journalism, social media management, and marketing. She holds a bachelor's degree from Kansas State University in journalism and mass communication.

Edited byKristin Carroll

Reviewed byMichael Ferraina

The information contained in this article is for informational purposes only and is not intended to constitute medical, legal or financial advice or create a professional relationship between A Place for Mom (of which OurParents is a trademark) and the reader. Always seek the advice of your health care provider, attorney or financial advisor with respect to any particular matter and do not act or refrain from acting on the basis of anything you have read on this site. Links to third-party websites are only for the convenience of the reader; A Place for Mom does not recommend or endorse the contents of the third-party sites.

Who Pays for Hospice Care in a Nursing Home?