In discussing programs that pay for or provide financial assistance for nursing home care, it is important to mention a type of program whose objective is to prevent the unnecessary placement of individuals in nursing homes. As nursing homes are the most expensive form of senior care, many states and organizations provide assistance to individuals who require nursing home level care but prefer to remain living outside of nursing homes. We have organized this article into two groups: programs that help pay for nursing home care and programs that can help prevent nursing home placement.
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 2020, the national, daily average cost for nursing home care for a shared room is $255. The least expensive states are located in the Southeastern U.S., the South Central region, and the Mid-West, where the daily cost is closer to $165 – $200. The most expensive area of the country, excluding Alaska and Hawaii, is the Northeast and New England, where the daily cost averages in the $350 – $415 range. 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.
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.
|State||Daily Cost||State||Daily Cost|
|District of Columbia||$386||Kansas||$220|
|Rhode Island||$285||New Hampshire||$350|
|South Dakota||$231||New Jersey||$370|
|Texas||$165||District of Columbia||$386|
The benefits that Medicare, also known as Original 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. Note that some people refer to short-term nursing home care as convalescent care. Medicare will pay for twenty days of care at 100% of the cost. For the eighty days following, Medicare requires care recipients to pay a portion of the daily cost. As of 2020, the daily co-payment is $185.50. For those who subscribe to a Medicare Supplemental Insurance plan, the secondary insurance will pay the remaining 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. A minor exception to this rule exists, when the nursing home doubles as a psychiatric hospital and the individual is in residence for a psychiatric condition.
Further limiting Medicare’s coverage is the policy that one must have been hospitalized a minimum of 3 days, and within 30 days following hospital discharge, requires skilled nursing care for the same injury / illness that required hospitalization. Furthermore, skilled nursing / convalescent care is 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 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, through its state affiliates, is the largest single payer for nursing home care. While estimates vary, it is safe to say that Medicaid pays between 45% and 65% of the total nursing home costs in the United States. While on the surface, this may sound encouraging for families whose loved ones require 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. In addition, they change each year. Certain resources, such as one’s home, are considered exempt from Medicaid’s asset limit, and other resources can be allocated to a non-applicant spouse. There are similar exceptions made for the applicant’s income, in which the applicant spouse can transfer income to their non-applicant spouse. These spousal impoverishment rules (community spouse resource allowance and monthly maintenance needs allowance) are in place to protect a non-applicant spouse from having too little from which to live, while also effectively lowering an applicant spouse’s countable assets and income.
There are two options specifically for veterans and surviving spouses. 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 (and their survivors) 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 calculates income or the program’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 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.
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 U.S. 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.
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.
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, 1915(c) Waivers or Home and Community Based Services.
Medicaid waivers usually have the same eligibility requirements as the state’s institutional Medicaid plan. 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, as well as a webpage for each that details the specific eligibility requirements and benefits.
Some regular state Medicaid programs, which in the case of the elderly, is often called aged, blind and disabled Medicaid, offer personal care assistance. Also known as attendant care, persons must require assistance with their daily living activities. Unlike Medicaid waivers and institutional Medicaid, state plan benefits are an entitlement. This means that anyone who meets the eligibility requirements are guaranteed to receive assistance. In other words, there is never a waitlist. As with the other Medicaid programs, there are income and asset limits. To see all state plan personal care Medicaid programs by state, click here.
In 2019, some Medicare Advantage (MA) plans began offering home and community based services and supports to delay and / or prevent the need for nursing home care. Medicare Advantage is also called Medicare Part C, which includes Original Medicare (Part A and Part B), often prescription coverage (Medicare Part D), and other benefits, such as dental and vision that Original Medicare does not cover. MA plans are provided by private insurance companies, and available HCBS differ based on one’s MA plan and the state in which one lives. Examples of covered services may include adult day care, respite care, personal care assistance, medical / non-medical transportation, home modifications, and meal delivery. Please note that these benefits are available only via Medicare Advantage plans, not Original Medicare.
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 of services is broader and specific to each program. A state by state list of programs is available here.
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 43 states and the District of Columbia. Read more about the MFP Program here.
Not every nursing home resident actually requires nursing home care. It is important to recognize many assisted living communities now offer advanced care services that are 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.