Dementia, including Alzheimer’s disease, involves a progressive decline in cognitive function requiring increasing medical and supportive care. Medicare, the federal health insurance program, covers acute medical needs, diagnosis, and short-term skilled services for dementia patients. However, it has significant limitations on long-term care and does not function as a comprehensive long-term care insurance policy.
Coverage for Diagnosis and Outpatient Management
The initial step in managing dementia is detection, which Medicare Part B supports through preventive and diagnostic services. Cognitive screening is a required component of the Annual Wellness Visit (AWV), a yearly benefit covered at no cost. This screening looks for early signs of impairment, such as memory or decision-making difficulty.
If screening suggests cognitive impairment, Part B covers a separate, comprehensive visit for assessment and care plan development. This evaluation requires a detailed history, a functional assessment, and often input from a family member or caregiver. The goal is to establish a diagnosis, rule out treatable causes, and create a personalized written care plan.
Part B also covers medically necessary diagnostic tests used to confirm a dementia diagnosis. These include laboratory blood work and brain imaging like CT scans or MRI. Medicare has expanded coverage for amyloid Positron Emission Tomography (PET) scans, which detect the amyloid plaques characteristic of Alzheimer’s disease.
Outpatient mental health services are covered under Part B, as dementia patients often experience co-occurring conditions like anxiety and depression. Coverage includes individual and group psychotherapy sessions with eligible providers. After meeting the Part B deductible, beneficiaries pay a 20% coinsurance for these services.
Coverage for Inpatient and Skilled Nursing Needs
Medicare Part A, known as Hospital Insurance, covers acute medical episodes. If a patient is admitted to an acute care hospital, Part A covers the inpatient stay, including room, meals, nursing care, and medications. Part A also covers inpatient psychiatric care for mental health crises, though a lifetime limit of 190 days applies in a freestanding psychiatric hospital.
Part A provides limited coverage for post-acute care in a Skilled Nursing Facility (SNF). To qualify, the patient must have had a qualifying inpatient hospital stay of at least three consecutive days, and SNF admission must occur within 30 days of discharge. The patient must also require daily skilled services, such as physical therapy or complex wound care, provided by licensed medical personnel.
If SNF criteria are met, Medicare covers the first 20 days at 100%. For days 21 through 100, the patient pays a daily coinsurance amount. Coverage ceases if the patient stops making progress or if their need shifts entirely to custodial care.
Hospice care is also covered under Part A for dementia patients certified by a doctor as having a life expectancy of six months or less. This benefit shifts the focus from curative treatment to palliative care, covering services like pain management, medical equipment, and caregiver support. The hospice benefit includes initial 90-day periods, followed by unlimited 60-day periods, each requiring re-certification.
Prescription Drugs and Medicare Advantage Plans
Medications used to manage dementia symptoms are primarily covered under Medicare Part D, the prescription drug benefit. Part D covers cholinesterase inhibitors (e.g., donepezil) for mild to moderate Alzheimer’s disease and NMDA receptor antagonists (e.g., memantine) for moderate to severe dementia.
Newer disease-modifying therapies, such as anti-amyloid monoclonal antibodies (lecanemab and donanemab), are covered under Medicare Part B because they are administered intravenously in an outpatient setting. Coverage for these high-cost drugs requires strict criteria, including a diagnosis of mild cognitive impairment or mild dementia with documented amyloid plaques. Patients are responsible for the 20% Part B coinsurance, which can be a significant out-of-pocket cost.
Medicare Advantage plans (Part C) offer an alternative way to receive Medicare benefits through private insurance companies. These plans must cover all services in Original Medicare (Parts A and B) and often bundle in Part D coverage. Part C plans can offer additional benefits valuable for dementia patients, such as transportation, meal delivery, and enhanced care coordination. The Chronic Condition Special Needs Plan (C-SNP) is a specialized option designed to coordinate care and offer tailored benefits for individuals with severe chronic diseases like dementia.
Understanding Coverage Limitations: The Custodial Care Exclusion
The most significant coverage gap for dementia patients is the exclusion of long-term custodial care. Custodial care refers to non-medical assistance with Activities of Daily Living (ADLs), such as bathing, dressing, and eating. Since dementia is progressive, patients eventually require this daily assistance, which Medicare considers non-medical and does not cover.
This exclusion applies regardless of the setting. Medicare does not pay for long-term residency in an assisted living facility, a memory care unit, or a nursing home, nor does it cover the associated room and board costs. While Medicare covers a patient’s medical services (e.g., doctor visits) even in a long-term care setting, the substantial cost of personal care and housing remains the patient’s responsibility.
Medicare does cover Home Health Care, but only if it is intermittent and includes a skilled component, such as nursing care or physical therapy. The patient must also be certified as homebound. A home health aide may assist with personal care only if it is secondary to the skilled service. Medicare will not cover an aide if the only service needed is help with ADLs. For long-term custodial care, the primary public payer is Medicaid, a joint federal and state program for low-income individuals.