Medicare Coverage for Dementia and Alzheimer’s Disease: What’s Covered and What Isn’t

Alzheimer’s disease and other dementias are among the most financially devastating diagnoses a Medicare beneficiary or their family can face. The total cost of dementia care — medical, personal, and custodial — runs to hundreds of thousands of dollars over a patient’s lifetime. Medicare does cover certain aspects of dementia care, but it has significant gaps that most families discover too late. Understanding what Medicare covers and what it doesn’t is essential for anyone dealing with cognitive decline.

Cognitive Assessment as Part of the Annual Wellness Visit

Every Medicare beneficiary is entitled to a free Annual Wellness Visit (AWV) each year. One component of the AWV that often goes unrecognized is a cognitive impairment detection assessment — effectively a brief mental status exam that your primary care physician performs to identify any signs of cognitive decline.

The AWV cognitive assessment is not billed separately; it’s included in the AWV visit at no cost to you. The visit uses standardized tools such as the Mini-Cog (a 3-minute test combining word recall and clock drawing), the MMSE (Mini-Mental State Examination), or the MOCA (Montreal Cognitive Assessment) to screen for deficits.

If the AWV cognitive screening raises concerns, your physician can then order further evaluation. Cognitive impairment assessment — more detailed testing performed as a separate evaluation — is covered under Part B. This includes:

Physician time spent taking a detailed cognitive history from the patient and a caregiver
Brief standardized cognitive testing (MMSE, MoCA) in the office setting
Referral for neuropsychological testing if warranted

A comprehensive neuropsychological evaluation — standardized testing lasting several hours, administered by a neuropsychologist — is covered under Part B as diagnostic testing. You pay the standard 20% Part B coinsurance after the deductible. This evaluation can be critical for accurate diagnosis, establishing a baseline, and differentiating Alzheimer’s from vascular dementia, Lewy body dementia, frontotemporal dementia, or reversible causes of cognitive impairment.

Diagnostic Workup Under Part B

Diagnosing Alzheimer’s disease and ruling out other causes of cognitive decline involves multiple tests, most of which are covered under Part B.

Brain imaging:

MRI of the brain: Covered under Part B for diagnostic purposes. Used to rule out strokes, normal pressure hydrocephalus, tumors, and assess brain atrophy patterns
CT scan of the brain: Alternative imaging, also covered under Part B
PET scan for amyloid: More complex situation — see below

Laboratory work: Blood tests to rule out thyroid dysfunction, vitamin B12 deficiency, folate deficiency, metabolic disorders, and other reversible causes of cognitive impairment are covered under Part B as diagnostic labs.

Neurologist visits: Visits to a neurologist or geriatric psychiatrist for dementia evaluation and management are covered under Part B. You pay the standard 20% coinsurance.

Amyloid PET Scans: A Special Coverage Rule

Amyloid PET scans — which detect amyloid plaques in the brain, a hallmark of Alzheimer’s disease — have been covered under Medicare only in limited circumstances. For many years, CMS covered amyloid PET only in the context of approved clinical trials.

This changed significantly with the approval of new Alzheimer’s disease-modifying treatments (see below). CMS updated coverage for amyloid PET to support eligibility determination for these treatments. Check with your neurologist for the current coverage rules, which continue to evolve with new drug approvals.

Medicare Part D Coverage for Dementia Medications

The medications used to treat Alzheimer’s disease symptoms — not the disease itself, but its symptoms — are covered under Medicare Part D prescription drug plans.

Cholinesterase inhibitors (slow the breakdown of acetylcholine to support cognitive function):

Donepezil (Aricept): Generic widely available; typically Tier 1 or 2 on most formularies; low copays
Rivastigmine (Exelon): Available as generic oral and as a transdermal patch; covered under Part D
Galantamine (Razadyne): Generic available; covered under Part D

These medications are used across all stages of Alzheimer’s disease.

NMDA receptor antagonist:

Memantine (Namenda): Generic available; covers moderate-to-severe Alzheimer’s disease; typically Tier 1 or 2 as a generic

Combination therapy:

Donepezil + memantine (Namzaric): Combination pill; branded, higher formulary tier than generics; most patients are better served by the individual generics for lower cost

Under the $2,000 annual Part D out-of-pocket cap that took effect in 2025, even patients on more expensive branded medications have some cost protection. See Medicare Part D explained for how the coverage phases and cap work.

Disease-Modifying Alzheimer’s Treatments: Lecanemab (Leqembi) and Donanemab

In a historic development, the FDA approved two disease-modifying Alzheimer’s treatments that actually target and clear amyloid plaques from the brain — not just managing symptoms, but potentially slowing disease progression for the first time.

Lecanemab (Leqembi): Approved by the FDA in July 2023 for early Alzheimer’s disease (mild cognitive impairment or mild dementia due to Alzheimer’s). Administered as an IV infusion every two weeks.

Donanemab (Kisunla): FDA approved in July 2024 for early symptomatic Alzheimer’s. Administered as an IV infusion every four weeks.

Medicare coverage: Because these are administered as IV infusions in clinical settings, they are covered under Part B rather than Part D. CMS announced Medicare coverage for FDA-approved Alzheimer’s disease treatments for beneficiaries enrolled in a qualifying clinical registry (later expanded to broader coverage as conditions evolved). The coverage determination requires that treatment be overseen by a physician, the patient meets clinical criteria, and outcomes are tracked.

Important caveats:

These drugs are not appropriate for all Alzheimer’s patients — they require amyloid confirmation (PET scan or CSF analysis) and are indicated only for early-stage disease
Serious side effects include ARIA (amyloid-related imaging abnormalities — brain swelling or microbleeds) requiring MRI monitoring
Costs are substantial; the 20% Part B coinsurance without Medigap can run tens of thousands of dollars annually

If your loved one may be a candidate for these treatments, discuss with a neurologist at a specialized Alzheimer’s disease center and understand the full cost implications before proceeding. Medigap plans compared explains which supplement plans cover Part B coinsurance.

Care Coordination Services Under Part B

For people with dementia who are managing multiple conditions and medications, two Part B billing codes provide structured care coordination that can significantly improve care quality and reduce emergency room visits.

Chronic Care Management (CCM): For patients with two or more chronic conditions — Alzheimer’s disease plus, for example, hypertension and diabetes — physicians can bill monthly for non-face-to-face care coordination work. You pay 20% of the approved CCM monthly rate (roughly $8–$15/month depending on complexity). This service includes medication reconciliation, care plan maintenance, and coordination between specialists.

Behavioral Health Integration (BHI): For cognitive and behavioral symptoms of dementia, BHI provides monthly integration of behavioral health into primary care. Covered under Part B.

These services are often under-utilized because patients and families don’t know to ask for them. If your loved one has an Alzheimer’s diagnosis, ask their primary care physician about CCM enrollment.

Home Health Coverage for Homebound Dementia Patients

When an Alzheimer’s patient reaches the point where leaving home requires considerable and taxing effort — which happens as the disease progresses — they may qualify for Medicare home health benefits under Part A and Part B.

Home health is covered with zero coinsurance and zero deductible when all criteria are met:

The patient must be homebound (leaving home is medically contraindicated or requires considerable effort)
A physician must certify the need for skilled care (skilled nursing visits, physical therapy, occupational therapy, or speech therapy)
Care must be provided by a Medicare-certified home health agency

For Alzheimer’s patients, skilled nursing visits for medication management and wound care, occupational therapy for activities of daily living (ADLs), and safety assessments (fall prevention, home modification guidance) may all qualify. Home health aides can provide bathing and personal care when skilled services are also being provided.

Note that home health does not cover round-the-clock personal care or custodial care alone. If a dementia patient needs supervision or personal care beyond the skilled care component, that is not a Medicare-covered benefit.

Adult Day Services: Limited Medicare Coverage

Medicare does not generally cover adult day health services (ADHS) — programs where dementia patients spend structured daytime hours at a supervised facility while their caregiver works or rests. However, Medicare may cover medical monitoring and skilled services provided at an adult day health center if those services meet the skilled care criteria (a physician certifies need for skilled nursing or therapy at the center).

The custodial supervision component of adult day care — the main reason families use it — is not covered. This is an important gap families must fund privately or through long-term care insurance.

The Major Gap: Memory Care and Residential Dementia Care

This is the most important thing to understand about Medicare and dementia: Medicare does not pay for memory care facilities, assisted living, or residential dementia care. Period.

Memory care units: Specialized dementia care in a locked, supervised environment. Costs run $5,000–$10,000/month or more depending on location. Medicare does not cover these.

Assisted living: Room, board, personal care, and supervision for people who can no longer live independently. Not a Medicare benefit.

Custodial nursing home care: If a dementia patient in a nursing home no longer needs skilled care (medical or therapy services) and requires only custodial supervision and personal care, Medicare stops paying. Medicaid pays for nursing home custodial care for those who meet financial eligibility criteria.

The only residential care Medicare covers is short-term skilled nursing facility care after a qualifying 3-day hospital stay, and only when the patient still needs daily skilled care. Once a dementia patient stabilizes and needs only ongoing supervision and personal care, Medicare coverage ends.

What pays for memory care?

Long-term care insurance: Policies with an Alzheimer’s or dementia benefit cover residential care after an elimination period. This is the primary private-market solution. See long-term care insurance: what it covers and costs for details.
Medicaid: Pays for nursing home care for those who have spent down assets to Medicaid-eligible levels. Medicaid planning with an elder law attorney is critical for couples facing dementia. See Medicaid planning for long-term care for asset protection strategies.
Veterans benefits: Aid and Attendance pension benefit from the VA can help veterans and surviving spouses pay for in-home care or assisted living. See VA benefits and Medicare for how these programs interact.
Personal savings: Many families exhaust retirement savings paying for dementia care before reaching Medicaid eligibility.

Hospice for End-Stage Dementia

Advanced Alzheimer’s disease — when a patient can no longer speak, walk, or feed themselves — meets Medicare’s criteria for hospice care under Part A. Hospice is covered 100% (no coinsurance) when:

The patient’s physician certifies a life expectancy of six months or less if the disease runs its normal course
The patient (or their healthcare proxy) elects hospice, which means curative treatment is discontinued in favor of comfort care

Medicare hospice covers medications for comfort, nursing visits, social work, spiritual care, and respite care for family caregivers. The patient can reside at home, in a memory care facility, or in a nursing home during hospice — Medicare pays the hospice provider; the facility pays separately.

Dementia hospice is often delayed because families don’t recognize when advanced dementia qualifies for the six-month prognosis. Ask the patient’s physician to evaluate eligibility — appropriate and timely hospice enrollment improves quality of life and reduces caregiver burden.

PACE: An Underutilized Option for Dual-Eligible Patients

The Program of All-inclusive Care for the Elderly (PACE) is available in certain areas for people 55 and older who are nursing-home eligible but can safely live in the community with appropriate services. PACE provides comprehensive medical, social, and custodial care through a single program — including adult day health care, medical care, medications, transportation, and some in-home personal care.

PACE participants must be eligible for both Medicare and Medicaid (dual eligible). For dementia patients in PACE-available areas, this program can substitute for or significantly reduce the need for expensive memory care facilities.

Planning Steps for Families Facing Cognitive Decline

If you or a family member is experiencing memory concerns, act on these steps now — before a crisis:

Schedule a full cognitive evaluation with a primary care physician and, if indicated, a neurologist or geriatric psychiatrist
Complete advance directives: Healthcare proxy, durable power of attorney (financial), and living will should be signed while the patient still has legal capacity
Review the financial picture: What assets, insurance, and income sources exist? Is long-term care insurance in place?
Consult an elder law attorney: Medicaid planning, trust structures, and asset protection strategies require professional guidance — see Medicaid planning for long-term care
Contact your State Health Insurance Assistance Program (SHIP): Free counseling on Medicare benefits relevant to dementia care
Explore caregiver resources: The Alzheimer’s Association (alz.org) offers 24/7 helpline and care consultation services at no charge

The financial reality of Alzheimer’s disease is sobering, but understanding what Medicare covers — and acting early on the gaps — gives families the best chance of navigating this without complete financial devastation. The time to plan for long-term care costs is before they arise, not after a diagnosis changes everything. If you haven’t yet reviewed your healthcare costs in retirement including the realistic LTC exposure, this is the moment.