Nursing Home Costs
According to Genworth’s Cost of Care Survey,1 a private room in a nursing home costs $290 per day, or $8,821 per month. Semi-private rooms are more affordable, though they average $255 per day, or $7,756 per month.
What can you expect to spend on nursing home care? That’s a complex question, as there are several factors that can impact the cost of a nursing home stay, including location, length of stay, and care services required, among others. However, regardless of the cost of nursing or in-home care, there are many ways families can make this necessary care more affordable.
Let’s look at what you can expect to spend and how most families go about paying for nursing, assisted-living, or in-home care.
What Is a Nursing Home?
Before jumping into the costs of nursing homes, let’s first answer the question, what is a nursing home? Nursing homes provide nursing care for the elderly around-the-clock, with 24-hour medical care available. These types of care are also referred to as skilled-nursing care and convalescent care. While seniors typically transition into a nursing community on a permanent basis, some homes also provide short stays for those in need of rehabilitation after an injury, illness, or surgery that may require skilled nurses and/or therapists.
Whether one uses these services part-time or full time, nursing home care does come at a premium price compared to other health care options. However, it also provides seniors with all of the valuable services they need concerning medical care, socialization, rehabilitation, and housekeeping services amid environments designed to offer the comforts of home.
Average National Costs of Nursing Home Care
The long-term cost of nursing home care will depend on many factors, such as your location, the provider you choose, how long you plan to stay, and whether any type of special considerations are needed. In some cases, facilities’ rates are all-inclusive, while others may charge additional fees for certain services, including physical therapy, speech therapy, and memory care.
Rates have climbed considerably in recent years, a trend that looks to accelerate over the next several years. In fact, if projections hold, the monthly cost of a semi-private room in a nursing home will be well over $10,000 by 2030, an increase of about one-third. For private rooms, expected annual costs already have eclipsed the six-figure mark. Here’s a look at past, present, and projected annual costs:
The Cost of Nursing Home Care By State
In addition to costs that vary by the type of room, nursing home care is much more affordable in some states than others. Here’s a look at average monthly costs for nursing home care for semi-private and private rooms.
|District of Columbia||$12,471||$14,357|
In every state, the cost of both types of rooms in nursing homes rose between 2016 and 2020, and for some states, the increases have been dramatic. More than half the states have seen the cost of semi-private rooms rise by double digits. Alaska, which already had the highest average cost, also had the largest increase both for semi-private and private rooms. Here’s a look at each state’s increase in annual nursing home costs between 2016 and 2020:
|District of Columbia||26%||36%|
Cost of Nursing Homes vs Assisted Living
The cost of assisted-living facilities continued to rise as well, though centers like those are much more affordable than nursing homes. Assisted-living facilities average $141 per day, which translates to $4,300 per month, and $51,600 per year. While this represents an increase over the past few years (about seven percent since 2018), assisted living is far more affordable than semi-private or private rooms in nursing homes.
It’s important to note, however, that these figures don’t take into account specialized care, such as memory care or considerations for disabilities.
Cost of Nursing Homes vs In-Home Care
Options for providers of in-home care include homemaking-service providers, which can help older people with daily activities of living and household tasks like cleaning, cooking, and running errands, and home health aides, who are trained in providing more extensive care yet also still serve as companions. In some cases, individuals and families may opt for skilled in-home nursing care, which would typically be provided by a registered nurse or certified therapist who can administer medication and monitor vitals.
The more intense the medical care required, the more expensive it will be. For example, typical homemaker services cost about $147 per day, home health aides cost $150 per day, and for 10 hours of work, a typical registered nurse would make $352. In most cases, these types of services are not needed all day, or even every day.
Are Nursing Home Costs Tax Deductible?
In most cases, out-of-pocket nursing home costs are generally tax-deductible under itemized medical expenses. If you, your parent, spouse or another legitimate dependent is in nursing care primarily for medical care, then expenses related to medical care, lodging and meals are deductible. However, seniors in nursing homes for personal reasons rather than medical, will only be allowed to deduct costs associated with actual medical care, but not meals and boarding costs.
How to Pay for Nursing Home Costs
The costs of nursing care expenses can be paid for privately, but they can also be offset in a number of ways, such as through health insurance, life insurance, long-term insurance policies, savings, reverse mortgages, and local and regional agency assistance. We’ll take a closer look at all of your various options below.
Did You Know: One way to cut down on nursing home costs is to age in place with a medical alert system. To find out more, see our best medical alert system picks page to help you make a better and more informed decision.
Medicare Coverage for Nursing Home Costs
Medicare will only cover skilled nursing care expenses in very specific situations and is not designed to pay for nursing home or custodial care costs long term. One such situation is when a senior has been hospitalized and released, but still requires a bit of specialized care. Medicare will help pay for short-terms stays in nursing homes if they:
- Were admitted to the hospital for a minimum of three days as an inpatient.
- Have been admitted to a Medicare-certified facility within 30 days of the hospital stay.
- Need skilled care like physical therapy, speech therapy, and other types of rehabilitation.
Those who meet all of these conditions under original Medicare will qualify for assistance as follows:
- Up to 20 days of nursing care is 100% covered by Medicare
- After day 21 and up to day 100, patients will pay a copay that averages $170.50.
- After 100 days, all Medicare coverage ends, and all payments are the patient’s responsibility.
Medicaid Coverage for Nursing Home Care
Medicaid is an excellent option for low-income older adults. This coverage assists individuals with many types of medical care, including doctor’s visits, hospital stays, and long-term care services such as those received in a skilled nursing facility. Often, this program covers 100 percent of these costs, but there may be copayments for certain beneficiaries. For those who qualify for Medicaid, this is the best choice for nursing care coverage.
Veterans Benefits for Skilled Nursing Care
Long-term care services for veterans with service-related injuries and disabilities enjoy full coverage from the Department of Veterans Affairs (VA) at specified locations or through certain providers approved by the department. Those without service-related disabilities may also qualify for Veterans Affairs benefits if they meet certain qualifications. However, depending on the veteran’s household income, there may be copayments required.
It’s common to pay for nursing home care privately at first, then move to Medicare or another funding source later. The main benefit of paying privately is flexibility. With Medicare and other taxpayer-subsidized programs, seniors have fewer choices because nursing homes can limit their numbers of publicly-funded enrollees. For this reason, it’s important to know the accepted payment setups before deciding to move into a given facility. Sources of private funds could be savings or money from cashing out IRAs and other investments. People also borrow from life insurance policies, sell their homes, and get reverse mortgages, as explained below.
When planning ahead for long-term care, a person with savings can buy an annuity. The underwriter receives a lump sum of cash and then issues regular monthly payments to the individual after retirement. The individual can use these payments for a nursing home, a car payment, or anything else. The main advantage of having an annuity is financial discipline. The annuity forces savings to be stretched out over time and regular payments are guaranteed. Additional advantages of annuities are:
- Savings put into an annuity are shielded from consideration on applications for government aid.
- A person who lives a long life could draw more from the account than they put into it.
The main disadvantage of annuities is that value is lost in commission and annual charges. Also, penalties are charged if funds are withdrawn early.
A whole life insurance policy (but not a term life insurance policy) can be tapped for long-term care payments. However, this, of course, reduces the financial benefit for heirs. Three approaches are:
- Surrendering a policy
- Selling a policy
- Converting life insurance to “life assurance”
First, a whole life insurance policy can be surrendered to the provider. This means that the agency buys the policy back from the policyholder. However, usually, they’ll pay just 50 to 75 percent of the face value. Similar terms are offered for the second approach: selling the policy to a “life settlements” company. Again, the typical offer is about 50 to 75 percent of the policy’s value. The life settlements company continues to pay the policy’s premiums until the policyholder passes away. The company then receives the financial payout. Life insurance conversion to “life assurance” is a third option designed specifically to pay for long-term senior care. Like life insurance, life assurance includes a savings guarantee plus an investment portfolio. Life insurance conversion accounts might give less for senior care but preserve a death benefit (inheritance). The advantages and disadvantages vary from person to person. Meeting with a financial advisor could be worthwhile.
Long-Term Care Insurance
When a person is planning well in advance to pay for senior care, buying long-term care insurance can be a smart move. It allows more freedom of choice compared to using Medicare and other public programs for nursing home payment. People buy policies that pay anywhere from about $2,000 to $10,000 per month. To guard against dramatic market changes, inflation protection can be included with monthly premium payments. It’s important to know that long-term care insurance policies vary in terms of when they’ll pay benefits. Generally, to receive payments for nursing home care or assisted living, a person must need help in at least two activities of daily living. A doctor’s statement documenting this need is required as part of the claim.
Renting Out a Property
When a senior leaves their old living space empty, renting it out with careful management could be a valuable income source. Turning a home into a rental might become a permanent source of income for the family or just a temporary source of income until the home is sold. Ideally, any rental arrangement will be made when the homeowner is still a competent decision-maker. For a loved one to take over, that person will need legal guardianship or power of attorney over the homeowner.
Bridge loans can cover people’s living expenses as they await a property sale, pension payout, or another virtually guaranteed source of income. A bridge loan is a short-term loan, but often the first payment isn’t due until 90 days after signing. Typical loan lengths vary from three months to two years.
Reverse Mortgage Loan
While a bridge loan can help during a pending home sale, a reverse mortgage loan helps keep the home until the second spouse moves out or passes away. The loaned money can help pay for nursing home care. The advantage of using a reverse mortgage loan for nursing home payment is covering two housing costs at once. However, when the second person no longer lives in the home, loan payments become due. Heirs often opt to sell the property rather than maintain payments.
How Can I Find Nursing Homes Near Me?
You can explore an array of nursing homes and skilled care providers with ease by using our comprehensive nursing home directory. Our database allows you to search by zip code or state and then lets you narrow down your search by specific needs or preferences. However, you can also speak to a live representative for customized assistance by giving us a call.