Paying for a Nursing Home
Options to Help Cover Nursing Home Costs
A nursing care facility is a home that eases an older adult's worry about their safety and health concerns. It provides skilled nursing care, rehabilitative care, medical services, personal care, and activities in a secure setting. Today, a nursing home environment allows seniors more privacy and living options that match the likeness of their own homes.
Nursing homes operate with the philosophy that the residents' needs and preferences come first and operations come after the people living there. The residents have greater control over their daily lives-for instance, in terms of mealtime or bedtime, they can follow their personal schedule. And the nursing aides have greater autonomy to care for patients.
Finding ways to pay for a nursing home is stressful. And choosing the right one for you or a loved one is twice as difficult. If you're starting a search for one, use this list to help guide the decision:
- Include the person who will live there. Allow them to participate in choosing the facility. It helps the person adjust to the move.
- Ask other family members to help locate the best nursing home facility.
- Speak with doctors, nurses, or social workers to help in the selection. Speak with the nursing home administrators, directors, and care assistants since they give most of the care.
- Talk with clergy or rabbi for guidance.
- Know the elder's rights.
- Reach out and call the local long-term care ombudsman or call 1-800-677-1116.
- Use this guide to find and compare nursing homes.
- Other resources for planning.
According to the Centers for Medicare and Medicaid, almost 40 percent will seek nursing home care in their lives. Long-term care costs are putting a great deal of strain and stress on the elderly and their family members to pay for nursing home care.
If you've planned ahead, the idea of paying for care is not bothersome, but if you have not, then it's overwhelming. We've researched paying for nursing home care and have come up with several ways like long-term care insurance, Medigap, and employer-provided or private health insurance plans that can equalize the pain of its cost.
Note: You must have the policies in place before a significant medical and health event, or the options are not available.
Pay Options for Nursing Home Care
Most people who move into a nursing home begin by paying for their care from private funds and out-of-pocket. In order to qualify for Medicaid and have the government pay for it, you must first use up all your assets and resources. After that, you can become eligible for the federal program. Medicare does not cover long-term care room and board in a nursing home. See below more information on Medicaid and paying for nursing home care.
In a recent study by Genworth, it identified trends across the long-term care services settings. While the cost of care among all health care providers increases over time, the cost of facility-based providers has grown at a greater rate than that for home care. For example, the national averages have wide differences of costs in each state. Alaska's nursing home costs a whopping $23,451 a year for a private room and Louisiana is $5,171.
As the aging population grows and requires more services due to chronic illnesses, family members must pay attention to its associated costs to better prepare. We have more choices today than any other time in the U.S., but it's pay options are limiting if you have not planned ahead.
An older adult's physician, registered nurse, geriatric care manager, or a licensed social worker can best develop a care plan and help your loved one find the best care option,
These facilities give the highest level of attention and supervision - more than any other long-term care setting, even like that of an assisted living facility. Nursing homes offer residents personal care assistance, room and board, supervision, prescriptions, therapies and rehabilitation, and 24/7 skilled nursing care. Because of the high level of care, the costs of nursing homes is also the highest. Fortunately, there are more options to help pay for nursing home care than any other type of long-term care.
Ways to Pay
Self-funding - for the well-planned consumer and financially fortunate individual. If you haven't purchased long-term care insurance, you will need substantial assets that give a flow of income and cash, consistently. Depending on what part of the country you live, some individuals will need more than others.
Bottom-line, experts say it's best to save at least a few hundred thousand dollars. That savings can include income from pension plans, investments, and Social Security benefits. When you do, you're ready to go.
Long-Term Care Insurance
A long-term care policy pays a specified amount for nursing home care for a specified number of years in one's lifetime. It's designed to help supplement your care and protect your assets by paying for the expenses - the amounts set in your policy.
Depending on the policy, you buy and your plan of care, a long-term care policy can help pay for other services like home care, nursing home and assisted living facilities and other options.
Some individuals elect to pay for skilled nursing home costs by using a reverse mortgage instead of taking out a home equity loan. A reverse mortgage allows the homeowners to draw on the home's equity while deferring the loan payments until the remaining (last) homeowner moves out or dies.
Before you choose a reverse mortgage, learn if it's the best choice. It requires one spouse to continue living in the home. If you or the spouse moves out of the home due to illness or death, the loan is due.
A reverse mortgage is one way to leverage your home equity. Even if the home sells at a price below the amount of the reverse mortgage, the seller never owes more than the value of the home. The amount of money you qualify for depends on factors like age and home value.
A home equity loan borrowed against the value of one's home as collateral. Home equity loans are often used to finance major expenses such as home repairs, medical bills, or long-term care expenses.
Older adults can unlock the equity in their homes to pay for home care services or nursing home care. Because it's a conventional home equity loan, it requires the individual to pay it back with interest, so the equity is not completely freed up like a reverse mortgage.
Medicare is a federal government program that pays for hospital and medical insurance for people over 65 years of age and older, and to certain ill or disabled persons. It also pays for 100 days of care in a skilled nursing home facility per benefits period. It pays for 100 percent of the care given in a skilled nursing home in the first 20 days and only after a three-day hospital stay. It requires a co-payment.
Medicare Part A is "hospital" insurance and Medicare Part B is an optional supplementary medical insurance for a small monthly premium. See the Skilled Nursing Medicare page to learn more about how Medicare can help pay for the nursing home care.
Medicaid is another federally funded government program that pays for certain health services and nursing home care for people with low incomes. Medicaid also pays for some long-term care services at home and in the community. Medicaid contracts with privately owned nursing facilities and helps cover the costs for those who qualify.
Medicaid has limitations on the assets you can have and the income you can receive before you are eligible for benefits. Who is eligible and the types of services given are different in each state. Restrictions apply to transferring assets to heirs to qualify for Medicaid. See the Medicaid and Nursing Home page and learn about using this program to help fund nursing care costs.
Qualifying for Medicaid
At the beginning of your nursing home stay, you may have to pay out-of-pocket for a portion or all of the nursing home care because you do not qualify for Medicaid. If you do not have enough money to pay for the room and board, Medicaid may pay part. The amount you owe depends on your income and deductions. The state will try to recoup the funds from the estate after the person passes away. Medicaid cannot recover the funds from your home if a spouse, brother, sister, adult child was living there at least one year before the nursing home admission.
Most people reduce their assets before qualifying for the federal and state program. When calculating eligibility, Medicaid has rules about what can and cannot be regarded as an asset. Other rules apply to married couples allowing them to protect a certain amount of assets and income. To learn more, call your local Medicaid and Area Agency on Aging offices.
Income and assets Medicaid looks to when qualifying a person for the program:
- Social Security
- Interest and dividends from savings or investments
- Half of a working spouse's income
More Options to Pay for Nursing Home Costs
Check out these resources to pay for nursing home costs.
Plan Early for Long-Term Care
If you wait too long to plan ahead for the inevitable costs of long-term care, you might exceed the ability to pay for it.
Nursing home costs are staggering. In the Genworth study, even a double-occupancy room is hundreds of dollars per day. The government's latest National Nursing Home Survey reports that the average nursing home stay is 835 days - more than two years.
Like all senior living facilities, you cannot negotiate a better rate with a nursing home, if you use government funding. They won't lower their rates because they're set by the payment levels offered by Medicare and Medicaid.
But what you can do is negotiate a private pay rate, when paying out-of-pocket. A nursing home with a high vacancy rate or no waiting list is more willing to negotiate. Shop around for the best price.
After seven years of helping her aging parents, Carol Marak has become a dedicated senior care writer. Since 2007, she has been doing the research to find answers to common concerns: housing, aging and health, staying safe and independent, and planning long-term.
- What are Skilled Nursing Facilities?
- Services Offered in Skilled Nursing Facilities
- Compare to Assisted Living
- Myths about Nursing Homes
- Nursing Home Staff
- Nursing Home Administrators
- Nursing Home Costs
- Paying for a Nursing Home
- Medicare and Nursing Homes
- Medicaid and Nursing Homes
- Will Social Security Cover Nursing Home Costs
- How to Find a Nursing Home
- What to Look For When Touring a Nursing Home
- Moving Into a Nursing Home
- Nursing Home Checklist
- Nursing Home Trends
- Nursing Home Technology
- Medicare Quality Data