Myth 1. Medicare will pay for long-term care. A 2001 survey sponsored by CareQuest found that four in ten Americans age 65 and over believed that Medicare, or Medicare supplemental insurance (Medigap), would pay for long-term nursing home stays. The reality is that Medicare will pay for up to 100 days of "short-term" nursing home care in qualifying circumstances, but it will not pay for long-term custodial care.

To qualify for short-term care, you must first be in the hospital at least three days, not counting the day of discharge. You then must need skilled nursing or skilled rehabilitation services, delivered at a Medicare-certified nursing home, and approved by a physician on a daily basis. Thus, you'll likely qualify if you need to recover from surgery to repair a broken hip, but not if you have Alzheimer's.

Myth 2. Medicare pays for all short-term costs. Assuming you qualify for short-term care, Medicare will pick up the full allowable tab only for the first 20 days. Fortunately, the average stay is only slightly longer than that (23 days in 1999). However, for days 21-100, you pay the first $101.50 (adjusted annually), though Medigap insurance might pick it up. Keep in mind that you might be discharged from Medicare coverage any time during the 100-day period because you no longer need skilled care-yet you may still need custodial care at that point, which Medicare won't pay for.

Myth 3. Medicare pays for home care. Again, only under limited circumstances. A physician must certify that skilled services are needed, the person must be homebound, and the care must be intermittent. That means less often than seven days a week and fewer than eight hours daily.

Myth 4. Medicaid pays for long-term care. Yes, it does-it picks up about 50 percent of the nation's nursing home tab. But you must be poor to qualify. In most states, which run the federally funded program, the patient's net worth must be $2,000 or less. That means spending down retirement accounts and IRAs. In addition, the beneficiary's income such as Social Security and pension payments must go toward the bill. A healthy spouse (and sometimes an unmarried Medicaid beneficiary) usually can keep the house, a car, limited income and other limited assets during their lifetime. 

Myth 5. There's no difference between Medicaid and private-pay care. Critics contend that Medicaid beneficiaries receive lower quality care than they would under private pay because Medicaid pays the nursing homes less than private pay (about 80 percent of the going private-pay rate). For example, you won't get a private room, and your choice of facilities is more limited because not all nursing homes accept Medicaid patients or they have a limited number of Medicaid beds.

Myth 6. Medicaid pays for assisted living. Not all state Medicaid programs pay for assisted living, and the programs that do cover a limited number of people. Medicaid also pays for only limited home care, if at all.

Myth 7. I can give my assets away in order to qualify. You can, but you then won't qualify for Medicaid for at least three years after you transfer the assets (five years if the assets are in a trust). Furthermore, you likely won't receive the same quality of care and choice you would receive if you pay for long-term care out of pocket or through long-term care insurance.

Myth 8. The state won't require payback of Medicaid services. Federal law mandates states to try to recover the cost of Medicaid services from a Medicaid beneficiary's remaining estate once the beneficiary dies. That might mean that the home or farm you are able to keep while you receive Medicaid, and which you intend to pass on to your children, might have to be sold in order to pay back the state for the cost of those services.