Navigating the financial reality of Alzheimer's or dementia care can feel like one of the most overwhelming parts of the caregiving journey. With costs for memory care, assisted living, and in-home support reaching thousands of dollars per month, families often assume that Medicare will provide a safety net.
However, this crucial government health insurance program has significant and often surprising gaps in coverage for long-term dementia care. Understanding precisely what Medicare will and will not cover is not just about budgeting; it's essential to creating a realistic, sustainable care plan that protects your loved one's well-being and your family's financial future.
This guide breaks down the critical distinctions, clarifying what qualifies as “medically necessary” care versus “custodial” support, so you can plan with confidence and avoid costly surprises.
Long-term care for someone with Alzheimer’s or dementia is expensive. To provide the best possible care, it’s essential to plan for future care costs. HealthMarkets explains what Medicare covers and what it doesn’t for Alzheimer’s and dementia care.
2025 Alzheimer's Disease Facts and Figures
- 7.2 million Americans aged 65 and older are estimated to be living with Alzheimer's dementia in 2025.
- For the first time, this number has surpassed 7 million.
- When including the approximately 200,000 Americans living with younger-onset Alzheimer's (those under age 65), the total reaches roughly 7.4 million people.
As of 2025, an estimated 7.2 million Americans are living with Alzheimer’s disease or another form of dementia. And the majority are 65 years old or older, according to the Alzheimer’s Association.
This degenerative condition affects a person’s level of independence and ability to function in permanent, life-altering ways.
But the impact of Alzheimer’s extends to family members, too. In many cases, the patient’s adult children will take on a caregiving role, which requires time, effort, and a significant financial commitment.
Even with Medicare coverage, the average cost of treating this disease is high.
Growth and Projections
The prevalence of the disease is rising rapidly as the U.S. population ages. The current 7.2 million figure represents a notable jump from the 6.9 million estimated in 2024. Without medical breakthroughs to prevent or cure the disease, this number is projected to nearly double to 13.8 million by 2060.
Updated Cost of Care for 2025
A recent Genworth Financial survey, conducted in collaboration with CareScout, outlined the average national median costs for monthly Alzheimer’s treatment options in the United States:
- Home-based care: Ranges from $6,292 (Homemaker services) to $6,483 (Home health aide).
- Adult daycare: Is $2,167 (based on the national daily median of $100).
- Assisted living facilities: Cost $5,900 for a private, one-bedroom unit.
- Nursing homes: Are $9,277 for a semi-private room or $10,646 for a private room.
Key Medicare Financial Changes
In-Home Care
These costs saw some of the sharpest increases due to labor shortages and rising wages. In many areas, agencies now charge the same rate for both “hands-on” home health aides and “hands-off” homemaker services.
Assisted Living
The national median jumped 10% year over year, primarily driven by higher occupancy rates and inflation.
Nursing Homes
Private room costs now exceed $127,000 annually on a national median basis, making it the most expensive form of formal long-term care.
As a caregiver, it’s essential to understand which treatment areas Medicare covers and which out-of-pocket expenses to plan for.
This knowledge will better equip you to manage the financial responsibilities associated with Alzheimer’s, so they don’t become another source of conflict, tension, or unpredictability as your older adult’s illness progresses.
We explain two areas of care that Medicare covers and two that it doesn’t.
Medicare Does Cover “Medically Necessary Care”
The Centers for Medicare & Medicaid Services (CMS) defines medical necessity as “services or supplies that: are proper and needed for the diagnosis or treatment of your medical condition, are provided for the diagnosis, direct care, and treatment of your medical condition, meet the standards of good medical practice in the local area, and aren't mainly for the convenience of you or your doctor.”
These usually include doctor’s visits, laboratory tests, required procedures, and certain specialist referrals or emergency care.
Some prescription drugs are also viewed as medical necessities under Medicare Part D coverage if the medication has been approved to treat or manage Alzheimer’s symptoms.
Medicare Doesn't Cover Custodial Care
As symptoms advance, most Alzheimer’s and dementia patients need help with activities of daily living (ADLs) like personal hygiene, eating, dressing, and bathing.
Medicare classifies these services as custodial care and generally does not cover them.
But Investopedia notes two exceptions: “If the care is considered medically necessary and prescribed by a licensed physician or authorized medical personnel, and if the care is conducted by a healthcare provider who participates in Medicare.”
Medicare Does Cover Some Rehabilitative Care
If home health services, such as physical or occupational therapy, are needed after a hospitalization or to manage a chronic condition, Medicare will cover them as long as the patient is certified as “homebound“.
Skilled Nursing Facility (SNF) Care
Medicare pays for up to 100 days of rehabilitative care in a skilled nursing facility per benefit period. However, this coverage only triggers if the patient had a medically necessary inpatient hospital stay of at least three consecutive days before admission.
Cost Breakdown
The first 20 days are covered at $0 cost to you. For days 21–100, you must pay a daily coinsurance ($209.50 in 2025; $217 in 2026).
Temporary Home Health Care
Medicare covers intermittent skilled nursing and home health aide services in 60-day periods. While the standard limit is usually 28 hours per week, Medicare may cover up to 35 hours per week in certain limited, case-by-case situations if a doctor deems it medically necessary.
Cost & Requirements of Home Health vs Skilled Nursing
| Feature | Skilled Nursing Facility (SNF) | In-Home Health Care |
|---|---|---|
| Primary Requirement | 3-day consecutive inpatient hospital stay | Certified as “homebound” by a doctor |
| Coverage Limit | Up to 100 days per benefit period | Intermittent care in 60-day periods |
| Daily Hours | 24-hour skilled care | Usually 28-35 hours per week |
| 2025 Costs (Days 1–20) | $0 per day | $0 for services |
| 2025 Costs (Days 21–100) | $209.50 daily coinsurance | $0 for services |
Medicare Doesn't Cover Long-Term Care Facilities or Memory Care
In the later stages of Alzheimer’s or dementia, your older adult might need to move to an assisted living community, nursing home, or memory care community.
Medicare won’t cover this type of care or housing, but Medicare Supplement policies can help cover some out-of-pocket costs.
The Average Cost of Assisted Living in the USA
Based on the most recent national data for 2025, the average (median) cost of assisted living in the United States is $70,800 per year. This figure reflects a significant 10% increase over 2023 rates, driven primarily by rising labor costs and inflation.
Assisted Living Cost Breakdown & Variations
While the national median assisted living costs are approximately $5,900 per month, actual costs vary drastically depending on your location:
- Most Expensive States: In high-cost areas such as Hawaii and Alaska, annual costs can exceed $120,000 to $135,000.
- Most Affordable States: In states such as Louisiana and Mississippi, annual costs are around $48,000 to $50,000.
- Additional Fees: Many facilities also charge a one-time “community fee” or “entry fee” at move-in, which can range from a few thousand dollars to significantly higher amounts for high-end communities.
Annual Cost Comparison for Senior Care Options in America
Understanding the current financial landscape is vital for effective long-term care planning. According to recent 2025 reports, senior care costs are rising across the board, with several care types significantly outpacing the overall rate of inflation.
Driven primarily by labor shortages and inflationary pressures on operating expenses, the national median cost for assisted living communities and homemaker services each increased by 10% in the past year.
The following table provides a comprehensive overview of the national median annual costs for various senior care options in 2025, helping you anticipate and budget for your loved one's future care.
| Care Option | Annual National Median (2025) |
|---|---|
| Adult Day Care | $26,000 |
| Assisted Living Community | $70,800 |
| Homemaker Services | $75,504 |
| Home Health Aide (44 hrs/wk) | $77,792 |
| Nursing Home (Semi-Private) | $111,325 |
| Nursing Home (Private) | $127,750 |
Planning Ahead Reduces Worry
Medicare helps pay for some levels of dementia treatment and care, but it’s also necessary to prepare for the services that Medicare doesn’t cover.
Planning for future care costs can reduce the financial burden and allow you to focus on your older adult’s physical and emotional well-being.
Final Thoughts on What Medicare Covers When it Comes to Alzheimer's Disease
While Medicare provides vital support for doctor's visits, hospital stays, and some rehabilitative therapies, the long-term, hands-on care required for Alzheimer's and dementia largely falls outside its scope.
Recognizing that Medicare does not cover custodial care, long-term facility stays, or memory care is the first, most crucial step in proactive financial planning. This knowledge empowers you to explore other essential options, such as long-term care insurance, Medicaid eligibility, veterans' benefits, or personal savings strategies.
By planning for these uncovered costs, you can transform a source of immense anxiety into a manageable part of the care journey. Your foresight will allow you to focus on what truly matters: providing compassionate care and maintaining the highest possible quality of life for your loved one, free from the added strain of financial uncertainty.
Related Articles:
- What Does Medicare Cover? Find Out Before the Bills Arrive
- How to Estimate Long Term Care Costs to Make Care Decisions Easier
- Find Financial Help for Seniors: 2,500+ Federal, State, and Private Benefits Programs
Guest contributor: Michael Z. Stahl serves as executive vice president of HealthMarkets – one of the nation’s largest independent insurance agencies in the Medicare, individual and supplemental health, life, and small group insurance markets. He has a bachelor’s degree in economics from The Wharton School at the University of Pennsylvania. He holds the Chartered Property and Casualty Underwriter (CPCU), Associate in Insurance Accounting and Finance (AIAF), and Associate in Reinsurance (ARe) designations. An avid Kansas City Royals fan, he lives in Dallas with his wife and children.
About the Author
Michael Z. Stahl is the executive vice president and chief marketing officer of HealthMarkets, one of the largest independent health insurance agencies in the U.S. that distributes health, Medicare, life and supplemental insurance products from more than 200 insurance companies. Stahl holds the chartered property casualty underwriter (CPCU), associate in insurance accounting and finance (AIAF) and associate in reinsurance (ARe) designations, and earned a bachelor of science in economics from The Wharton School at the University of Pennsylvania. He lives in Dallas with his wife and four children.
