When someone receives hospice care in a nursing home, the costs are split between two categories, and different payers cover each one. Medicare pays for the hospice services themselves (nursing visits, medications for the terminal illness, medical equipment, counseling), but it does not pay for room and board at the nursing facility. That room and board gap is the part that catches most families off guard, and how it gets covered depends on whether the patient has Medicaid, private insurance, VA benefits, or is paying out of pocket.
What Medicare Covers (and What It Doesn’t)
The Medicare Hospice Benefit covers all care related to the terminal diagnosis: visits from hospice nurses and aides, pain medication, medical supplies, grief counseling for family members, and short-term respite care. There are small copayments for prescriptions and respite stays, but otherwise the hospice services cost the patient nothing under Medicare.
What Medicare explicitly does not cover is room and board in the nursing home. This is true whether the person lives in a nursing home, an assisted living facility, or a hospice inpatient facility. The logic, from Medicare’s perspective, is that hospice is a benefit designed around care delivered wherever you already live. It pays for the care team, not the housing. So the daily cost of the nursing home bed, meals, and routine custodial help falls to someone else.
For nursing home residents already on Medicare for a skilled nursing stay, this is a significant shift. Once you elect hospice, that skilled nursing coverage ends for the terminal condition, and the room and board question becomes urgent.
How Medicaid Fills the Room and Board Gap
For people who qualify for both Medicare and Medicaid (known as “dual eligibles”), Medicaid picks up the nursing home room and board. This is the most common way the gap gets covered. Medicaid reimburses the hospice provider at 95% of the facility’s standard skilled nursing rate, and the hospice agency then passes that payment through to the nursing home.
There’s one wrinkle: a “post-eligibility treatment of income” calculation. This is the portion of the patient’s own income (Social Security, pension) that Medicaid requires them to contribute toward their care costs. It’s not a separate bill from the nursing home. It’s built into the Medicaid formula, and it typically leaves the patient with a small personal needs allowance, usually somewhere between $30 and $90 per month depending on the state. The rest of their income goes toward the cost of care.
If the patient doesn’t already have Medicaid, they may need to apply. Many nursing home residents become eligible over time as their savings are depleted, a process sometimes called “spending down.” Each state sets its own income and asset limits, so the threshold varies. A nursing home social worker or Medicaid office can walk families through whether the patient qualifies.
Medicare Advantage Plans and the Hospice Carve-Out
If the patient is enrolled in a Medicare Advantage plan, hospice works differently than most other benefits. Hospice is “carved out” of Medicare Advantage, meaning the private plan doesn’t administer or pay for it. Instead, hospice services are paid directly by original fee-for-service Medicare. The patient stays enrolled in their Medicare Advantage plan for everything else, but hospice billing goes through traditional Medicare.
This means the same rules apply: Medicare covers the hospice services, not room and board. The Medicare Advantage plan continues to cover unrelated medical needs, like a cardiologist visit for a condition that isn’t the hospice diagnosis. But the nursing home bed still needs a separate payer.
Private Insurance Coverage
Many employer-based and private health insurance plans include at least some hospice coverage, but the specifics vary widely. Some plans mirror the Medicare benefit closely. Others have different eligibility criteria, benefit limits, or cost-sharing structures. The key question to ask your insurer is whether the plan covers hospice services in a nursing facility setting, and whether it contributes anything toward room and board.
Private long-term care insurance, if the patient purchased a policy years earlier, is more likely to help with the room and board side. These policies are designed to cover custodial and residential care costs, which is exactly what Medicare’s hospice benefit leaves out.
VA Benefits for Veterans
Veterans enrolled in VA healthcare have a distinct advantage. Hospice care is part of the VA’s standard medical benefits package, and there are no copays for hospice services, whether they’re provided directly by the VA or by a contracted community hospice organization. Veterans can receive inpatient hospice at a VA Community Living Center (the VA’s version of a nursing home), and the VA covers both the care and the facility costs.
For veterans receiving hospice at a non-VA nursing home, the payment structure depends on the arrangement between the VA, the hospice agency, and the facility. Veterans and their families should coordinate with their VA care team to understand what’s covered in their specific situation.
Costs Families Still Pay Out of Pocket
Even with good coverage, some costs fall to families. The most common out-of-pocket expenses include:
- Room and board without Medicaid. If the patient has Medicare but not Medicaid and no long-term care insurance, the family pays the nursing home’s daily rate for room and board. This can run $200 to $300 or more per day depending on the facility and location.
- Treatment for non-hospice conditions. Medications or doctor visits for health problems unrelated to the terminal diagnosis aren’t covered by the hospice provider. These go through regular insurance, Medicare, or supplemental policies, and any usual copays or deductibles apply.
- Private room upgrades. If the patient wants a private room and the facility’s standard is semi-private, the difference in cost is typically the family’s responsibility.
- Personal comfort items. Things like special foods, personal care products, or other non-medical items that the nursing home doesn’t include in its standard rate.
How the Money Actually Flows
The payment structure for hospice in a nursing home involves an unusual arrangement. Medicare pays the hospice agency a daily rate for each day the patient is enrolled. For routine home care (the level most nursing home hospice patients receive), that rate is higher during the first 60 days and drops somewhat after day 61. The exact dollar amount varies by geographic area because Medicare adjusts for local wage differences.
Out of that daily payment, the hospice agency covers all the clinical services: nurse visits, aide visits, medications for the terminal illness, medical equipment, and social work or chaplain support. If Medicaid is paying for room and board, that money also flows through the hospice agency, which then passes it along to the nursing home. The nursing home and the hospice agency essentially share responsibility for the patient, with the hospice team managing the terminal illness and the nursing home providing day-to-day residential care.
This arrangement means families don’t typically receive separate bills from both the hospice and the nursing home for the same services. But it’s worth confirming with both the hospice agency and the facility exactly which costs are covered and by whom, especially in the first few days after hospice is elected, when billing transitions can create confusion.