How to Pay for Nursing Home Costs
Odds are high that someone in your family will need a nursing home sooner or later. Someone turning age 65 today has almost a 70% chance of needing some type of long-term care, and 20% of people will need it for longer than five years, according to LongTermCare.gov. The average cost of nursing home care is so high that the cost of that care can financially cripple a family. But there are steps you can take – whether a nursing home is needed now, next month or next decade – to minimize the financial strain of nursing home costs.
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There are many ways to cover the costs of long-term care, including savings, investments, assets, long-term care insurance, state LTC Partnership programs, the Federal LTC Insurance Program and tax advantages. Care Conversations, an initiative led by the American Health Care Association, the National Center for Assisted Living and America’s Skilled Nursing Caregivers, offer a helpful list of these private and public payment sources in greater detail.
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Planning for Long-Term Care
Medicare does not provide an all-inclusive long-term care component. If certain conditions are met, Medicare offers limited coverage (up to 100 days per benefit period) for some beneficiaries. Since Medicare does not cover long-term care, the program does not pay for assisted living costs, though it may cover certain services, such as home health or outpatient therapy benefits for assisted living residents. Additional information can be found on Care Conversations.
Ideally, financial planning for long-term care should occur long before the need arises, says Wendy Boglioli, a spokesperson for insurer Genworth Financial. Long-term care insurance, Medigap and employer-provided or private health insurance plans can offset the cost of long-term care. But if these policies aren’t in place before a major health event occurs, they are usually no longer available to consumers.
If your family’s facing imminent need for nursing care and doesn’t have an insurance plan for it in place, there are still options to help defray the costs. Make no mistake: Those costs can be staggering. In 2018, a private room cost an average of $8,365 a month, or more than $100,000 annually, according to the Cost of Care Survey 2018 by Genworth Financial. A semi-private room ran $7,441 a month, or $89,292 per year. And the average nursing home stay is 835 days, or more than two years, according to the government’s latest National Nursing Home Survey.
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Costs widely vary from person to person, both because of geographical difference in rates and because each resident’s length of stay differs. While nearly 1 in 10 residents age 75 to 84 stays in a nursing home for five or more years, nearly 3 in 10 residents in that age group stay less than 100 days, the maximum duration covered by Medicare, according to the American Association for Long-Term Care Insurance. Convalescent nursing home care, which follows a major surgery or other hospitalization, is typically short-term and can be covered by Medicare.
“Even if you or your loved one doesn’t need care right now, but you think it may be coming, at least look at the costs now and in five years to gauge what the hit will be,” Boglioli says.
Medicare
Seniors and their families facing a near-term need for a nursing home should first determine whether Medicare will cover at least a portion of the stay. The Medicare program provides coverage for rehabilitation – but not long-term care. Medicare will pick up the tab for up to 100 days of care in a skilled nursing facility each benefit period. A benefit period is how Medicare measures the length of stay in a hospital or skilled nursing facility.
Medicare can also help if a long-term nursing home situation looks inevitable but isn’t immediately necessary. For as long as the individual is able to stay at home, Medicare can be tapped for up to 35 hours per week of home health services. Medicare covers home health services like intermittent skilled nursing care, physical therapy, speech-language pathology and occupational therapy for up to 60 days at a time, called an “episode of care.”
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To secure these funds, individuals must be living at home – not in a nursing home or other long-term care facility – must have their physician approve a plan of care and must use a Medicare-certified agency. If you require help only with personal care, such as meal preparation, bathing, using the bathroom and dressing, you do not qualify for the Medicare home health benefit. A government-published guide offers details on which home health services Medicare covers.
The U.S. News Best Nursing Homes rankings indicate which nursing homes in each state accept Medicare.
Medicaid
If an individual lacks enough savings to cover the cost of a nursing home – or if the cost of a protracted stay exhausts their assets – they can become eligible for assistance from Medicaid. State Medicaid programs are required to cover nursing home care, says Caroline Haarmann, associate vice president, Medicaid Reimbursement and Research, American Health Care Association. “To qualify for these services, a person would have to meet their state’s level of care criteria and financial eligibility requirements,” she says. “Eligibility for Medicaid LTC is complex, as there is often more than one ‘eligibility pathway’ that allow a person to qualify for these services. Some of these are options the state can choose, while others are mandatory.” In addition, depending on how a person qualifies for nursing home care in Medicaid, the state may determine that the beneficiary must contribute towards the cost of their care.
One way to find a qualified lawyer is to call your local bar association and find out which attorneys are teaching seminars on Medicaid planning to other attorneys. The attorney also must be licensed in the same state as the person needing Medicaid assistance because Medicaid laws vary from state to state.
Veterans Administration Aid and Attendance
According to VeteranAId.org, the A&A Pension can provide up to $1,794 per month to a veteran, $1,153 per month to a surviving spouse, or $2,127 per month to a couple. A veteran filing with a sick spouse is eligible for up to $1,410 per month. Like Social Security, this pension is dependable and is paid directly to you by the Department of the Treasury. This benefit can be used for in-home care, board and care, assisted living communities and private-pay nursing homes.
“Industry professionals consult the Community Care Program, the Department of Veterans Affairs’ new network of licensed health care providers, as well as Veterans Care Agreements,” says Dana Halvorson, senior director, Not for Profit and Constituent Services at AHCA. “VCAs are a new type of agreement included in the VA MISSION Act (of 2018).” Learn more about VCAs at the VA website.
Cost of Nursing Home vs. Assisted Living
Rachel Reeves, director of communications, National Center for Assisted Living, says that assisted living is primarily paid for by individuals’ private or personal funds, such as LTC insurance or personal assets. Medicare does not cover long-term supports and services. Medicaid varies by state, and how the program is set up in each state determines how residents can use Medicaid to help pay for LTC in home and community-based settings, such as assisted living communities. “About 1 in 6 assisted living residents relies on Medicaid for their daily care, many of whom spend down their personal assets and rely on Medicaid in order to remain in their assisted living home,” she says.
David Levine, Contributor
David Levine has been covering mental and behavioral health for U.S. News since 2017. A former … Read more
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