Custodial Care

Custodial care is personal care and supervision that helps a person with the basic tasks of daily life, such as bathing, dressing, eating, using the bathroom and moving from a bed to a chair, as opposed to skilled medical or rehabilitative care. Medicare's own consumer site, Medicare.gov, uses the term interchangeably with long-term care: "Long-term care (also called 'custodial care' or 'long-term services and support') includes medical and non-medical care for people who have a chronic illness or disability. Most long-term care helps with basic personal tasks of everyday life, sometimes called 'activities of daily living.'"

The term carries most of its weight in Medicare. The program's list of excluded services includes "Custodial care, except as necessary for the palliation or management of terminal illness," and defines it by what it is not: "Custodial care is any care that does not meet the requirements for coverage as SNF care." The same help with bathing and dressing can therefore be covered for a few weeks during a skilled nursing stay and not covered at all once the skilled need ends.

Two definitions that do not line up. Medicare's is residual: whatever is not skilled nursing facility care is custodial. Ordinary usage, and Medicare.gov's own consumer page, describe it positively as help with activities of daily living. The practical gap is that a person can need a great deal of help, every day, for years, and none of it is skilled. A nursing home resident who no longer needs daily skilled nursing or therapy has moved from skilled care to custodial care without moving rooms.

Who pays. Medicare.gov is direct: "Since most long-term care is non-medical, Medicare and most health insurance, including Medicare Supplement Insurance (Medigap), don't pay for long-term care services, including care in a nursing home or in the community." That leaves four sources:

• Medicaid, which Medicaid.gov calls "the primary payer across the nation for long-term care services," for those who meet their state's financial and medical eligibility rules, including the look-back on asset transfers.
• Long-term care insurance. Federal tax law calls the covered care "maintenance or personal care services," meaning care whose primary purpose is "the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual," including protection from threats to health and safety caused by severe cognitive impairment.
• PACE. For people enrolled in the Program of All-Inclusive Care for the Elderly, the regulation waives Medicare's custodial-care exclusion.
• The person and the family, through savings and income or through unpaid caregiving.

A Medicare detail worth knowing. Months spent in a nursing home on custodial care alone do not keep a Medicare benefit period open, because a resident counts as an inpatient for that purpose only while receiving skilled care. The 60-day clock that ends a benefit period keeps running, which can matter if a later hospital stay starts a new one.

1. The need is assessed. A doctor, care manager or insurer's assessor looks at which activities of daily living the person needs help with, and whether there is a cognitive impairment requiring supervision.
2. The setting is chosen: home care by an aide, adult day care, assisted living or a nursing home.
3. The payer is determined. Medicare covers skilled care, and custodial care only within hospice or PACE. A long-term care policy pays once its benefit trigger and elimination period are met, usually up to a daily or monthly limit. Medicaid pays for those who qualify. Everything else is paid privately.

For example: Walter needs an aide 6 hours a day, 5 days a week, to help him bathe, dress and eat. At an illustrative $34 an hour, that is 30 hours x $34 = $1,020 a week, or $1,020 x 52 = $53,040 a year, about $4,420 a month. Medicare pays none of it, because none of the care is skilled. If Walter's long-term care policy pays up to $4,500 a month once he needs help with two activities of daily living, it covers this schedule after the elimination period. Doubling the hours to 12 a day would cost about $8,840 a month, and the $4,340 above the policy limit would come from Walter and his family.

Pros

• Custodial care can often be given at home or in the community, not only in a facility.
• It does not require a medical professional, so family members, home care aides and adult day programs can all provide it.
• Long-term care insurance and Medicaid both pay for it when their conditions are met.

Cons

• Medicare and most health insurance, including Medicare Supplement Insurance, do not pay for it.
• It can last for years, so the total cost is open-ended in a way most medical bills are not.
• Medicaid's coverage is means-tested, so a person with savings above the state's limits has to spend them down, or otherwise reduce countable assets, before qualifying.