Nursing Home Costs and How to Afford Them

How Much Do Nursing Homes Cost?

In 2023, a nursing home costs about $8,000 per month for a semi-private room and $9,300 for a private room. These totals represent national median averages; however, your actual nursing home costs will vary greatly based on three factors:

• Care and Health Care Needs
  • Different types of skilled nursing will come at different prices. 
• Type of Room
  • Most facilities offer both private and semi-private rooms.
• Location of the Nursing Home
  • Cities tend to be more expensive, while rural settings are often less so.  

When budgeting for the future, it’s important to keep in mind where you may want to retire and which homes might suit your needs. While you may not have all the answers, the factors that impact nursing home costs will help you prepare better. Here are some of the other factors to consider when looking into nursing home costs.

Nursing Home Costs by State

Nursing home costs vary by state. The location of nursing homes is actually the biggest factor when it comes to price differentials. When it comes to real estate, cities tend to cost more than rural locales, and the same goes for nursing homes. For example, the average yearly cost of a nursing home in Long Island is $142,350, while it’s only $68,620 in Alabama.

That said, it’s not always the biggest cities that have the most expensive nursing homes, making it important to research the places where you or a loved one plan to retire.

Here is a glance at the states that have the most and least expensive nursing home costs on average.

Most Expensive States for Nursing Homes in 2023 

Most Affordable States for Nursing Homes in 2023

Why Are Nursing Home Costs Rising?

It’s no secret nursing home costs have gone up over the last decade. And since 2019, the cost of a private room in a nursing home has increased 3.57 percent, and a semiprivate room increased by 3.24 percent.

Nursing home costs are increasing at a rapid speed, even faster than overall medical care. And with the already expensive price tag, that increase is making it financially unattainable for some individuals.

COVID-19 has also led to sharp increases in nursing home costs. Due to decreased capacity and increased safety measures, it has cost more to run a nursing home during the pandemic, and owners are passing on the costs to residents.

Other factors contributing to the hike:

• Labor shortages: In May 2020, nearly 23 percent of nursing homes reported a shortage of skilled nurses in their facilities. The need to fill this gap causes facilities to pay higher rates, an increase that they pass onto residents.
• Increased demand: As the population in the U.S. ages, people need nursing care more than ever. This increased demand leads to higher costs.
• Regulatory changes: Especially in the wake of COVID, new CDC regulations are being placed upon nursing homes with regard to safety and resident health. While these heightened safeguards are likely a good thing, they cost extra money to implement.

How to Pay for Nursing Home Care

Because of the rising costs, it’s important to know how to pay for nursing homes. There are a variety of ways to cover the costs and it’s imperative to plan. To prepare for the possibility of needing a nursing home, you may want to consider purchasing long-term care plans.

While it’s tough to think about needing long-term care when you are in your 40s or 50s, it is less expensive to buy at that age than as you get older. Fifty-two percent of people 65 and older will need some type of long-term care; consequently, it’s imperative to know how to pay for a nursing home so that you don’t find yourself in a bind when or if the time comes that you need it.

Using Private Insurance to Pay for Nursing Home Care

Most private health insurance plans don’t cover long-term care facilities like nursing homes. However, you can purchase long-term insurance plans that will cover some of their costs. Long-term insurance plans offer coverage that health-care plans –– Medicare or Medicaid –– don’t normally cover.

It’s important to note that long-term care insurance is not an investment like life insurance and it’s a use-or-lose type of coverage. That means if you don’t end up needing long-term care, you aren’t guaranteed the money, but it is a way to have a sense of security that you or your loved one will be able to afford a nursing home in the event it’s necessary.

When it comes to the cost of long-term insurance, you can expect to pay approximately $3,400 a year, which comes out to $283 a month.

Does the VA Pay for Nursing Home Care?

Veterans have access to various long-term assistance plans, including help with covering nursing home costs. Some of the care services offered to sick or disabled vets are 24/7 nursing and medical care, help with activities of daily living, pain management care, comfort care, and physical therapy.

To qualify for these services, veterans must be signed up for VA health care. The Department of Veterans Affairs determines if the veteran needs the services and determines if they are offered in the area the veteran lives. It’s also important to note that the services provided can either be given in a setting run by the VA, a setting run by the state, or a pre-approved community organization.

Does Medicaid Pay for Nursing Homes?

The simple answer to whether or not Medicaid pays for nursing homes is yes. Even though Medicaid does pay for nursing homes, it only pays for those people who require this level of care and meets the program’s financial requirements. Additionally, for Medicaid to cover nursing home bills, the recipient of the coverage must give up basically all their income. Finally, it’s important to note Medicaid’s daily rate so you don’t have to worry about paying out of pocket.

Which Nursing Home Costs Does Medicaid Cover?

Medicaid tends to cover all nursing home costs. The reason for this is that nursing homes don’t usually itemize services in the same way as assisted living facilities. Therefore, the cost of medical care and medical supplies, as well as the cost of room, meals, and assistance with activities of daily living are usually included in the daily rate provided by Medicaid.

Does Medicare Pay for Nursing Homes?

Unlike Medicaid, Medicare doesn’t usually cover the cost of long-term nursing home care. And Medicare doesn’t cover any of the activities of daily living, such as meal plans, room and board, and housekeeping. That being said, some supplemental insurance plans can help bridge the gap between what Medicare will cover and what individuals need.

How Long Does Medicare Pay for Nursing Homes?

Medicare will pay for a nursing home for a little over three months — 100 days to be exact. The catch with this is that you must be admitted to the skilled nursing home facility within 30 days of leaving the hospital. Additionally, the reason for needing a nursing home stay must relate to the reason you were in the hospital. Otherwise, Medicare will not cover the stay.

How to Pay for Nursing Home Care With Social Security

You can pay for nursing home care with Social Security by having their office send payment directly to the care facility. Even though you can use this benefit to help with nursing home costs, it may not be enough. The average Social Security check is about $1,461 a month, which is nowhere near the average monthly cost of nursing home facilities.

How to Pay for a Nursing Home With No Money

Medicaid is available for those who need nursing home care but can’t afford it or have no money. If you or your loved one needs to move to a nursing home and have not qualified for Medicaid in the past, you should revisit the application process. While Medicaid can pay for 100 percent of nursing home costs, if you need a nursing home, your total assets will be brought into the equation to determine the level of funding you qualify for.

Does a Nursing Home Accept Your Pension and Social Security?

Those who live in nursing homes can have their pension or Social Security check put into a resident’s trust fund. But because senior identity theft is a big issue in the U.S., if you or your loved one is going pursuing this option, it’s important to note the amount of money you have in the resident’s account because there is the risk that nursing home employees could potentially steal from these accounts.

While some people can receive their pension or Social Security checks deposited in an account at the nursing home, others may no longer be eligible to continue receiving that income. For those who need to move into a nursing home and Medicaid is paying for part of the nursing home costs, your Social Security benefits may be terminated as a result.

How to Protect Your Assets if a Spouse Goes into a Nursing Home

There are a variety of ways to protect your assets if you or your spouse must move into a nursing home facility. First, you may be able to keep some of your income and still have Medicaid help with costs when/if your spouse needs a nursing home. It’s important to note that Medicaid has spousal protection rules.

Here are some other ways to protect assets:

• Give monetary gifts to family members before you need to move to a nursing home.
• Draft a “Life Estate” for your real estate with a lawyer.
• Give your spouse a portion of your monthly income.
• Place liquid assets in an annuity.
• Protect your money by putting it in an irrevocable trust.

Are Nursing Homes Worth the Cost?

Overall, moving to a nursing home is not only an emotional change but a financial change as well. Objectively, nursing homes are a costly service, often costing more per year than private college tuition. Still, for those who need around-the-clock care, a nursing home may be essential for their well-being. Regardless, there are other options.

Assisted living facilities and in-home care are additional options that could provide you with some help. Those are pricey too, but not always as expensive as nursing homes. That being said, some of us may need the care only a nursing home can provide, in which case, it’s important to know everything that impacts the price tag.