Nursing homes can be expensive. The average cost for a semi-private room in 2010 was $207 per day. That comes out to $74,820 each year—a terrifying financial burden for anyone. Though the cost of a nursing home can vary widely depending on where you live, expenses eat up savings quickly. Happily, these expenses can be offset by Medicaid and Medicare.

Medicaid will cover long-term care for those with low income and assets, but eligibility requirements vary by state. Around two-thirds of nursing home residents use Medicaid to help pay for the stay, while the other third pays out of their own pocket.

Limited coverage for temporary stays

Medicare’s coverage of nursing home stays is much more limited. Because Medicare’s focus is on acute care, it is geared to cover short-term hospital stays and doctor’s visits. It will not cover long-term care or custodial care, which involves day-to-day expenses like washing and dressing. But there are some circumstances under which Medicare Part A will cover your stay in a nursing home in the short term:

  1. You enter the nursing home less than thirty days after a hospital stay.
  2. The hospital stay lasted for at least three days. Days you were kept “under observation” but not formally admitted do not count.
  3. The care provided in the nursing home is meant to treat/manage the condition related to the hospital stay.
  4. The nursing home is providing daily skilled nursing care that cannot be offered at home or as an outpatient. Skilled nursing requires the supervision of registered nurses or physical therapists, and can include intravenous injections or changing bandages. Keep in mind that most nursing home residents do not receive this level of care. If your nursing home accepts Medicare, it will provide written notice whether it believes your needs merit skilled nursing care.

These requirements can be difficult to meet. In fact, Medicare requirements for nursing home coverage are stringent enough that nursing homes often err on the side of caution and terminate Medicare coverage before they need to.

Two assumptions can lead to wrongful termination of coverage. First, the nursing home may believe you are no longer eligible for skilled nursing if you stop showing progress toward recovery. In reality, arrested progress can be a sign you need skilled nursing to continue. Second, nursing homes may think skilled nursing must be administered by a skilled nurse, while only supervision by the skilled nurse is necessary. That means that you can have multiple treatments that individually don’t need to be carried out by a skilled nurse, while a skilled nurse supervises the overall treatment to monitor for complications from treatment interactions.

Medicare Part A will cover, in total, 100 days of skilled nursing. For the first 20 days, your costs for these services will be completely covered. For days 21-100, you will need to make large copayments equal to one-eighth (⅛) of the hospital deductible. Currently, that’s $161 a day—not a huge improvement over shouldering the entire cost of your stay. If you have a Medigap plan, you may not have to make these copayments.