Planning Ahead: Financing Dementia Care With Medicare and Medicaid

One of the most pressing questions families face after a dementia diagnosis is how to pay for the care their loved one needs. Home care, respite, and supportive services can add up quickly. The new Medicare GUIDE benefit, which Lizzy Care can help your family access, is an important step forward. It provides monthly care management at no cost and includes coverage of up to $2,563 towards respite, equal to about 80 hours of aide support each year. This can be a lifeline, but many families soon find they need more help than GUIDE alone can provide.

That is why planning becomes essential. For many, private pay is the first option, but it is not the only one. Medicaid, often thought of as only for those with limited means, can actually play a vital role in financing long-term dementia care. In New York, New Jersey, Connecticut, Kentucky, and many other states, Medicaid offers home and community-based services or waivers that can significantly expand the hours of support a family receives. With the right planning, even many middle-class families can qualify, and eligibility rules are often more flexible (though state-by-state differences mean it helps to check your own state’s programs).

Medicare and Medicaid: What Families Should Know

Medicare is a federal health insurance program for people aged 65 and older and for some younger people with disabilities. It covers hospital stays, physician visits, and some skilled home health care, but it generally does not pay for long-term personal or custodial care such as ongoing home aides or daily supervision. Medicaid, in contrast, is a joint federal and state program that supports people with limited income and resources. Medicaid can provide long-term care, including in-home or nursing home services, once eligibility requirements are met. Some people qualify for both programs at the same time, known as being “dual eligible,” which can greatly reduce out-of-pocket costs.

Families can work with elder law attorneys or financial planners to structure assets in ways that protect inheritances while establishing Medicaid eligibility. In New York, income above the Medicaid threshold can often be directed into a pooled income trust, allowing individuals to keep paying for everyday expenses while still qualifying for benefits. Asset transfer rules do apply, but with professional guidance families can time applications and preserve resources while accessing support.

What About New Jersey?

For families in New Jersey, many of the same principles apply, but the details are different. New Jersey applies a lookback period that examines asset transfers before a Medicaid application, and the state also sets its own income and asset limits for home and community-based services. Families may need to “spend down” by covering certain care costs before qualifying. Because Medicaid is run at both the state and federal level, each state sets its own thresholds and covered services. Understanding these rules is key to making the right financial decisions.

Bringing It All Together

Medicaid is not an all-or-nothing solution. It can complement GUIDE and private pay to create a more sustainable plan. When layered together, these resources can ensure that your loved one has consistent, high-quality support at home while also reducing the strain on family caregivers.

At Lizzy Care, our Navigators work with families to explore every option and build a plan that fits their unique circumstances. The earlier you start planning, the more choices you will have and the more secure your family’s future will be.

Fill out the form below to talk to someone about Lizzy Care’s services or visit https://hilizzy.com/guide/check/ to see if your family is eligible for free support through Medicare.

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