Medicaid, Medicare, and Private Pay Options
If you’ve made the decision that your loved one requires long-term nursing home care, you are likely aware that the complexity of caring for a senior loved one is likely only matched by the financial details in relation to their care.
Let’s explore the elevated costs of Nursing home care as well as the available pay options.
Nursing Home Care – The Costs
Since the vast majority of the caregivers in nursing homes (also known as skilled nursing facilities or convalescent homes) are licensed professionals and care is provided around the clock, the costs will be greater than assisted living or adult community care models.
Since 2021, it is estimated that the monthly cost of nursing home care in the United States is between $7,000 and $9,000 per month. Of course, this rate has escalated since, with the average cost creeping closer to the $10,000 mark – an amount heavy enough to be a huge burden on families.
Payment Options – The Models
The payment models can be divided into three categories: State and Federal programs, personal insurance plans, and private pay options.
When eligible, many seniors rely on State and Federal programs as the form of payment for nursing home care. And if applicable, families may also choose a mix and match approach, combining both models to cover their loved one’s costs of care, as appropriate.
State and Federal Programs i.e. Medicaid and Medicare
Designed to help people of all social and economic backgrounds to pay for health care, these programs offer financial assistance for health care to seniors who meet eligibility requirements.
Medicare vs. Medicaid:
Medicare usually covers short-term stays at nursing home facilities to eligible seniors, but not long-term care.
This means that for the elderly adult recovering from an injury or temporary health situation, this will help cover costs, while it is not a lifetime care solution.
Normally, Medicare will cover the full cost of care for the first 20 days, partial costs of care from day 21-100, and provide no coverage past day 100. You can find the complete Medicare coverage details on their official website or reach out to a competent senior planner.
Medicaid, on the other hand, is designed for low-income individuals and will usually cover all costs – including extended senior care – for qualifying individuals.
It is accepted as an insurance option in most, but not all, nursing homes.
Veteran Benefits are also an option for U.S. veterans who require long-term senior medical care. The veteran eligibility will depend on income, disability level, and location, and the individual must already be enrolled for VA health care to qualify for long-term care when the need arises.
Personal Insurance Plans
Whether private insurance policies will cover or supplement long-term care for seniors will depend on the exact policy and the specific level of care needed.
In many cases, the insurance plan will partially pay for nursing home care, and each policy will cover different health-related services and amenities.
- ● Long-term Care Insurance is designed to pay for custodial and personal care, and therefore there is a fair chance that such a policy will cover nursing home costs.
- ● Life Insurance is also an option to pay for nursing home care. The policy can be sold or surrendered at cash value and the funds used for long-term care payment. Still, the cash value is typically less than what seniors have invested in throughout the years.
- ● Private health insurance will sometimes cover some of the nursing home care costs. If going this route, you should ask the facility director to divide the relevant costs between medical (medication, therapy, injections) and personal care (activities, dining, housekeeping), because health insurance plans may cover the costs of healthcare.
It is important to note that new policies often can’t be purchased when a senior has reached a certain age. Therefore, if you plan on having your loved one’s insurance policy help cover senior costs, it is important to choose the right policy early on.
Private Pay Options i.e. savings, pensions, or stocks
If it is likely that your loved one’s care will be paid for using private pay options, it is very important to sensitively discuss the savings, funds, and personal resources available with your aging loved one so you can be sure that all options are considered.
- ● Personal savings, or out-of-pocket payments, is a common way for seniors to pay for nursing home care.
- ● Pensions, sums paid monthly by a senior retiree’s former employer can also be used as payment for nursing home care. The pension amount is based on position, years of service, and retirement age.
- ● Retirement income includes social security benefits, benefits from annuities, retirement or profit-sharing plans, insurance contracts, or IRAs. This income is usually taxable and it is advisable to find out about potential tax breaks and credits when using these incomes for nursing home care payment.
- ● Stock portfolios and Homes are also commonly sold to pay for nursing home care.
- ● Family Assistance for seniors unable to afford nursing home care is common and commendable, and also fraught with difficult decisions and relationship dynamics.
- ● Bridge loans are short-term loans that are quickly obtained to be used to pay for a move to a skilled nursing facility or nursing home while assets are being liquidated or while a home is being sold.
Nursing Home Care Costs – The Process
Regardless of the option your loved one will employ to help pay for the costs of long-term care, the process of choosing the right facility and payment option can be difficult.
Join the many who have benefitted from the personalized guidance at Senior Planning Services – here to simplify this process for your family.