Long-term care in residential facilities like nursing homes is a financial challenge for many. When dealing with a loved one who is disabled, elderly or ill, families often try every other kind of long-term care facility first. Because nursing homes provide more health care services than some of the other options, the cost is significantly higher. Before committing to a nursing home, explore both assisted living and in-home care and compare their services and costs. You only need a nursing home for rehabilitation or long-term care when you require skilled nursing and help with assisted living services. If you’re thinking about how to cover nursing home costs, it may help to speak with a financial advisor. Try SmartAsset’s free advisor matching tool today.
Nursing Home Costs
Nursing homes differ from assisted living since there is 24-hour per day skilled nursing available to attend constantly to the medical needs of the patients. Nurses may be registered nurses, licensed practical nurses or certified nursing assistants available depending on the level of care offered by the facility. Nursing homes also provide help with daily living activities.
A Genworth Financial Cost of Care Survey in 2020 found that the average daily cost of a semi-private room is $7,756 per month or over $93,000 per year. Alaska is the most expensive state for nursing home care while Texas is the cheapest. Sometimes, individuals only need a short-term stay in a nursing home. More often, nursing home stays are longer in nature. The National Center for Health Statistics published a 2019 report that said the average length of stay in a nursing home is 485 days. This cost is only for basic room and board. If special services are needed, that’s extra.
The national median cost for a nursing home stay is $255 per day and $7,756 per month for a semi-private room. For a private room, which jumps up to $290 per day and $8,821 per month. For assisted living, the national median cost is $4,300 and $4,576 for in-home care with caregivers.
Private Pay
If you have access to Home Health Services, they can provide in-home help for up to 35 hours per week paid for by Medicare. The in-home care has to include skilled nursing care although Home Health can help with light housekeeping duties. You will have even better luck using Home Health Services for rehabilitative care. Medicare will cover occupational therapy, speech therapy and physical therapy at home for up to 60 days. You must have a physician approve a plan of care and go through a certified Medicare agency.
If you need longer term nursing home care, or even permanent nursing home care, then you have to weigh your payment options. Some take out a reverse mortgage to help defray the costs. A reverse mortgage taps into the equity you already have in your home. Before taking out a reverse mortgage, carefully study the terms of the mortgage and verify the credentials of the lender. A reverse mortgage does have to be paid back although they are usually paid back when the house is sold.
Others tap into retirement accounts. If you have a 401(k) or similar account or a traditional Individual Retirement Account (IRA), then you should speak with a tax advisor or financial advisor to determine the tax implications of liquidating your account before you do anything.
Long-Term Care Insurance
Long-term care insurance is a great option to pay for nursing home care if you have planned ahead and have had a policy for several years. It pays for certain expenses of in-home care, depending on the policy. All long-term care insurance policies are not created equally. Older policies, particularly, are very variable in their terms. You don’t want to spend years paying a premium for a long-term care insurance policy and then have it be of little use. However, after 65, 70% of us are going to need long-term care for some reason at some point, so it pays to be prepared.
Many of the newer long-term care policies are attached as riders on permanent life insurance policies. The rider allows the policyholder to access some of the face value of the life insurance policy to pay for long-term residential care like nursing home care. It’s often wise to ask a financial advisor for help in choosing a long-term care insurance policy since they tend to vary widely, and you don’t want to pay for something that you won’t be able to use.
It’s important to know that most long-term insurance policies do not cover pre-existing conditions – those that you might have before you take out the policy. These would include diabetes, cancer and heart disease. These policies also usually do not include long-term care for things like alcoholism, drug abuse or addiction, mental illnesses or self-inflicted wounds.
Medicare
Medicare will usually cover the first 100 days of a nursing home stay. It is for short-term intense rehabilitation from an injury or short-term illness. It does not cover long-term nursing home stays unless you buy a Medicare Advantage policy (Part C) and that policy has nursing home coverage. A Medicare Advantage policy has benefits you pay for over the original Medicare. Check with the provider before you buy a Medicare Advantage policy if you want nursing home coverage.
Medicaid
Medicaid is usually the funding source of last resort for nursing home care, but unless you are wealthy or have a good long-term insurance policy, many people have to resort to Medicaid. There is a Medicaid program in every state that pays for nursing home care if you can’t pay for it yourself.
Medicaid involves strict and complicated “means testing” of your income level and your assets. In general, an applicant over 65 cannot have more than $2,523, in 2022, in income each month. For a married couple, your income cannot exceed $5,046 per month. There is also an “asset test” with Medicaid to determine eligibility. You can have no more than $2,000 in assets to qualify for Medicaid to pay for your nursing home stay. Your home, car and home furnishings are usually exempt. The spouse can have no more than $2,000 in assets. Your bank records are also analyzed to make sure you have not made a large transaction in the past 2-5 years that would look like you were transferring assets to avoid liquidation by Medicaid.
Bottom Line
Affordable long-term care for the elderly or the disabled is an important issue and ongoing problem in the U.S. Deciding on options for yourself or an elderly relative is a complicated process. In some cases, you can use a mixture of private pay and a government program. In other cases, a government program may have to pick up some or all of the cost if you need extended care for a long time or permanently.
Tips on Extended Care
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A financial advisors may be able to help you find long-term care options. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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Retirement and long-term care planning aren’t always easy. For help, check out SmartAsset’s Retirement Tax Calculator that helps you determine the friendliest state to retire in, from a tax perspective.
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Source: finance.yahoo.com