Although one-third of elderly individuals might never require long-term care services Many individuals require additional assistance, such as residential care in a nursing home.
As per the U.S. Department of Health & Human Services' Administration on Aging The typical 65-year-old faces nearly a 70% probability of requiring some form of long-term care eventually, with one in five expected to necessitate this kind of support for over half a decade.
A lot of households find themselves grappling with choices related to financing prolonged medical care.
People frequently fail to consider the possibility of requiring nursing home care and tend to believe that they won't need it. Medicare “Private healthcare insurance might not cover this,” explains Dr. Charles Crecelius, an associate professor of internal medicine and geriatrics at Washington University School of Medicine in St. Louis. “It could end up being quite expensive.” mistake ."
Ahead, we explore nursing home costs, how families pay for them and other types of long-term care options that can help ensure your loved one gets the care they need.
Callout: Key Points — Costs of Nursing Homes
What Is the Price of Nursing Home Care?
Nursing home Caring can come at a high cost. As stated by Genworth Financial's 2023 Long-Term Care Costs Study (as per the latest available information), the midpoint price for a nursing home room stands at:
- $8,669 each month for a semi-private room
- $9,733 each month for a private room
The expenses associated with care in nursing homes are influenced by several factors including:
- Level of care needed. Typically, the greater the number of services and support an individual requires, the higher their expenses will be. Skilled nursing care Is particularly costly, with increased requirements demanding higher charges.
- Type of facility. Certain nursing homes focus specifically on assisting people with particular ailments, like Alzheimer’s disease And various types of dementia. Such facilities might cost more compared to general ones that do not provide specialized care services since the employees require additional training and expertise to deliver these specific services.
- Geographic location. The expenses for nursing homes differ from one state to another. As an illustration, in urban areas where the cost of living is elevated, such as Boston and San Francisco, the typical price for an assisted living facility tends to be considerably more expensive compared to places with a lower cost of living, like St. Louis and San Antonio.
The location plays a crucial role in determining costs. According to Kelsey Simasko, an attorney at Simasko Law based in Mount Clemens, Michigan, "In my state, the typical monthly expense for a nursing home ranges from approximately $10,000 to $12,000." She further clarifies this point by mentioning, "For instance, I am aware of a facility in Detroit charging around $7,000 each month, whereas another place located in Rochester Hills, Michigan, has rates as high as $14,500 per month."
Operating expenses also affect pricing. As Simasko points out, "a substantial team of trained experts is required to manage a care facility for the elderly, and this team requires compensation."
She mentions that for certain nursing homes, the corporate ownership might additionally play a role.
She points out that most nursing homes are run by profit-driven entities, and the higher the fees they charge, the greater the income these proprietors can pocket for themselves.
Top Five Highest-Cost Metropolitan Areas
| Metro Area | State | Median private room monthly cost for a nursing home | Monthly expenses for semi-private rooms in media nursing homes cost |
| Sacramento | California | $17,490 | $11,406 |
| Boston | Massachusetts | $15,345 | $14,144 |
| Hartford | Connecticut | $15,056 | $13,688 |
| San Jose | California | $14,600 | $13,809 |
| San Francisco | California | $13,079 | $12,471 |
Source: Genworth Financial
Top Five Most Affordable Metro Areas
| Metro Area | State | Median private room monthly cost for a nursing home | Monthly expenses for semi-private rooms in a media nursing care facility cost |
| Birmingham | Alabama | $9,125 | $8,030 |
| St. Louis | Missouri | $9,095 | $7,194 |
| Oklahoma City | Oklahoma | $7,848 | $6,327 |
| New Orleans | Louisiana | $7,787 | $7,787 |
| San Antonio | Texas | $6,388 | $5,323 |
Source: Genworth Financial
Ways to Cover Expenses for Assisted Living Costs
The expense for an individual room in a nursing facility typically amounts to around $116,800 annually. Fortunately, several alternatives exist for financing elderly care and accommodation in such facilities, which include:
- Medicaid
- Medicare
- Long-term care insurance
- Federal and state-run long-term care coverage
- From savings and investments: Out of pocket
- Veterans benefits
Medicai d
The large majority of individuals obtain nursing home care through Medicaid "They aren’t covering the costs themselves," explains Chris Orestis, a senior care advocate from Maine with expertise in retirement, long-term care, and specialized senior housing financing solutions. As the president of the retirement consulting firm Retirement Genius, he offers valuable insights on these topics.
Medicaid is a government-run healthcare program designed for those with limited financial resources. This initiative serves more residents in nursing facilities compared to other funding sources. As reported 2023 data from KFF Medicaid covered 62 percent of nursing home residents.
Compare this to Medicare, which provides coverage for just 13% of residents. The rest, about 25%, relied on alternative primary payers like private insurance or paid directly from their own pockets.
Stringent eligibility criteria have to be fulfilled prior to Medicaid becoming applicable, like spending down Your resources, and the documentation process can be burdensome.
Even if you meet the criteria for Medicaid, you might still be required to pay some amount towards your medical expenses. This depends on how each state assesses eligibility and benefit provisions. It’s also important to keep this in mind. Not every nursing home accepts Medicaid. If you're depending on Medicaid to cover your costs, make sure to inquire in advance if the facility you're thinking about admits patients who use Medicaid.
It’s important to know that your choices will greatly decrease when you transition to Medicaid. As Orestis points out, at this stage, "you essentially become under state care," indicating that you lose the ability to decide where you’ll reside.
“The state tells you where you go. You don’t get to say, ‘I like that nursing home, and I like that corner private room.’ That’s not for you. When you’re on Medicaid, the state will say, ‘We have an available bed in this facility within your region.’ You’ll go there, and you’ll be sharing a room with one or two other people, and that’s it,” Orestis explains.
A Medicaid attorney can assist you with managing the procedure of reducing your assets to meet the eligibility criteria for Medicaid. Ensure that you find someone licensed in the same state where the individual requires Medicaid support.
Medicare
Medicare does not cover Long-term care housing, however, doesn’t encompass all facets of what you would experience in a nursing home; nonetheless, it does include elements like rehabilitation services.
Medicare pays for the initial 20 days of treatment at a skilled nursing facility At full capacity. From day 21 to day 100, the daily co-payment amount is $204. The coverage terminates after the hundredth day.
To be eligible for Medicare coverage of nursing home care, people need to:
- Reside at your house (rather than in a nursing home or another long-term care facility)
- Have their doctor authorize a treatment plan
- Use a Medicare-certified provider
- Require ongoing care following at least three days in a hospital.
- Utilize a healthcare center accredited by Medicare as a skilled nursing facility.
Medicare can assist when someone faces an eventual move to a long-term nursing facility without needing immediate placement. As long as the person remains at home, Medicare might cover up to 35 hours each week for 60 days of home healthcare services, including things like:
- Intermittent skilled nursing care
- Physical therapy
- Speech-language pathology
- Occupational therapy
If your needs are limited to assistance with daily activities like preparing meals, bathing, using the restroom, and getting dressed, then you may not be eligible for Medicare’s home health benefits.
The U.S. News Top Rated Care Facilities for Seniors Rankings show which nursing facilities in every state participate with Medicare.
Long-term care insurance
Signing up for long-term care insurance One approach to offsetting expenses when you eventually require long-term care is to prepare beforehand. Long-term care insurance can be utilized to finance care provided in environments such as nursing homes or within someone’s own residence. home in their own community.
Nevertheless, this choice comes with a significant price tag. As an example, a 55-year-old male might anticipate paying around $1,700 each year for a $165,000 coverage plan. Female counterparts typically face higher costs—approximately $2,700 per annum—as they generally have longer life spans. Meanwhile, a joint policy for a married duo could amount to roughly $3,750 yearly based on data from the American Association for Long-Term Care Insurance for the year 2024.
Certainly, the later in life you buy an insurance policy, the higher the cost tends to be. Additionally, specific severe health issues like muscular dystrophy and cystic fibrosis might pose challenges, potentially even making it unfeasible, to obtain coverage.
“It’s important to know before As Crecelius states, "If you become sick or require long-term care due to another reason, this is what you're paying for and what to anticipate."
If you're looking into financing extended long-term care or a stay at a nursing facility, consult with an insurance specialist or a financial advisor for assistance.
Meanwhile, an independent insurance broker — one who isn’t tied to a specific insurer — can assist you in finding a suitable plan. For example, certain insurers have begun providing hybrid policies that incorporate a long-term care rider into a permanent life insurance policy.
Government-run insurance initiatives
State-specific Long-Term Care Partnership Programs can assist in safeguarding an individual’s assets when utilizing Medicaid coverage for long-term care expenses. Many states provide additional plans like the Indiana Long-Term Care Insurance Program and the Arizona Long-Term Care System, which means you might not be required to deplete all your funds just to meet Medicaid eligibility requirements.
From savings and investments: Out of pocket
If you are lucky enough to possess savings or investments that you can utilize to cover a nursing home expense without relying on insurance, make certain you comprehend both the advantages and disadvantages. This decision comes with several complexities. tax rules Therefore, it's advisable to consult with your accountant or another professional for advice.
Should you possess an individual retirement account, you can utilize these funds to cover long-term care expenses. Nonetheless, withdrawing them might incur tax liabilities.
- Roth IRA. Should you possess a Roth IRA, withdrawals post-age 59½ will be exempt from taxation since the funds deposited into this account were previously subjected to tax. However, ensure that your money has remained within the account for a minimum of half a decade and meets the required age condition. Additionally, you may withdraw your own contributions prior to reaching 59½ without facing tax consequences; however, earnings generated through investments cannot be accessed similarly penalty-free.
- Traditional IRA. The guidelines differ for a conventional IRA, where funds are contributed pre-tax. Upon withdrawal from this type of account, both the earnings and capital gains are subject to taxation according to your prevailing income tax bracket. Additionally, withdrawing funds prematurely—before reaching 59½ years—is penalized with a 10%. Nevertheless, certain exemptions apply to this penalty rule, including instances involving non-reimbursable medical expenses. medical expenses .
- Other investments. Stocks, property or other items may also be used to pay for long-term care. Again, it’s best to check with an accountant or tax expert before you take any action.
- Savings. Should you use your savings for long-term care, certain associated costs might qualify for a tax deduction—especially when you, your spouse, or a dependent resides in a nursing facility due to medical needs like treating or recovering from an ailment. Nevertheless, only after subtracting 7.5% of your adjusted gross income can these eligible medical expenditures actually meet the threshold required for qualification.
Veterans benefits
The VA Aid and Attendance A pension can offer a monthly benefit, reaching up to $2,300 according to the 2024 rate scales. veteran , $1,478 for a widowed spouse or $2,727 for a couple. To receive these benefits, you must satisfy certain eligibility criteria, which may differ based on individual circumstances. (These amounts are projected to rise by 2.5% in 2025 as part of a cost-of-living adjustment.) Similar to Social Security, the VA pension offers reliable support and is issued directly to recipients by the Department of the Treasury.
Sorting out the details of VA benefits concerning long-term care can be tricky. The American Health Care Association recommends visiting the VA website For more information regarding general benefits as well as to the VA, please refer to the detailed section provided. Geriatrics and Extended Care Page detailing the advantages and expenses associated with services provided in home environments, like assisted living communities and nursing homes.
Negotiating Long-Term Care Costs
Many nursing homes do not reduce their fees, but it doesn't hurt to inquire whether pricing might be adjustable through negotiation.
For example:
- A facility may opt to accept a reduced private-pay rate rather than an even lesser Medicaid rate.
- A place that has empty beds or doesn’t have a queue for admissions may agree to reduce the monthly fee to occupy more spaces.
- A home health The agency might accept a reduced hourly or daily fee if they realize you're comparing prices to find the most affordable option.
Is Your Loved One Really in Need of a Nursing Home?
For certain individuals, the idea of longevity senior care evokes visions of an elderly care facility, yet if there are indications your elderly parent requires eldercare That isn’t the sole choice. Actually, multiple tiers of eldercare exist, and your family member might not require the comprehensive 24/7 supportive care provided in a nursing home or skilled nursing facility.
Instead, certain seniors require assistance with only a handful of tasks. activities of daily living , and in such instances, an assisted living community might be a more suitable – and cheaper – option for addressing those lower-level requirements.
According to LaShuan Bethea, who serves as the executive director of the National Center for Assisted Living in Washington, D.C., "Residents in an assisted living community generally require minimal help with everyday tasks and enjoy greater independence compared to those residing in nursing homes."
These communities help with:
- Bathing and personal hygiene
- Toileting
- Meal preparation
- Medication management
Assisted living typically costs considerably lower than what you'd find for a nursing home. As reported by Genworth Financial, the typical cost of assisted living is around $5,350 each month.
A residential care facility might be a more suitable choice for people who don't meet the criteria for extended care in a skilled nursing environment through Medicaid.
Assisted living facilities can support people under specific conditions; however, they often come at a high cost. Several methods exist to cover these expenses, yet it's crucial to take initiative early on by seeking advice from local professionals who can guide you as you explore different possibilities and assess what fits within your budget.
Copyright 2024 U.S. News & World Report
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