It’s been estimated by the U.S. Department of Health and Human Services that as many as 70 percent of adults who are at least 65 years old will require some level of long-term care throughout the rest of their lives.
While most people recognize that this is an eventuality, either for their loved ones or themselves, few actually realize just how much nursing home costs can be. What’s more, they may even be more surprised to learn the role health insurance may (or may not) play a part in their long-term care.
In this post, we’ll explore the cost of a nursing home and develop some strategies for how you can be prepared.
How Much Does a Nursing Home Cost in 2021?
According to the life insurance company Genworth, the median national costs of a nursing home in the U.S. are as follows:
- Semi-Private Room: $7,971 monthly / $95,652 annually
- Private Room: $9,036 monthly / $108,432 annually
These figures will vary based on a variety of factors such as the level of care needed and geographical location. For a complete breakdown of how much nursing home care costs by state, please see this list here.
How Much Do Nursing Homes Cost Per Day?
If you break these numbers down to the daily cost, then you could expect to pay:
- Semi-Private Room: $262.06 per day
- Private Room: $297.07 per day
Why is Nursing Home Care So Expensive?
With annual costs near the six-figure mark, the price of skilled nursing care may come as a shock to most people. However, when you consider the amount of care and hospitality that your loved one may be receiving, you may start to appreciate the scope of what’s included in this price.
The main driver of nursing home costs is the amount of staff that are required to provide 24/7 care. First, consider the number of nurses and doctors who are on-site and can provide immediate attention for things like:
- Medications and prescriptions
- Therapies (physical, speech, rehabilitation)
- Dietary regimens
- Emergencies situations (such as a slip and fall, stroke, or heart attack)
Medical assistance aside, nursing homes are also designed to help seniors with basic human needs. This could be for things that most of us take for granted such as:
- Using the toilet
- Getting dressed in the morning
- Bathing and daily hygiene
By contrast, if your loved one were to continue living at home under the care of a private in-home health aide, the average cost would be $21 per hour. That’s an expense of $504 per day for 24-hour care.
On top of this, remember that nursing homes are also providing:
- Living accommodations (bed, bathroom, TV, fridge)
- Prepared meals (three per day)
- Laundry services
- Activities to keep the community members entertained
Compare the scope of these services against what you would pay for a furnished apartment, all-inclusive hotel, or live-in staff, and $297 per day may not seem so unreasonable.
Nursing Home vs Assisted Living Communities
Nursing homes with round-the-clock medical care is not necessarily required for all seniors. For many, they may be in a state of transition where they can still operate independently for the most part and only need some occasional assistance or check-ins from medical staff.
For these types of seniors, an assisted living community may be a better fit. An assisted living facility is a type of housing community designed for people who require various low levels of medical and personal care but still want to live their lives as they see fit.
Because the medical and nursing care of an assisted living facility is significantly less than a nursing home, the costs to join one are also much less. According to Genworth, the median national cost per month is $4,298 monthly or $51,576 annually.
What is the Average Time a Person Lives in a Nursing Home?
According to the National Care Planning Council, the average senior will stay in a nursing home for 835 days (2.3 years).
The majority of seniors will enter a nursing home after having transitioned from their private residence into an assisted living facility. The average stay in assisted living is 29 months (2.4 years) before making the change again into a skilled nursing home.
All of this combined, you or your loved one could expect to need approximately 4-5 years of long-term care. Using the figures above, that could end up coming to a grand total of $372,699.
Does Medicare Cover Nursing Home Costs?
As many people enter into retirement, they will also sign up for the government health insurance program Medicare (starting at age 65). Medicare does provide for some limited nursing home care, but the scope of this coverage is very limited.
For starters, Medicare will only consider you eligible to enter into a skilled nursing facility after first undergoing a three-day in-patient hospital stay. Once this is done, Medicare will then fully cover the first 20 days of the nursing home stay followed by the next 100 days with a $176 daily copay to the patient. Any days beyond this will not be covered and will be at the financial responsibility of the patient.
Applying for Medicaid
If you or your loved one is financially unable to pay for a nursing home out of pocket, then you may wish to apply for another type of assistance program called Medicaid. Medicaid will cover the cost of a nursing home, but you have to first be eligible.
To qualify, nearly all of the applicant’s financial assets must be applied as the primary means of paying for nursing home care. This includes any payments from social security, pensions, annuities, retirement savings, or other income streams. You are allowed to keep your home, vehicle, and a small allowance.
Once the applicant’s assets have been mostly liquidated, Medicaid will then cover the rest of the expenses. However, the nursing home facility has to be Medicaid approved for the payments to go through. If the nursing home is private, then Medicaid will not be accepted.
Keep in mind that after the applicant passes away, Medicaid is entitled to recover any payments they made by collecting from the deceased person's estate. This usually includes the sale of the house and vehicle that they were allowed to retain.
Share Documents Safely
If you and your family are planning how to fund nursing home care for a loved one, then consider using a digital service like Pillar Life. Pillar uses multiple layers of industry-leading protection so that all of your communications and shared financial documents will be safe and secure.