How to Pay for a Nursing Home

The costs of nursing care can be staggering. A 2012 survey estimated that a private room costs an average of $248/day, or over $90,000/year and that the average nursing home stay is about two years.

Fortunately, there are a handful of ways to help pay for a nursing home stay and each option should be evaluated carefully.

Medicare

Medicare generally covers rehabilitation and if you are looking for a long-term solution, this may not be the right option for you but it is important to consider the following:

Seniors and families in need of short-term care should determine whether Medicare will cover at least some of the stay in a nursing home.

If a senior has spent at least three days in a hospital, Medicare can pay the bill for up to 100 days of care immediately following discharge from the hospital. However, the patient must go to a home that is considered a “Medicare-certified skilled nursing facility.”

For those considering a long-term nursing home stay, Medicare can be used for up to 35 hours per week of home-health services. These services are for seniors who are able to stay at home and receive sporadic nursing care, physical therapy, and occupational therapy for up to 60 days. This is called an “episode of care.”

To secure Medicare funds, a senior must be living at home and are required to have their physician approve a care plan. Services must also come from a Medicare certified agency.

Seniors who require help only with personal care such as bathing, using the restroom, dressing, and cooking do not qualify for the Medicare home health benefit.

Personal Finance

In an ideal situation, financial planning for nursing-home care began years ago with health insurance plans, savings and assets (see Medicaid).

Some insurance companies allow seniors to use a life insurance policy to pay for a long-term stay at a nursing home and this option should be discussed with your insurance agent.

Help from your state (Medicaid)

Medicaid can help pay for the costs of a long-term stay at a nursing home but not all nursing homes accept Medicaid payments and not all patients qualify for Medicaid.
Check with the nursing home to confirm it accepts Medicaid coverage.

It is important to understand that some seniors may not be eligible for Medicaid until they have used some personal finances on care. Determining how much must be paid is dependent on income and deductions.

Asset Reduction

Most people eligible for Medicaid must reduce their assets before receiving aid. There are a variety of regulations that determine what an asset is and what is not when determining eligibility for Medicaid. Every state is required to allow married couples to protect a certain amount of assets and income when one must leave for a nursing home.

Transferring Assets

Medicaid may not pay for months or even years if a person simply gives away all their assets to family members or friends. Transfers for less than fair market value can also result in penalties.

Home and Real Estate

After a person passes away, your state may try to recover the benefits it paid for that person via owned real estate, such as a home. However, states are prohibited from placing a lien on a home if there’s a chance a senior will return from nursing home care or if dependents are currently living there, such as a spouse, a brother, a sister, or a child under the age of 21.

How to Apply

To apply for Medicaid, contact your State Health Department.

Long-Term Care Insurance

Long-term care is an insurance policy sold by most major insurance companies and covers care that is generally not covered by health insurance, Medicare or Medicaid. Nursing home care can often fall into this category.

The cost of long-term care policies varies and is usually based on the following:

  1. How old you are when you purchase the policy
  2. The maximum amount a policy will pay each day
  3. The maximum number of days (years) a policy will pay
  4. Any optional benefits, such as benefits that increase with inflation

If you have not invested in long-term care but need immediate nursing home financing, a senior may not qualify for long-term care insurance. Some group policies may not require medical underwriting and in other cases, a senior may be able to buy limited coverage or coverage at a higher rate.

Contact your insurance company to find out if long-term care is covered.

If you’re shopping for long-term care insurance, check to see if coverage could be limited due to a pre-existing condition.

Federal employees, members of the uniformed services, retirees, their spouses, and other qualified relatives may be able to buy long-term care insurance at discounted group rates.