PACE Plan Medicare: How the Program of All-Inclusive Care for the Elderly Works (and Who Qualifies)

Adult children helping a frail parent navigate Medicare often focus on the standard choice: Original Medicare versus Medicare Advantage. But for parents whose care needs are serious enough that a nursing home is a realistic possibility, there is a third option that most families never hear about from their insurance broker.

It is called PACE — the Program of All-Inclusive Care for the Elderly — and for the right family, it can be the most comprehensive and cost-effective Medicare option available.

What PACE Actually Is

PACE is a capitated managed care program jointly funded by Medicare and Medicaid. CMS contracts with PACE organizations to deliver all covered services — medical, social, and personal care — to eligible seniors, with the goal of keeping them living in the community rather than in a nursing home.

The program was built on a simple premise: a nursing-home-eligible senior living at home with coordinated, comprehensive support can often have better health outcomes at lower total system cost than the same person in institutional care. PACE exists to fund that model.

Participants in PACE receive all of their Medicare and Medicaid services through the PACE organization. This means the PACE organization takes on the full risk and responsibility for the participant's care. In exchange, they receive a fixed monthly capitation payment from CMS and (for dual-eligible participants) from the state Medicaid program.

What PACE Covers

The scope of covered services under PACE is broader than any standard Medicare Advantage plan:

• Primary and specialty medical care — all visits, including specialist consultations, coordinated through the PACE interdisciplinary team
• Hospital care — inpatient stays when needed
• Emergency care — 24/7 access
• Home health care — home health aide services, skilled nursing visits
• Adult day health services — structured programming at the PACE center, which most participants attend several days per week
• Prescription drugs — all medications are covered with no separate Part D plan needed
• Physical, occupational, and speech therapy
• Personal care and attendant services — help with bathing, dressing, and daily activities
• Nutritional counseling and meals (including meals at the day center)
• Social work services
• Dentistry — routine and some restorative dental care
• Audiology and vision services
• Transportation — to and from the PACE center and medical appointments

This is a genuinely comprehensive package. A participant in PACE does not need a separate Part D plan, a Medigap supplement, or a Medicare Advantage plan. PACE replaces all of those.

Who Qualifies for PACE

PACE has specific eligibility requirements that make it the right fit for a subset of seniors — not all Medicare beneficiaries.

The four requirements:

1. Age 55 or older. Unlike standard Medicare, PACE does not require the participant to be 65. Individuals who qualify for Medicare due to disability and are 55 or older may be eligible.

2. Nursing facility level of care. The participant must meet the state's clinical criteria for nursing home admission. This typically means needing assistance with three or more activities of daily living (ADLs) — things like bathing, dressing, eating, toileting, or transferring — or having cognitive impairment that makes independent living unsafe. An assessment by the PACE organization determines this.

3. Residence in the PACE organization's service area. PACE programs are geographically limited. Participants must live in the area served by a PACE site. This is the most common barrier to access — PACE programs exist in most states but not in every county. Rural and suburban families often find the nearest PACE center too far away for the required day center attendance.

4. Ability to live safely in the community at enrollment. At the time of joining, the participant must be able to live at home safely with PACE support. PACE is not a facility — participants live in their own homes or with family and attend the PACE day center regularly. If a senior is already in a nursing home and cannot transition back to community living, they may not be appropriate for PACE.

How PACE Is Funded: What Your Parent Pays

The cost structure of PACE depends on whether your parent has both Medicare and Medicaid (dual-eligible) or Medicare only.

If your parent has Medicare and Medicaid (dual-eligible): There is typically no monthly premium and no cost-sharing for covered services. Medicaid covers the participant's share. This is the most common scenario, as PACE tends to serve lower-income seniors who qualify for both programs.

If your parent has Medicare but not Medicaid: Your parent pays a monthly premium to participate in PACE. CMS sets the premium structure, and it varies by PACE organization and geographic market. The premium covers both the Medicare Part D drug benefit equivalent and the supplemental services. Some PACE organizations offer sliding-scale fees based on income for participants who are near — but do not meet — Medicaid income limits.

Even without Medicaid, the all-inclusive nature of PACE means there are generally no additional copays, deductibles, or out-of-pocket costs for services provided through the program. Compare this to a Medicare Advantage plan where your parent might pay $40 per specialist visit, $400/day for a hospital stay, and separate drug costs.

How the PACE Model Works Day-to-Day

The operational center of a PACE program is the PACE day center. Most participants attend the day center two to five days per week, depending on their care needs. At the day center, participants receive:

• Medical care from the on-site clinical team (physicians, nurse practitioners, nurses)
• Physical and occupational therapy
• Social activities and cognitive programming
• Meals
• Personal care assistance if needed

The interdisciplinary care team — which typically includes a physician, nurse, social worker, physical therapist, occupational therapist, dietitian, personal care aide, and recreational therapist — meets regularly to review each participant's care plan. All services are coordinated through this team.

For adult children, the day center model has a practical benefit: it provides structured supervision and socialization for a parent who might otherwise be isolated at home, while the care team manages medical complexity without requiring the family to arrange separate appointments with multiple providers.

When a participant needs hospitalization, the PACE organization manages the admission and discharge process and coordinates the transition back to home — including any skilled nursing or home health services needed during recovery.

PACE vs. Nursing Home: The Core Trade-Off

PACE is explicitly designed as an alternative to nursing home placement. The evidence on outcomes is generally positive for appropriate candidates — participants report higher satisfaction, lower rates of hospital readmission, and in many studies, longer time living independently compared to nursing home residents with similar care needs.

However, PACE is not right for every family, and it is important to understand what it requires:

What PACE requires of your parent:

• Willingness and ability to participate in the day center program (most days per week)
• A stable home environment where they can safely reside with support
• Acceptance of the PACE interdisciplinary team as the primary care team — if your parent wants to see their long-established private physician outside the PACE network, that is generally not covered under PACE

What PACE does not provide:

• 24-hour on-site medical supervision (that is what a nursing facility provides)
• Care for participants who are completely bed-bound or medically unstable to the point where community living is unsafe

If your parent has advanced dementia and is a fall risk, or requires continuous skilled nursing care, PACE may not be the right fit — or may only work if significant in-home support is available beyond what the program provides.

How to Find Out If PACE Is Available

The primary barrier to PACE for most families is geography. The National PACE Association maintains a locator at pacenow.org where you can search for programs by state and city. CMS also lists active PACE organizations in its data.

As of early 2026, there are approximately 175 PACE programs operating across 32 states. If your parent lives in a rural area, access may not be available.

If a program exists nearby, the enrollment process typically involves:

1. Contacting the PACE organization for an initial inquiry
2. An eligibility assessment — a clinical team member will evaluate your parent's functional level, medical history, and care needs to confirm they meet the nursing-facility-level-of-care criteria
3. A care plan meeting with the interdisciplinary team
4. Enrollment, after which Medicare and Medicaid coverage transfers to the PACE program

Your parent's existing Medicare and Medicaid enrollment does not end — it continues, but all their Medicare and Medicaid services are now delivered through PACE.

What PACE Means for Medicare Enrollment Decisions

If your parent is PACE-eligible and a PACE program exists in their area, this changes the Medicare enrollment calculus significantly. PACE replaces:

• Medicare Advantage
• Medigap supplements
• Standalone Part D plans

Your parent does not need to choose among those options if they enroll in PACE. However, they do need to be enrolled in both Medicare Part A and Part B to be eligible for PACE.

For families managing a medically complex parent who is considering a nursing home, asking the PACE question should be part of that conversation — before signing a nursing home contract, not after.

Getting Help with the Decision

PACE is one of the least-publicized Medicare programs, and most insurance brokers have no financial incentive to mention it (since they earn no commission from a PACE enrollment). If you think your parent might qualify, the most reliable sources of information are:

• Your State Health Insurance Assistance Program (SHIP) — free, unbiased counselors who are familiar with all Medicare options including PACE
• The National PACE Association (pacenow.org)
• Your parent's primary care physician, who may be aware of local PACE programs

Medicare's complexity extends well beyond the standard MA vs. Original Medicare decision, and PACE is one example of how a specialized program can be the right answer for a specific family situation that the mainstream enrollment process never surfaces.

Our Medicare Enrollment Guide covers the full landscape of Medicare enrollment decisions for adult children — including when and how to explore programs like PACE, how to navigate the standard enrollment windows, and how to compare costs across coverage types for your parent's specific health profile.

Get the Medicare Enrollment Guide