Medicare vs. Medicaid for nursing-home care
If a hospital discharge planner just told you your parent needs nursing home care, you're likely hearing conflicting information about who pays for what. Medicare and Medicaid are two entirely separate programs with different eligibility rules and coverage periods, and mixing them up can cost your family thousands of dollars or delay placement.
This guide walks you through exactly what Medicare covers in a skilled nursing facility, when Medicaid (called ALTCS in Arizona) takes over, and how to prepare financially for the transition between the two. You'll understand the coverage rules, documentation requirements, and timeline for each program so you can make informed decisions during a compressed hospital discharge window.
By the end, you'll know which program applies to your situation right now, what out-of-pocket costs to expect, and when to start the ALTCS application if long-term nursing home care becomes necessary.
Before you start
- Your loved one's Medicare card and number
- Recent hospital discharge paperwork if transitioning from acute care
- List of current medications and diagnoses
- Access to financial records (bank statements, asset documentation) if considering Medicaid
- Contact information for the discharge planner or case manager
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Step 1: Determine if Medicare's Skilled Nursing Facility Benefit Applies
Medicare Part A covers short-term nursing home stays only when your loved one needs skilled care following a qualifying hospital stay. The hospitalization must last at least three consecutive midnights as an admitted inpatient, and admission to the skilled nursing facility must occur within 30 days of discharge.
Skilled care means daily nursing services or therapy that only licensed professionals can provide — wound care, IV medications, physical therapy after a hip fracture, or monitoring after a stroke. Medicare does not cover custodial care, which includes help with bathing, dressing, eating, or toileting when that's the primary need. If the discharge planner says your parent qualifies for skilled nursing, ask specifically what skilled services the physician has ordered and confirm the three-midnight requirement was met.
Medicare covers the first 20 days in full. Days 21 through 100 require a daily coinsurance amount that changes annually. After day 100, Medicare coverage ends completely, regardless of whether your loved one still needs care. Many families assume Medicare covers nursing home care indefinitely — it does not. Understanding this 100-day limit is critical for financial planning.
Verify coverage with the facility's admissions coordinator before placement. They will contact Medicare to confirm eligibility and explain what the daily coinsurance will be. If your loved one has a Medicare Supplement (Medigap) policy, it may cover some or all of the coinsurance for days 21-100.
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Step 2: Understand What Happens When Medicare Coverage Ends
After Medicare's 100-day skilled nursing benefit expires, or if your loved one never qualified for Medicare in the first place, payment responsibility shifts to private funds or Medicaid. This transition catches many families off guard. The facility will notify you before Medicare coverage ends, but you need a plan in place well before that conversation happens.
If your loved one can return home safely with home care support, that's typically the goal. The facility's social worker and therapy team will assess whether discharge home is medically appropriate. If nursing home care remains necessary but is now custodial rather than skilled, you'll pay privately or apply for Medicaid. Private pay rates in Maricopa County skilled nursing facilities typically range from $250 to $450 per day depending on the facility and level of care.
Most families cannot sustain private pay indefinitely. If assets are limited, you'll need to apply for Arizona's Medicaid program, called ALTCS (Arizona Long Term Care System). ALTCS covers long-term nursing home care for eligible individuals, but the application process takes time and requires extensive financial documentation. Starting this process early — ideally while Medicare is still paying — prevents a coverage gap.
Some families explore a hybrid approach: spending down assets to Medicaid eligibility levels while paying privately for a few months. An elder law attorney can explain spend-down strategies that comply with Medicaid's look-back rules. Do not transfer assets or make large gifts without legal guidance, as Medicaid imposes penalties for transfers made within five years of application.
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Step 3: Learn ALTCS Eligibility Requirements for Arizona Medicaid
ALTCS is Arizona's Medicaid program for elderly and physically disabled adults who need nursing home care or home-based long-term services. Eligibility depends on both medical need and financial criteria. Your loved one must require nursing facility level of care as determined by a state assessment, and must meet strict income and asset limits.
The medical eligibility assessment evaluates ability to perform activities of daily living and the need for supervision or hands-on assistance. A state assessor will interview your loved one and review medical records to determine if nursing home level of care is appropriate. Most people already residing in a nursing facility or being discharged from a hospital with significant care needs will meet this threshold.
Financial eligibility is more complex. As of 2024, asset limits for a single individual are $2,000 in countable assets, though these figures adjust periodically — verify current limits with an ALTCS specialist or elder law attorney. Countable assets include bank accounts, investment accounts, second homes, and vehicles beyond one. Exempt assets typically include the primary residence (with equity limits), one vehicle, personal belongings, and a small burial fund. Income limits also apply, though individuals with income above the limit may still qualify through a special income trust.
If your loved one is married, spousal impoverishment protections allow the community spouse (the one not in the nursing home) to retain a portion of joint assets and income. These rules are intricate — the community spouse is not required to become impoverished to qualify the institutionalized spouse for ALTCS. Consult with an elder law attorney or certified Medicaid planner to understand how much the community spouse can keep.
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Step 4: Gather Documentation and Submit the ALTCS Application
The ALTCS application requires comprehensive financial documentation covering the past five years. You'll need bank statements, tax returns, documentation of all asset transfers, proof of income sources, life insurance policies, vehicle titles, and property deeds. The state is verifying both current financial status and that no disqualifying transfers occurred during the look-back period.
Start by requesting five years of bank statements for all accounts your loved one owns or co-owns. Medicaid caseworkers scrutinize deposits and withdrawals. Large or unusual transactions require explanation — you may need to provide receipts, cancelled checks, or affidavits explaining what the money was used for. Even small regular withdrawals for cash can trigger questions if not documented.
You can apply for ALTCS through the Arizona Health Care Cost Containment System website or by working with a Medicaid application specialist. Many families hire professionals who specialize in ALTCS applications because the paperwork is extensive and errors cause delays. Application specialists charge fees but can expedite the process and reduce the chance of denial due to incomplete documentation.
Arizona has 45 days to process complete applications, but complex financial situations or missing documentation extend this period significantly. During the application process, someone must pay for care — either your family privately or the facility may carry the cost if they agree to do so pending ALTCS approval. Get any agreement to defer payment in writing. Once approved, ALTCS typically covers care retroactively to the application date.
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Step 5: Understand What ALTCS Covers and Your Ongoing Responsibilities
Once approved, ALTCS pays for nursing home care through contracted facilities. Not all nursing homes accept ALTCS — verify acceptance before placement or confirm your loved one's current facility participates in the program. ALTCS covers room, board, nursing care, medications, therapy, and medical supplies needed in the facility.
Your loved one will contribute most of their monthly income toward the cost of care, keeping only a small personal needs allowance. Social Security, pensions, and other income go to the facility, with ALTCS paying the difference between that amount and the facility's Medicaid rate. The personal needs allowance covers personal items like clothing, haircuts, and small purchases — the facility cannot require you to pay for covered services out of this allowance.
ALTCS eligibility requires annual recertification. You'll need to report changes in income, assets, or living situation promptly. If your loved one receives an inheritance, lawsuit settlement, or other windfall, this may temporarily affect eligibility. Consult with your elder law attorney before accepting any large sum on behalf of someone receiving ALTCS benefits.
If your loved one's condition improves to the point where nursing home care is no longer medically necessary, ALTCS may transition them to a lower level of care or discharge them from the program. The state conducts periodic assessments to ensure continued medical eligibility. Most individuals who enter nursing homes remain there long-term, but the program does reassess when circumstances change.
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Step 6: Plan for the Financial Transition Between Programs
The gap between Medicare ending and ALTCS approval beginning is where families face the greatest financial pressure. If Medicare coverage ends on day 100 and the ALTCS application is still pending, someone must cover the daily private pay rate. This period can last weeks or months depending on application complexity.
Create a transition timeline as soon as nursing home placement occurs. If your loved one entered under Medicare, mark day 80 on your calendar as the date to have serious conversations with the facility social worker about next steps. By day 90, you should know whether discharge home is possible or whether long-term care funding is needed. Do not wait until day 99 to start the ALTCS application if you know assets are limited.
Some facilities will accept a payment plan or defer payment during the ALTCS application process, especially if they believe approval is likely. Others require private pay or may initiate discharge proceedings if payment is not arranged. Understand your facility's policy early. If they will not defer payment and you cannot pay privately, you may need to transfer your loved one to a facility that will work with you during the application period.
Consider whether spending down assets to reach Medicaid eligibility is the right choice for your family. For some, paying privately for several months while preserving certain assets makes sense. For others, immediate ALTCS application is necessary. An elder law attorney can model different scenarios based on your loved one's specific financial situation and help you understand the trade-offs of each approach.
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Step 7: Know Your Rights and How to Appeal Denials
Both Medicare and ALTCS have appeal processes if coverage is denied or terminated earlier than you believe is appropriate. For Medicare skilled nursing denials, you'll receive a notice explaining why coverage is ending. Common reasons include lack of skilled need, failure to progress in therapy, or the service becoming custodial rather than skilled.
You have the right to appeal Medicare coverage terminations. The facility must provide information about the appeals process, including deadlines and how to request a fast-track appeal. If you file a fast-track appeal before the coverage end date, Medicare must continue paying during the appeal review. You may ultimately be responsible for those days if the appeal is denied, but the appeal buys time to arrange alternative funding.
For ALTCS denials, common reasons include excess assets, income over the limit without proper trust structures, or failure to meet medical necessity criteria. The denial notice will specify the reason and explain your appeal rights. Many denials are due to incomplete documentation or misunderstanding of complex rules rather than true ineligibility. Working with an elder law attorney or ALTCS specialist to address the denial reason often results in approval on reapplication or appeal.
If your loved one is already in a nursing home when ALTCS is denied, the facility cannot immediately discharge them to the street. Federal and state regulations require a safe discharge plan. However, the facility can pursue payment from you or your loved one's estate, and can initiate discharge proceedings if alternative funding is not arranged. Take denial notices seriously and act quickly to appeal or correct the issue.
Conclusion
Understanding the distinct roles of Medicare and Medicaid in nursing home payment prevents costly surprises during an already stressful transition. Medicare provides short-term coverage for skilled care following hospitalization, while ALTCS covers long-term nursing home care for those who meet medical and financial eligibility requirements. The programs do not overlap — Medicare ends, then private pay or Medicaid begins.
Your action plan depends on your loved one's current situation. If they're entering a skilled nursing facility under Medicare, use that coverage period to assess whether long-term care will be needed and begin financial planning accordingly. If long-term care is likely and assets are limited, start the ALTCS application process while Medicare is still paying. If your loved one is already private paying and assets are depleting, gather documentation now rather than waiting until funds are exhausted.
The facility social worker is your partner in navigating these programs, but they work for the facility, not for you. Consider consulting an elder law attorney for complex financial situations, especially if your loved one is married, has recently transferred assets, or owns property. The cost of professional guidance is typically far less than the cost of errors that delay ALTCS approval or trigger penalty periods.
Troubleshooting
Medicare is ending but your loved one still needs skilled nursing care
Request a care plan meeting with the therapy team and nursing staff. Ask specifically what skilled services are still being provided and whether the physician believes continued skilled care is medically necessary. If you believe Medicare is ending prematurely, file a fast-track appeal before the termination date. The Quality Improvement Organization will review the case independently.
ALTCS application is taking longer than expected and private pay funds are running out
Contact the ALTCS caseworker to ask what documentation is missing or what is causing the delay. Provide requested information immediately. Ask the facility if they will defer payment pending approval or if they can recommend a patient advocate who can help expedite the application. Some facilities have relationships with ALTCS specialists who can intervene when applications stall.
Your loved one's income exceeds ALTCS limits but they cannot afford private pay
Ask an elder law attorney about establishing a Qualified Income Trust, also called a Miller Trust. This legal structure allows individuals with income above ALTCS limits to still qualify by directing excess income into the trust. The trust pays the facility, and ALTCS covers the remainder. This is a common solution and is specifically allowed under Arizona Medicaid rules.
The facility says they will discharge your loved one because payment has not been arranged
Facilities must follow federal discharge notice requirements and cannot discharge a resident without a safe discharge plan. You have the right to appeal the discharge. Contact the state long-term care ombudsman program, which advocates for nursing home residents' rights. If your loved one is being discharged for non-payment, ask whether the facility accepts ALTCS and whether they will allow your loved one to remain during the application process.
ALTCS was denied due to asset transfers made several years ago
Review the denial notice carefully to understand what transfers triggered the penalty. Gather documentation showing what the transferred assets were used for — medical expenses, home repairs, or other legitimate costs may not be penalized. An elder law attorney can help you prepare a penalty calculation and determine how long the penalty period will last. In some cases, returning gifted assets can cure the penalty.
You're unsure whether your loved one's hospital stay qualifies for Medicare skilled nursing coverage
Request a copy of the hospital admission paperwork or ask the hospital billing department directly whether your loved one was admitted as an inpatient or held in observation status. The Medicare Summary Notice will also show whether the stay was billed as inpatient. If the three-midnight requirement was not met, Medicare will not cover skilled nursing, and you'll need to plan for private pay or ALTCS from day one.
Sources & review
This guide is general information from BedAlly's editorial team for families in Maricopa County, Arizona. It is not medical, legal, or financial advice. Benefit rules, eligibility, and costs change — verify current details with the agency or facility directly before making a placement decision.