How to Pay for Nursing Home Care

Page Reviewed / Updated - Apr. 2014

Introduction to Paying for Nursing Home Care

In discussing programs that help pay for or provide financial assistance for nursing home care, it is important to mention a category of program whose objective is to prevent the unnecessary placement of individuals in nursing homes.  As nursing homes can be the most expensive form of caring for the elderly, many states and organizations provide services to individuals who require nursing home level care but choose to remain living outside of nursing homes.  We have organized the following forms of assistance into two groups: programs that help pay for nursing home care and programs and options that can help prevent nursing home placement.

 There are financial assistance programs designed to help those require nursing home level care, to remain living in their homes.

Cost of Nursing Home Care - State by State

Prior to a discussion of the financial options available to help pay for nursing home care, it is helpful to understand the costs involved.  In 2014, the national, daily average for nursing home care for a shared room was $212. The least expensive states are located in the Southeastern US where the daily cost was closer to $155.  The most expensive area of the country, excluding Alaska and Hawaii, is the Northeast where the daily cost averages are closer to $330.  A state-by-state breakdown of nursing home costs is available further down this page.  Interesting to note is that Alzheimer's care in skilled nursing homes is usually subject to the same fee structure as regular nursing home care. This differs from assisted living communities which typically charge 20% - 30% over their standard fees to care for an individual with Alzheimer's.

Payment Options & Financial Assistance for Nursing Homes

Medicare's Benefits for Nursing Homes

The benefits that Medicare offers toward the cost of nursing home care are limited.  Medicare is not intended to provide a long term care solution rather it is designed for those who need skilled nursing care for a limited time.  As such, Medicare will pay for twenty days of care at 100% of the cost. For the eighty days following, Medicare will pay 80% of the cost.  For those who subscribe to a Medicare Supplemental plan, the secondary insurance will pay the remaining 20% of the cost for the last eighty days of coverage. Neither Medicare nor Medicare Supplemental Insurance will pay for nursing home care after the 100 day maximum is reached.   There is an minor exception when the nursing home doubles as a psychiatric hospital.  In this situation Medicare increases assistance for up to 190 days.

Further limiting Medicare's coverage is the policy that skilled nursing be only for those recovering from an illness or injury, not for those with an irreversible long term or chronic condition. For example, a person who requires nursing home care to recover from a hip injury will be covered while a person suffering from Alzheimer's who requires nursing home care, will likely not be covered.  As with many things Medicare related, there is a partial exception to this rule for individuals who live in states that offer Medicare PACE Programs.  One can read about Medicare PACE here.

Medicaid and Nursing Homes

Medicaid through its state affiliates is the largest single payer for nursing home care. While estimates vary it is safe to say that Medicaid pays at least 40% of the total nursing home costs in the United States. While on the surface, this may sound encouraging for families whose loved one requires nursing home care, it is important to be aware that Medicaid is a means-tested program, meaning that the applicant's income and financial assets are closely analyzed prior to acceptance into the program. Persons must meet strict financial guidelines in order to qualify. However, should an individual qualify, Medicaid will pay for 100% of their nursing home costs at a Medicaid approved skilled nursing facility.

Medicaid's eligibility requirements vary depending on the age, marital status and state of residence of the applicant. A rule of thumb for financial eligibility is the $2,000 / $2,000 rule. The applicant's monthly income cannot be greater than $2,163 and the value of their financial resources cannot be greater than $2,000. However, they are many exceptions to these rules. Certain resources, such as one's home, are considered exempt from counting, other resources can be allocated to a non-applicant spouse. There are similar exceptions made for the applicant's income. Learn more about Medicaid eligibility or find assistance qualifying for Medicaid.

Veterans Assistance for Nursing Homes

There are two options for specifically for veterans.  The first is the Aid and Attendance Benefit, also referred to as the Improved Pension.  This is a program the provides financial assistance to war-time veterans that "require the aid of another person in order to perform his or her activities of daily living". The Aid and Attendance program is intended to help those with limited financial means (though not as limited as Medicaid).  A veteran's income and financial assets are both considered during the application process.   Veterans can use the Benefit towards the cost of nursing home care or assisted living. Read about how the Aid and Attendance Benefit amount is calculated and it's eligibility requirements.

The second option for veterans and their spouses which is not limited to those who served during war-time, are state VA nursing homes. Care in a VA nursing home is offered as an alternative to the Aid and Attendance benefit; one cannot concurrently receive both benefits. The state VA nursing homes, unfortunately, do not have a unified eligibility or application process. However, a rule of thumb is the veteran or their spouse must be at designated at least 70% disabled. Each state has its own nursing homes and each nursing home has its own eligibility requirements. There are a limited number of spaces available within each home and not all of them are designated for long term care. Waiting lists for admission to a VA nursing home are very common. Find VA nursing homes.

Other Options

Reverse Mortgages
Reverse mortgages can be used to help pay for nursing home care in some limited situations.  A reverse mortgage is a loan that a borrower takes from a bank against the value of their home. The loan can be paid out in monthly installments which can be used to offset the cost of nursing home care.

Reverse mortgages have several requirements of the borrower(s). Most relevantly, the homeowners must be at least 62 years of age and they must continue to live in the home against which the mortgage is taken. This limits a reverse mortgage's usefulness in this situation as an individual cannot simultaneously live in a nursing home and at home. However, if they are married and their spouse continues to live at home, then the spouse can collect the monthly proceeds and use them to help pay for care. Read more about the pros and cons of reverse mortgages as a funding source for long term care.

Long Term Care Insurance
Most individuals who have long term care insurance are aware of its benefits with regards to nursing home care and most individuals who do not have it and have a need for nursing home care, probably cannot afford the premiums. That said, long term care insurance is worth mentioning as it is estimated to pay for approximately 5% of the total US nursing home bill. Typically long term care insurance has a triggering event, something based on the medical or care needs of the beneficiary which allows them to start receiving insurance payouts. Those payouts can usually be put towards any care requirement the individual has, be that nursing home fees or companion care at home. Monthly premiums escalate with the advancing age and deteriorating health of the enrollee. Individuals over 65 and with considerable health problems may be presented with monthly premiums in the thousands of dollars or be denied coverage outright.

Nursing Home Tax Deductions
Nursing home care is tax deductible. Medical procedures performed at nursing homes as well as the cost of room and board are both deductible. Most frequently, these costs are deducted by using the Medical and Dental Expense Tax Credit. Learn more about this tax credit here.

Relocation
One option that can reduce the cost of nursing home care is to relocate the individual in need of care to an area of the country where the cost of care is lower. For a variety of reasons, this approach is not appropriate for every family. However for families in which it is feasible, the cost of care can be reduced by half or even more. For example, a family in the Northeast US with siblings or other relatives in the Southeast might find relocation of their loved one to another state can reduce the cost of nursing home care from $330 to $155 / day. On a monthly basis, this could reduce their cost of care by as much as $5,000.  In some states, even relocation within the state might reduce costs by several thousand dollars per month.

Families do not need to be familiar with nursing homes in the area as there are free services that help match families with the most affordable and quality care in any geographic area. Find affordable nursing home care.

The table below shows the high variability in nursing home care costs throughout the 50 states. The first column is sorted alphabetically and the second column is sorted by way of increasing average daily cost.

2014 Nursing Home Costs by State
Alphabetic Order Order of Increasing Cost
State Daily Cost State Daily Cost
USA 212 USA 212
Alabama 188 Texas 139
Alaska 650 Missouri 145
Arizona 197 Oklahoma 145
Arkansas 155 Louisiana 152
California 238 Arkansas 155
Colorado 217 Kansas 160
Connecticut 390 Iowa 169
Delaware 294 Illinois 170
District of Columbia (D.C.) 401 Utah 173
Florida 230 Georgia 180
Georgia 180 South Carolina 185
Hawaii 333 Tennessee 185
Idaho 219 South Dakota 186
Illinois 170 Alabama 188
Indiana 199 Nebraska 189
Iowa 169 Arizona 197
Kansas 160 Indiana 199
Kentucky 200 Kentucky 200
Louisiana 152 Montana 201
Maine 275 New Mexico 201
Maryland 270 North Carolina 203
Massachusetts 346 Mississippi 204
Michigan 241 Ohio 208
Minnesota 228 Virginia 211
Mississippi 204 Wyoming 216
Missouri 145 Colorado 217
Montana 201 Idaho 219
Nebraska 189 Minnesota 228
Nevada 229 Nevada 229
New Hampshire 291 Florida 230
New Jersey 300 California 238
New Mexico 201 Wisconsin 239
New York 340 Michigan 241
North Carolina 203 North Dakota 241
North Dakota 241 Rhode Island 250
Ohio 208 Washington 253
Oklahoma 145 West Virginia 254
Oregon 256 Oregon 256
Pennsylvania 272 Maryland 270
Rhode Island 250 Pennsylvania 272
South Carolina 185 Maine 275
South Dakota 186 Vermont 277
Tennessee 185 New Hampshire 291
Texas 139 Delaware 294
Utah 173 New Jersey 300
Vermont 277 Hawaii 333
Virginia 211 New York 340
Washington 253 Massachusetts 346
West Virginia 254 Connecticut 390
Wisconsin 239 District of Columbia (D.C.) 401
Wyoming 216 Alaska 650

 

 

Assistance to Prevent Nursing Home Placement

When a nursing home is under consideration, on occasion that is because a family believes they cannot afford to care for their loved one at home.  Nursing home care is in fact less expensive than 24/7 home care, however there are other factors of which not every family is aware.  Since nursing home care is so expensive and because state and federal governments often foot the bill for nursing home care, they have developed multiple programs designed to help individuals who require nursing home level care to remain living at home or in the community.  These programs function by providing care assistance, financial assistance and other in-home supports to help care for the loved ones at home, at least for part of the time.  

 Most states have several different programs intended to help families provide nursing home level care to their loved ones at home.


Medicaid Waivers

Each state has Medicaid waivers that permit individuals who are medically eligible for nursing home care to receive that care outside of nursing homes while they remain living in their homes or communities. There are waivers that help individuals with home care, others in assisted living residences and still other waivers that don't distinguish where the beneficiary resides provided it is not in a nursing home. Medicaid waivers are also referred to as HCBS Waivers or Home and Community Based Services.

Medicaid waivers usually have the same eligibility requirements as the state's institutional Medicaid plan. For most states this means the applicants must have less than $2,163 in monthly income and less than $2,000 in financial assets (which does not include their home's value). Typically states also have a provision which says the cost of caring for these individuals at home cannot exceed the cost to care for them in a nursing home (or a certain percentage of that cost). Medicaid waivers also have participation caps. There are a limited numbers of waiver slots created and often times there are waiting lists to receive services.

On this website, we maintain a list of all Medicaid waivers, organized by state, that are relevant to the elderly and a webpage for each that details the specific eligibility requirements and benefits.

Nursing Home Diversion Programs

Most states have non-Medicaid funded programs that provide care services and supports to individuals who require nursing home level care but are not eligible for Medicaid. As with Medicaid waivers, these programs provide services to beneficiaries in their homes or communities with the specific goal of preventing nursing home placement as the cost to support an individual full-time in a nursing home greatly exceeds that to provide assistance at home. Recognizing that much of the burden of caregiving is shifted to family members, nursing home diversion programs often offer support services to the family caregivers as well as services to the individual in need of care. Support like respite care to relieve the family caregiver, transportation assistance and home delivered meals serve the objective of unburdening family members.

Nursing home diversion programs is a loose categorization. These programs typically do not refer to themselves using that name. Rather, each program in each state has its own name. Some states offer more than one program targeting different groups of seniors and other states offer no programs. The types of services available are centered around helping an individual remain living at home, therefore home care, respite care, transportation assistance and chore services are usually included but the complete list is usually broader and is specific to the program.  A state by state list of programs is available here.

Money Follows the Person (MFP) Program


The MFP Program provides financial assistance to the states to help them transition individuals who live in nursing homes from the nursing home back into their communities. While this program does not provide direct financial and care assistance to individuals, it does expand the options available to nursing home residents. This program is currently available in 44 states.  Read more about the MFP Program here.

Nursing Home Care vs. Assisted Living

Not every nursing home resident actually requires nursing home care. It is important to recognize many assisted living communities now offer advanced care services almost on par with nursing homes. One option for reducing nursing home costs is to consider assisted living instead. Read about the key differences between assisted living and nursing home care.

 

 

2013 Nursing Home Costs by State

Name

Daily Cost

Name

Daily Cost

Alabama

$191

Oklahoma

$152

Alaska

$701

Missouri

$159

Arizona

$237

Louisiana

$160

Arkansas

$165

Arkansas

$165

California

$268

Texas

$168

Colorado

$239

Kansas

$172

Connecticut

$416

Iowa

$176

Delaware

$294

Georgia

$185

District of Columbia

$288

Alabama

$191

Florida

$250

Illinois

$193

Georgia

$185

Tennessee

$196

Hawaii

$398

Nebraska

$198

Idaho

$237

Utah

$198

Illinois

$193

South Carolina

$201

Indiana

$235

South Dakota

$203

Iowa

$176

Mississippi

$208

Kansas

$172

Wyoming

$208

Kentucky

$223

North Carolina

$212

Louisiana

$160

Montana

$218

Maine

$285

Minnesota

$219

Maryland

$274

New Mexico

$219

Massachusetts

$365

Kentucky

$223

Michigan

$255

Ohio

$225

Minnesota

$219

Virginia

$230

Mississippi

$208

Indiana

$235

Missouri

$159

Arizona

$237

Montana

$218

Idaho

$237

Nebraska

$198

Colorado

$239

Nevada

$245

Nevada

$245

New Hampshire

$330

Florida

$250

New Jersey

$332

North Dakota

$250

New Mexico

$219

West Virginia

$251

New York

$344

Oregon

$254

North Carolina

$212

Michigan

$255

North Dakota

$250

Washington

$263

Ohio

$225

Wisconsin

$265

Oklahoma

$152

California

$268

Oregon

$254

Maryland

$274

Pennsylvania

$286

Maine

$285

Rhode Island

$305

Pennsylvania

$286

South Carolina

$201

District of Columbia

$288

South Dakota

$203

Delaware

$294

Tennessee

$196

Vermont

$295

Texas

$168

Rhode Island

$305

Utah

$198

New Hampshire

$330

Vermont

$295

New Jersey

$332

Virginia

$230

New York

$344

Washington

$263

Massachusetts

$365

West Virginia

$251

Hawaii

$398

Wisconsin

$265

Connecticut

$416

Wyoming

$208

Alaska

$701