Memory Digest

Medicare, Medicaid and Dementia Care

A plain-language guide to what Medicare and Medicaid do and don't pay for when someone has dementia—from memory assessments to the GUIDE program, hospice and long-term care.

Last reviewed: October 2026

Paying for dementia care is one of the biggest worries families face. Two government programs—Medicare and Medicaid—play major roles, but they cover very different things. Understanding the difference early can save money, stress and surprises.

Rules, costs and eligibility change and vary by state. This guide is general information, not legal or financial advice.

Medicare vs. Medicaid at a glance

• Medicare is federal health insurance for people 65 and older (and some younger people with disabilities). It covers medical care: doctors, hospitals, tests and prescriptions.
• Medicaid is a joint federal–state program for people with limited income and assets. It's the main public payer for long-term care, including nursing homes.

Many people with dementia eventually qualify for both ("dual eligible").

What Medicare covers

Diagnosis and planning

• Cognitive assessment and care planning visit. Medicare Part B covers a separate visit for a cognitive assessment. During it, a clinician can evaluate memory and thinking, review medications, check safety, help create a care plan, and discuss advance care planning (Medicare.gov). The Part B deductible and coinsurance apply.
• The Annual Wellness Visit includes a check for cognitive impairment.
• Diagnostic tests such as brain imaging, when medically necessary. See Getting a Diagnosis.

Treatment

• Doctor visits, hospital stays (Part A), and outpatient care (Part B)
• Prescription drugs through Part D plans or Medicare Advantage drug coverage
• Physical, occupational and speech therapy when medically necessary
• Home health care on a part-time basis when a person is homebound and needs skilled care

Short-term skilled nursing

The Alzheimer's Association notes that Medicare will pay for up to 100 days of skilled nursing facility care under limited circumstances—generally after a qualifying hospital stay and when the person needs daily skilled care, such as rehabilitation.

Hospice

Medicare Part A covers hospice for people with a life expectancy of six months or less who choose comfort care. See Hospice and End-of-Life Care.

What Medicare does NOT cover

This surprises many families: Medicare does not pay for long-term custodial care—help with everyday activities like bathing, dressing, eating and supervision—when that's the main need. The Alzheimer's Association states plainly that custodial long-term nursing home care is not covered. That also generally applies to assisted living, memory care and ongoing in-home aides.

The GUIDE program

Since July 1, 2024, Medicare has been testing the GUIDE Model (Guiding an Improved Dementia Experience), an eight-year program run by participating health care organizations. According to CMS, GUIDE provides:

• A care navigator to help families find clinical and community services
• 24/7 access to a support line
• Caregiver training and education
• Respite services up to $2,500 a year for eligible people—such as in-home care, adult day programs or short facility stays
• Coordinated, ongoing dementia care from an interdisciplinary team

GUIDE is available only through participating programs and to people who meet eligibility rules. Ask your doctor, local Area Agency on Aging or the Alzheimer's Association whether a GUIDE program serves your area.

What Medicaid covers

Medicaid can pay for care Medicare doesn't, including:

• Nursing home care for people who meet financial and medical requirements
• Home and community-based services (HCBS) in most states—such as personal care aides, adult day programs and respite—which help people stay at home longer
• Medicare premiums and cost-sharing for some low-income people

The Alzheimer's Association notes that most people living with Alzheimer's or other dementia will eventually need long-term care services, and many rely on Medicaid once their own money is used up.

Medicaid eligibility basics

• Eligibility and benefits vary from state to state.
• Applicants must have limited income and assets.
• There are special protections for a spouse who continues living at home, so they aren't impoverished.
• Be very careful about giving away money or property to qualify. Strict rules, including a "look-back" period, can delay eligibility. The Alzheimer's Association advises checking with a legal adviser before transferring assets.
• Many nursing homes that accept Medicaid have staff who can help with the application.

Practical steps for families

1. Gather documents: Medicare and insurance cards, income and bank statements, deeds, and existing legal papers.
2. Ask for a cognitive assessment and care-planning visit soon after diagnosis.
3. Review the Part D or Medicare Advantage plan each fall during open enrollment to make sure medicines are covered.
4. Get free counseling from your State Health Insurance Assistance Program (SHIP), which offers unbiased Medicare help.
5. Contact your Area Agency on Aging (find it through the Eldercare Locator, 1-800-677-1116) to learn about local programs.
6. Consult an elder law attorney about Medicaid planning, powers of attorney and long-term care costs—see Living Well with Dementia.
7. Call the Alzheimer's Association 24/7 Helpline at 800-272-3900 for guidance—see Helplines and Support Organizations.

Bottom line

Medicare covers medical care—including memory assessments, care planning, short-term skilled care and hospice—but not long-term custodial care. Medicaid can help pay for nursing homes and home-based services for people with limited means, under rules that vary by state. Plan early, ask questions, and get expert advice before making major financial decisions.

Sources

1. Alzheimer's Association: Medicare
2. Alzheimer's Association: Medicaid
3. Medicare.gov: Cognitive Assessment & Care Plan Services
4. CMS: GUIDE (Guiding an Improved Dementia Experience) Model
5. Medicare.gov: Hospice Care Coverage

Not medical advice. This article is general information, not a diagnosis or treatment plan for any individual. Talk with a doctor about your situation.

Related articles

• Caregiving Guide: Where to Start
• Hospice and End-of-Life Care
• Getting a Diagnosis
• Caregiver Stress and Burnout
• Helplines and Support Organizations