PACE stands for Program of All-Inclusive Care for the Elderly, and it is a Medicare and Medicaid program that takes over every part of a frail older adult’s health care — doctors, specialists, prescriptions, therapy, adult day health, transportation, home care, hospital and nursing home care — in exchange for a fixed monthly payment and one significant condition: PACE becomes your only provider.
That trade is the whole story of the program, and it is why this page is organized around who benefits and who bears the cost. PACE is genuinely excellent for the right person and genuinely wrong for the wrong one, and the difference turns almost entirely on how much a household values keeping its existing doctors.
PACE was made a permanent part of Medicare and Medicaid by the Balanced Budget Act of 1997, with federal regulations at 42 CFR part 460. As of 2026 there are well over 150 PACE organizations operating in more than 30 states, serving participants in the tens of thousands; CMS and the National PACE Association maintain the current program directory and counts, and that is where to confirm whether one serves your address. Pine Lake Legacy provides education and a free policy review only, and does not enroll anyone in anything.
In This Article
- Who Qualifies, and the Four Conditions
- Who Benefits: The Participant, the Caregiver, and the State
- Who Pays: The Participant Gives Up Provider Choice
- PACE Compared With the Alternatives
- The Questions to Ask Before Enrolling
- Does an In-Force Life Insurance Policy Matter Here?
- Frequently Asked Questions
Who Qualifies, and the Four Conditions
Eligibility is narrow and specific. A person must be 55 or older, must live in the service area of a PACE organization, must be certified by the state as needing a nursing facility level of care, and must be able to live safely in the community with the services PACE provides.
The third condition is the one people misread. PACE is for people who could be in a nursing home — that is the entry ticket, not a disqualifier. If a person is not frail enough to meet the state’s level of care determination, PACE is not available to them.
The fourth condition is a judgment call made by the PACE organization’s interdisciplinary team, and it can change. If a participant’s needs eventually exceed what can be safely delivered in the community, PACE covers nursing facility care and continues to coordinate it. Enrollment does not end at the facility door.
Enrollment is voluntary and month-to-month. A participant may disenroll at any time, effective the first day of the following month. That is a meaningful protection and it is worth knowing before signing, because the more consequential decision is the one on the other side of the ledger.
Who Benefits: The Participant, the Caregiver, and the State
The participant. For a dual eligible — someone with both Medicare and Medicaid — there is generally no monthly premium, no deductible, and no copayment for any service the interdisciplinary team authorizes, including prescription drugs under the plan’s Part D coverage. For a household that has been assembling care from a dozen separate sources, the elimination of cost sharing and paperwork is not a small thing.
The family caregiver. This is the benefit that goes unmentioned in official descriptions and matters enormously in practice. PACE typically includes attendance at a day health center several days a week, with transportation both ways, plus in-home personal care. For a spouse or adult child who has been providing round-the-clock care, that is the difference between sustainable and not. See options when caregiving becomes unsustainable.
The state Medicaid program. PACE is paid by capitation: Medicare and Medicaid each pay the PACE organization a fixed amount per enrollee per month, and the organization bears the financial risk of that person’s total care. States have historically set the Medicaid capitation below what they would otherwise pay for institutional care, which is why states support the model. That is a legitimate alignment of interests and it is also the source of the tension in the next section.
Who Pays: The Participant Gives Up Provider Choice
Here is the cost side, stated as plainly as it deserves.
You must use PACE’s providers. The PACE organization employs or contracts its physicians, therapists, home care staff and specialists. A participant who goes outside the network without authorization is generally responsible for the full cost. For someone with a fifteen-year relationship with a primary care physician who is not part of PACE, that relationship ends. Ask specifically, before enrolling, whether your current doctors participate.
The organization that pays also decides. Because PACE is capitated, the same entity that bears the cost of a service also determines whether it is medically necessary. That structure has real advantages in coordination and it creates an obvious tension. Ask, before enrolling, how to appeal a denial: PACE organizations must have a grievance and appeals process, and denials can be escalated through Medicare and Medicaid appeal channels.
You cannot keep other coverage. Enrolling in PACE generally means disenrolling from a Medicare Advantage plan and from a separate Part D plan, because PACE provides drug coverage itself. Enrolling and then also joining a Part D plan will typically end PACE enrollment.
If you are not on Medicaid, you pay. A participant with Medicare but not Medicaid pays the Medicaid portion of the capitation out of pocket plus the Part D premium. Amounts vary substantially by market and have commonly been quoted in a range of several thousand dollars a month — frequently still below local nursing facility private-pay rates, but a real monthly cost. Ask the local PACE organization for its exact current figure; do not budget from any published range, including this one.
| Feature | PACE | Medicaid HCBS Waiver | Dual-Eligible Advantage Plan |
|---|---|---|---|
| Keep your own doctor | No, PACE providers only | Yes | Within the plan network |
| Adult day center and transport | Included | Sometimes, as a service | Usually not |
| Prescription coverage | Included in PACE | Separate Part D plan | Included in the plan |
| Cost for a dual eligible | Generally no premium or cost sharing | Generally low, varies by state | Varies |
| Requires nursing facility level of care | Yes | Yes | Not necessarily |
PACE Compared With the Alternatives
Four things get confused with PACE and the differences are decision-relevant.
PACE vs. a Medicaid HCBS waiver. A waiver program pays for home and community based services while you keep your own doctors and your own Medicare coverage. It is fee-for-service, less comprehensive, and less coordinated — and it does not take over your care. Waivers also frequently have interest lists; PACE capacity varies by organization. The trade is coordination and completeness versus choice and flexibility.
PACE vs. a Medicare Advantage special needs plan. A dual-eligible or institutional special needs plan coordinates care within a network but does not provide the day center, the interdisciplinary team, or the full assumption of long-term care that defines PACE.
PACE vs. adult day care. Adult day health is one component of PACE, not a substitute for it. Standalone adult day programs are purchased hourly or daily and coordinate nothing else.
PACE vs. a medically needy program. That is an eligibility route for Medicaid based on spending down income. It is a way of qualifying, not a way of receiving care.
PACE vs. a swing bed program. A swing bed is a hospital arrangement for short-term skilled care in rural facilities. Entirely different purpose.
The Questions to Ask Before Enrolling
Every one of these has a specific answer that a PACE organization can give you in writing, and every one has changed someone’s decision.
Does my current primary care physician participate, and if not, who would my doctor be? How many days a week would I attend the center, and is attendance required or optional? What is the transportation arrangement and the typical travel time? What happens if I need a specialist your team does not employ? What is the appeals process if a service is denied, and how long does it take? If I need nursing facility care, which facilities do you contract with? What is my exact monthly cost, given my Medicare and Medicaid status? And how do I disenroll if this does not work?
Bring someone with you to the enrollment meeting and take notes. Contact your Area Agency on Aging or your State Health Insurance Assistance Program for free, unbiased help comparing PACE against a waiver — both exist precisely for this and neither sells anything.
Does an In-Force Life Insurance Policy Matter Here?
Less than families expect, and the honest answer depends on which side of the Medicaid line the household is on.
If the participant is a dual eligible, PACE largely eliminates out-of-pocket care costs, so there is no funding gap to fill and no financial reason to touch a life insurance policy. What does matter is the Medicaid side: qualifying for Medicaid means meeting a resource limit, and in most states the cash surrender value of a permanent policy counts once total face value exceeds a small threshold. So the policy question is an eligibility question, not a funding one. See when life insurance counts as a Medicaid asset, and take the sequencing to an elder law attorney.
If the participant has Medicare but not Medicaid, there is a real monthly cost, and that is a genuine funding question. A permanent policy with a substantial death benefit on an insured frail enough to meet a nursing facility level of care is squarely the profile where secondary-market value can exceed cash surrender value by a wide margin. Starting a review early matters, because the process commonly takes roughly 60 to 120 days.
And frequently the right answer is to do nothing. Small policies do not attract offers. A policy inside a state burial exclusion may be protecting eligibility exactly where it sits. A spouse at home who will need the death benefit is a reason to keep it. Keeping the policy is a legitimate conclusion and we would rather tell you that than waste your time.
Pine Lake Legacy does not purchase policies, is not licensed in every state, and does not determine benefit eligibility. A free review gives you a realistic number for your attorney and your caseworker to work from. Send the policy cover page, or call (732) 978-9575.
Frequently Asked Questions
Who is eligible for PACE?
A person must be at least 55, live in a PACE organization’s service area, be certified by the state as needing a nursing facility level of care, and be able to live safely in the community with PACE services. Meeting the nursing facility level of care standard is the entry requirement, not a disqualifier.
Can I keep my own doctor in PACE?
Generally no, unless your physician already contracts with the PACE organization. PACE provides and coordinates all care through its own interdisciplinary team, and going outside the network without authorization usually means paying the full cost yourself. Ask about your specific doctors before you enroll, not after.
What does PACE cost?
For a dual eligible with both Medicare and Medicaid there is generally no premium, deductible or copayment for authorized services, including drugs. Someone with Medicare but not Medicaid pays the Medicaid portion of the capitation plus a Part D premium, which varies by market. Ask the local organization for its exact current figure.
How is PACE different from a Medicaid waiver?
A waiver pays for home and community based services while you keep your own physicians and your regular Medicare coverage, operating fee-for-service. PACE replaces all of that with one organization that provides and coordinates everything under a fixed monthly payment. The trade is comprehensiveness and coordination against freedom of provider choice.
Can I leave PACE if it is not working?
Yes. Enrollment is voluntary and a participant may disenroll at any time, with the change effective the first day of the following month. You would then need to arrange Medicare coverage, drug coverage and any long-term services separately, so plan the transition before disenrolling rather than after.
Does joining PACE affect a life insurance policy?
Not directly. What matters is Medicaid eligibility, since PACE requires it for premium-free enrollment and Medicaid counts the cash surrender value of permanent policies once total face value exceeds a small state threshold. That is an eligibility question for an elder law attorney rather than a funding question.
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Related Reading
- What Is A Medicaid Waiver Program
- What Is A Medically Needy Program
- What Is A Nursing Facility Level Of Care Determination
- What Is A Swing Bed Program
- Life Insurance Counts Medicaid Asset
- What Is An Area Agency On Aging
- Keeping The Policy Is The Right Answer
- Caregiver Burnout Financial Options
Pine Lake Legacy does not purchase life insurance policies and does not provide legal, tax, or investment advice. Information provided is for educational purposes only. Eligibility for any option, including life settlements, is not guaranteed and depends on individual circumstances, policy terms, underwriting, and market conditions. Consult independent legal, tax, or financial professionals before making decisions regarding a life insurance policy.