Seniors, worried about nursing home costs?  Here are your options

nursing home expenses

nursing home expenses

Long-term care in residential facilities such as nursing homes is a financial challenge for many. When dealing with a loved one who is disabled, elderly, or ill, families often try all sorts of other ways long-term care facility first. Because nursing homes provide more health care services than some of the other options, the cost is significantly higher. Before you go to a nursing home, research both assisted living and home care and compare their services and costs. You only need a nursing home for rehabilitation or long-term care when you need it qualified nurse and assistance with assisted living services. If you’re thinking about how to cover nursing home costs, it may help to talk to a financial advisor. I’m trying SmartAsset’s Free Advisor Matching Tool today.

Nursing home expenses

Nursing homes differ from assisted living in that there are skilled nurses available 24 hours a day to attend to patients’ medical needs at all times. Nurses may be registered nurses, licensed practical nurses, or certified nursing assistants available depending on the level of care offered by the facility. Nursing homes also provide assistance with daily activities.

A 2020 Genworth Financial Cost of Care Study found the average daily cost of a semi-private room to be $7,756 per month, or more than $93,000 per year. Alaska is the most expensive state for nursing home care, while Texas is the least expensive. Sometimes people only need a short-term stay in a nursing home. More often than not, the stay in nursing homes is longer in nature. The National Center for Health Statistics released a 2019 report that found the average length of stay in a nursing home was 485 days. This price is for basic room and board only. If special services are required, this is extra.

The national average cost of a nursing home stay is $255 per day and $7,756 per month for a semi-private room. For a private room, that jumps to $290 per day and $8,821 per month. For assisted living, the national average cost is $4,300 and $4,576 for home care with caregivers.

Private pay

If you have access to Home Health Services, they can provide home care for up to 35 hours per week, paid for by Medicare. Home care should include skilled nursing care, although Home Health can help with light housework. You’ll have even more luck using Home Health Services for rehabilitative care. Medicare will cover occupational therapy, speech therapy and physical therapy at home for up to 60 days. You must have a doctor approve a treatment plan and go through a certified Medicare agency.

If you need longer-term nursing home care or even permanent nursing home care, then you need to consider your payment options. Some subtract a reverse mortgage to help defray costs. A reverse mortgage involves the equity you already have in your home. Before taking out a reverse mortgage, carefully study the terms of the mortgage and check the credentials of the lender. A reverse mortgage must be paid back, although they are usually paid off when the house is sold.

Others tap into retirement accounts. If you have a 401(k) or similar account or a traditional Individual Retirement Account (IRA), then you should speak with a tax or financial advisor to determine the tax consequences of liquidating your account before taking any action.

Long-term care insurance

nursing home expenses

nursing home expenses

Long-term care insurance is a great option to pay for nursing home care if you’ve planned ahead and have had a policy for several years. It pays for certain home care expenses depending on the policy. All long-term care insurance policies are not created equal. Older policies in particular are very variable in their terms. You don’t want to spend years paying a premium for a long-term care insurance policy and then have it be of little use. However, after 65, 70% of us will need long-term care for some reason at some point, so it pays to be prepared.

Many of the newer long-term care policies are attached as riders to permanent life insurance policies. The rider allows the policyholder to access a portion of the face value of the life insurance policy to pay for long-term residential care such as nursing home care. It’s often wise to ask a financial advisor for help choosing a long-term care insurance policy, as they tend to vary widely and you don’t want to pay for something you won’t be able to use.

It’s important to know that most long-term insurance policies do not cover pre-existing conditions – those you may have had before you took out the policy. These include diabetes, cancer and heart disease. These policies also typically don’t cover long-term care for things like alcoholism, drug abuse or addiction, mental illness, or self-harm.

Medicare

Medicare usually covers the first 100 days of a nursing home stay. It is intended for short-term intensive rehabilitation from injury or short-term illness. It does not cover long-term nursing home stays unless you purchase Medicare Advantage (Part C) Policy and this policy has nursing home coverage. A Medicare Advantage policy has benefits that you pay for over original Medicare. Check with the provider before buying a Medicare Advantage policy if you want nursing home coverage.

Medicaid

Medicaid is usually the last source of funding for nursing home care, but unless you’re wealthy or have a good long-term insurance policy, many people have to turn to Medicaid. Every state has a Medicaid program that pays for nursing home care if you can’t pay for it yourself.

Medicaid involves a strict and complex “means test” of your income level and your assets. In general, an applicant over 65 cannot have more than $2,523 in 2022 income each month. For a married couple, your income cannot exceed $5,046 per month. There is also an “asset test” with Medicaid to determine eligibility. You cannot have more than $2,000 worth of assets to qualify for Medicaid to pay for your stay in a nursing home. Your home, car and household furnishings are usually exempt. A spouse can have assets worth no more than $2,000. Your bank records are also analyzed to make sure you haven’t made a large transaction in the past 2-5 years that looks like an asset transfer to avoid a Medicaid liquidation.

Bottom row

nursing home expenses

nursing home expenses

Affordable long-term care for the elderly or disabled is an important issue and an ongoing problem in the United States. Deciding on options for yourself or an elderly relative is a complex process. In some cases, you can use a combination of private pay and a government program. In other cases, a government program may need to cover some or all of the costs if you need continuing care for a long time or permanently.

Tips for long-term care

  • A financial advisor can help you find long-term care options. Finding a Qualified Financial Advisor it shouldn’t be difficult. SmartAsset’s free tool connects you with up to three financial advisors who serve your area, and you can interview your advisor matches for free to decide who is the best fit for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.

  • Planning for retirement and long-term care isn’t always easy. For help check The SmartAsset Retirement Tax Calculator which helps you determine the most tax-friendly retirement state.

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