If you’re a senior, the future may present more of a concern than it once did–you may wonder what you’ll do if your health deteriorates. If you must enter a nursing home, for example, how will you pay for it? Fortunately, you may have several options. One such option is long-term care insurance (LTCI). Government-regulated programs can also help. These include Medicare, Medigap, and Medicaid.

If you lack sufficient resources to pay for long-term care on your own, should you buy LTCI, rely only on government programs, or use an LTCI policy to supplement government benefits? Before you can answer this question, you’ll need to know what types of long-term care are covered under each program. Figuring out where one program leaves off and another begins can be a challenge, so here’s an overview.

The three types of long-term care

There are basically three types of long-term care: skilled care, intermediate care, and custodial care. You need to understand how these types of care are defined, and the extent to which you can obtain coverage for each of them.

What is skilled care?

Skilled care is continuous round-the-clock care required to treat a medical condition. It is ordered by a doctor and usually delivered by a skilled medical worker (e.g., a registered nurse or professional therapist). A treatment plan is established and supervised by a doctor.

Medicare’s coverage of skilled care

Medicare is a federal health insurance program for people age 65 and older and certain others. It provides 100 percent coverage for the first 20 days in each benefit period (year) that you’re in a skilled care facility–as long as certain conditions are met:

  • Before moving into a skilled care facility, you must have spent at least 3 consecutive days in the hospital for the same condition
  • This hospital stay must be within 30 days of the time you enter the skilled care facility, and
  • Skilled care must be provided in a certified facility

You are required to pay a daily co-payment for the 21st through 100th day in a skilled care facility, but Medicare covers any expenses beyond this amount. Medicare provides no coverage for expenses incurred after the 100th day.

Medigap’s coverage of skilled care

Medigap is supplemental health insurance sold by private insurance companies (under federal guidelines) to fill in some of the gaps in Medicare’s coverage. Most Medigap plans cover your daily Medicare co-payment for the 21st to 100th day of skilled care.

Long-term care insurance’s (LTCI’s) coverage of skilled care

LTCI pays a selected dollar amount per day for a specified period for certain forms of care in nursing homes and other settings. You’ll need LTCI if you want coverage beyond the 100th day of care in a skilled care facility. Because many people who enter such facilities stay for several years, LTCI can provide valuable financial protection.