When your loved one reaches a point where they need help with activities of daily living (ADLs), you may be unable to continue caring for them on your own. A nursing home can provide the hand-on support and services they need, but they come at a high cost that many people have questions about paying.
In 2023, the national median average for a nursing home is about $8,000 per month for a semi-private room and $9,300 per month for a private room. Costs vary depending on factors like the level of care needed, type of room, and location of the nursing home.
If you’re concerned about covering these costs, it’s important to plan before you choose a nursing home. In this guide, we’ll explain what a nursing home can take for payment to help you create a financial strategy for covering these costs.
Personal funds
Paying out of pocket with money from savings, a pension, or retirement account is the most straightforward way to pay for a nursing home if you can afford it. However, considering the national median average cost for a semi-private room is $8,000 per month ($96,000 per year), some may be unable or prefer not to pay out of pocket. At such a high cost, seniors could easily run through their savings in just a few years. In fact, the National Care Planning Council notes that the average stay in a nursing home is 835 days, which would amount to $219,616 based on the average rate for a semi-private room.
Even though paying out of pocket might be the easiest way to cover nursing home expenses, it’s a good idea to exhaust other options first. By holding onto your savings, you can be prepared for unexpected urgent expenses which may not have as many payment options.
Social security
Social security can be used to pay for nursing home expenses, but it likely won’t cover everything. The average social security check in 2023 is $1,827 per month, which is significantly lower than the average cost of nursing home care. Seniors may be also be eligible for Supplemental Security Income, which offers up to $914 per month. Even with income from both of these sources, seniors would still need about $5,000 extra to pay for a nursing home, so make sure to plan accordingly.
Medicaid
Nursing homes will accept Medicaid benefits to pay for care, and the program usually covers 100% of costs including room and board, medical supplies, and assistive care. Medicaid pays a fixed daily rate, which may leave a small portion for the recipient to keep for personal expenses.
However, qualifying for Medicaid can be difficult, as the program has strict requirements including income and asset restrictions. In 2023, the income limit is $2,742 per month and $2,000 of countable assets for an individual. Meanwhile, the income limit for a married couple (where both are applying) is $5,484 per month and $3,000 in countable assets. If you or your household exceeds these limits, you may be ineligible for Medicaid and would be unable to use it to pay for nursing home expenses.
Medicare
Medicare can be used to pay for nursing home care, but the program will only cover short-term stays of 100 days or less. Using Medicare to pay for a nursing home stay also comes with strict requirements:
- Recent hospital visit: The person receiving care must begin their stay in a nursing home within 30 days of leaving a hospital, where the stay was at least three days.
- Need for care: The person’s physician must prescribe they have a need for care, which must be related to the nature of their hospital visit
- Medicare-approved nursing home: Costs will only be covered at a facility Medicare has certified for that purpose
- Improvement in condition: Medicare will only cover nursing home expenses as long as the patient’s condition improves. Costs will not be covered after doctors determine the patient’s condition has stabilized
As a result of strict requirements and short-term coverage, Medicare may be suitable for brief stays in a nursing home, but you’d need to rely on other means to pay for long-term care.
VA Benefits
Eligible veterans may be able to use their VA benefits to pay for some or all nursing home expenses. Qualifying for VA benefits has strict requirements based on service, income, and assets. After qualifying for VA benefits, there are also clinical requirements specifically for covering long-term care. Nursing home coverage is typically for eligible veterans 65 years of age or older, but younger veterans with a total and permanent disability may also qualify.
The amount of benefits will vary based on the health status and income of the veteran, with the most benefits being awarded to those who need assistance with activities of daily living. If VA benefits don’t cover all costs, veterans will need to cover the rest with a co-pay from their personal funds.
Long-term care insurance
Nursing home can accept long-term care insurance to cover expenses, assuming the person meets eligibility requirements with the insurer. This type of insurance is generally purchased while the individual is healthy, and pays for nursing home or other long-term care costs once care is needed.
Benefits are provided through reimbursements, which provide a daily amount intended to cover costs while the senior needs care. However, some policies come with caps, which will only pay for expenses for a pre-defined period (usually 2-5 years). Premiums for these policies can be expensive and raise over time, so it’s a good idea to check the company’s premium rate history so you can estimate how much you’ll be paying and ensure that figure is affordable in retirement.
What to do if you can’t pay for a nursing home
If the relevant options above aren’t enough to cover nursing home expenses, you’ll need to either get money from loved ones or your existing assets. Selling a home might be the first thing you think of, though some people want to pass this on to loved ones. An alternative that you may be unaware of, is selling your life insurance policy. Through a transaction called a life settlement, you may be able to sell your policy for up to 60% of the death benefit. You can use the proceeds for anything you want, including pay nursing home costs or other retirement expenses. Get a free estimate to see how much your policy could be worth.
