What to Expect

Traditional nursing homes are distinct from assisted living centers, which are meant for people with more independence. Nursing home residents typically are recovering from illness or injury, or need help managing chronic health issues such as cardiovascular disease, diabetes or dementia. Many of the homes are equipped with oxygen tanks, dialysis machines and other medical equipment that isn't normally found at assisted living centers. Examples of standard nursing home benefits are:

  • Private and semi-private rooms
  • Three cooked meals daily
  • Help with daily living activities such as bathing and dressing
  • Medication management
  • Various therapies (memory therapy, physical therapy, speech therapy)
  • Laundry and housekeeping services
  • A social activity calendar

Despite their common points, nursing homes show lots of variation. Also, some have adopted qualities of assisted living centers. This guide can help you understand the possibilities and make the best move.

In This Article:
Nursing Home Costs ↓
Nursing Homes versus Assisted Living ↓
Nursing Home Payment ↓
Questions to Ask Nursing Homes ↓

Nursing Home Costs

Compared with an assisted living community, a nursing home costs about double. This is because the typical resident needs a higher level of care. The price is calculated at a daily rate, then multiplied for monthly billing. In 2016, a GenWorth study found that the median monthly charges at Medicare-certified nursing homes were approximately:

  • $6,850 with a semi-private room
  • $7,700 with a private room

Rates can be much higher too… and looking ahead ten years, GenWorth expects that the typical resident will likely be charged more than $10,000/month. Obviously, living in a nursing home costs more per month than what the average American spends on rent or a mortgage payment. Fortunately everyone has a payment solution using private or public funds. You can jump ahead to learn more about paying for nursing home care.

Nursing Homes versus Assisted Living Communities

Is a nursing home your best choice for senior care? It's important to know that nursing homes and assisted living centers are becoming more alike. Often people who initially look for a nursing home decide that assisted living is a better fit. Here we look at trends in services and costs for both kinds of living arrangements.

In This Section:
Assisted Living Centers ↓
Progressive Care ↓

Nursing Homes v. Assisted Living Communities The terms nursing home and assisted living center have different connotations. Although the two types of senior homes are becoming more alike, their category names still matter. Facilities that offer "progressive care" can fall into both groups.

Assisted Living Centers

Assisted living centers fit many people's needs, often providing more services than people assume.

  • With assisted living (as with nursing home care) residents can get personal care assistance in the areas of bathing and dressing, meals, medication management, transportation, getting into bed, and more.
  • Residents can get help with laundry, housecleaning, paperwork and other chores.
  • Compared with nursing homes, assisted living centers cost less and allow more freedom. Planned activities are likely to be more extensive and lively. However, compared with nursing homes they aren't as well equipped for medical care.

Generally the federal government regulates nursing homes, and states regulate assisted living centers. Federal law stipulates that nursing homes must have RNs on duty at all times. This isn't always a requirement in state-approved assisted living centers.

Nursing Homes

Nursing homes cost more because the care is more intensive. For example, residents in nursing homes are more likely to use wheelchairs or be bedridden. And although people in assisted care might have dementia, people in nursing homes who have dementia tend to have more advanced symptoms. Overall a nursing home is preferable when a person can benefit from constant monitoring and care from registered nurses and other medical staff. As explained below, nursing homes are becoming more like assisted living communities. A trend called "culture change" is making nursing home atmospheres more home-like.

Progressive Care

Progressive Care: Sometimes people choose nursing homes because they anticipate needing memory care or other advanced care soon, and they'd rather not relocate twice. A better solution could be choosing an assisted living facility that offers "progressive care" or "a continuum of care." A resident can start off in the assisted living area of a home, then move just a short distance if more intense care is needed later on.

Culture Change Nursing Homes: A stereotype of nursing homes is that they feel institutional, or impersonal and bleak. The idea has a firm basis in reality -- yet nowadays many nursing homes are warm, personalized and positive environments for residents and staff. An industry goal called "culture change" helps explain the transformation. Compared with traditional nursing homes, culture change nursing homes give residents more freedoms. For example:

  • Residents can choose their own bedtimes even if end-of-day personal care assistance is needed; bedtime doesn't follow a strict schedule.
  • Other examples are multiple choices for activities and mealtimes.
  • Residents might also be able to decorate their rooms with furniture and artwork from home.

Culture change nursing homes also assign the same employees to the same residents for consistency and comfort. Sometimes this is called "person-centered care" because it's focused on what's best for individuals, not what's easiest for managers. Residents have a greater sense of control and independence, and this can influence their overall well-being. Population size can also powerfully influence quality of life, as it shapes a person's sense of community. Many culture change nursing homes therefore group their residents into communities of 20 people or less. Each micro-community has its own refrigerator for snacks, and possibly meals are prepared with the group's staff for a homelike atmosphere. Also for a sense of community, daily announcements are delivered in person by a familiar staff member, not impersonally over a PA system. Besides taking a person-centered approach with residents, culture change nursing homes take care to promote staff empowerment. This can result in lower turnover rates and happier workers, further improving residents' experiences.

Nursing Home Payment Solutions

Staying at a nursing home in the US costs roughly $7,000 per month but we see lots of regional variation. For examples of extremes, in 2016 the typical cost was about $150 per day in Oklahoma and about $800 per day in parts of Alaska. Nursing home costs are also shaped by the resident's room setup, the facility's amenities and the level of care required… but in any case, the lifestyle isn't cheap! How do people pay for nursing homes? Ideally meeting with a financial advisor first, individuals and families find solutions with private and/or public funds. Especially when a spouse's living expenses need to be considered too, it's very wise to get professional guidance. Here's an introductory guide to payment solutions.

In This Section:
Private Pay ↓
Annuity (Savings) ↓
Life Insurance ↓
Long-Term Care Insurance ↓
Renting Out Property ↓
Bridge Loan ↓
Reverse Mortgage Loan ↓
Medicaid & Medicare ↓
VA Benefits ↓

Private Pay

Nursing home care is expensive. Therefore it's common to pay privately at first, then move to Medicare or another funding source. The main benefit of paying privately is flexibility. With Medicare and other taxpayer-subsidized programs, seniors have fewer choices because nursing homes can limit their numbers of publicly-funded enrollees. For this reason it's important to know the accepted payment setups before deciding to move into a given facility. Sources of private funds could be savings or money from cashing out IRAs and other investments. People also borrow from life insurance policies, sell their homes, and get reverse mortgages as explained below.

Annuity (Savings)

Planning ahead for long-term care, a person with savings can buy an annuity. The underwriter receives a lump sum of cash and then issues regular monthly payments to the individual following retirement. The individual can use these payments for a nursing home, a car payment or anything else. The main advantage of having an annuity is financial discipline. The annuity forces savings to be stretched out over time, and regular payments are guaranteed. Additional advantages of annuities are:

  • Savings put into an annuity are shielded from consideration on applications for government aid
  • a person who lives long could draw more from the account than they put in

The main disadvantage of annuities is that value is lost in commission and annual charges. Also, penalties are charged if funds are withdrawn early.

Life Insurance

A whole life insurance policy (but not a term life insurance policy) can be tapped for long-term care payments. However, this of course reduces the financial benefit for heirs. Three approaches are:

  1. surrendering a policy
  2. selling a policy
  3. converting life insurance to "life assurance"

First, a whole life insurance policy can be surrendered to the provider. This means that the agency buys the policy back from the policyholder. However, usually they'll pay just 50 to 75 percent of the face value. Similar terms are offered for the second approach: selling the policy to a "life settlements" company. Again the typical offer is about 50 to 75 percent of the policy's value. The life settlements company continues to pay the policy's premiums until the policyholder passes away. The company then receives the financial payout. Life insurance conversion to "life assurance" is a third option designed specifically to pay for long-term senior care. Like life insurance, life assurance includes a savings guarantee plus an investment portfolio.  Life insurance conversion accounts might give less for senior care but preserve a death benefit (inheritance). The advantages and disadvantages vary from person to person. Meeting with a financial advisor could be worthwhile.

Long Term Care Insurance

When a person is planning well in advance to pay for senior care, buying long term care insurance can be a smart move. It allows more freedom of choice compared with using Medicare and other public programs for nursing home payment. People buy policies that pay anywhere from about $2,000 to $10,000 per month. To guard against dramatic market changes, inflation protection can be included with monthly premium payments. It's important to know that long term care insurance policies vary in terms of when they'll pay benefits. Generally to receive payments for nursing home care or assisted living, a person must need help in at least two ADLs or activities of daily living. A doctor's statement of this need is required as part of the claim.

Renting Out a Property

When a senior leaves their old living space empty, then renting it out with careful management could be a valuable source of income. Turning a home into a rental might become a permanent source of income for the family, or just a temporary source of income until the home is sold. Ideally any rental arrangement will be made when the homeowner is still a competent decision-maker. For a loved one to take over, that person will need legal guardianship or power of attorney over the homeowner.

Bridge Loan

Bridge loans can cover people's living expenses as they await a property sale, pension payout, or other virtually guaranteed source of income. A bridge loan is a short-term loan but often the first payment isn't due until 90 days after signing. Common loan lengths are from three months to two years.

Reverse Mortgage Loan

While a bridge loan can help during a pending home sale, a reverse mortgage loan helps keep the home until the second spouse moves out or passes away. The loaned money can help pay for nursing home care. The maximum loan amount available is based on home equity. The advantage of using a reverse mortgage loan for nursing home payment is covering two housing costs at once. However, when the second person no longer lives in the home, loan payments become due. Often heirs opt to sell the property rather than maintain payments.

Medicare & Medicaid

Medicare and Medicaid are taxpayer-funded programs that help seniors pay for nursing home care. Both programs are limited to people with significant financial need. Medicare is generally restricted to medical care for shorter time periods. Medicaid helps cover custodial care. It's possible to be eligible for both programs at once. Medicare nursing home coverage applies to financially eligible people aged 65 and up who meet all three of these criteria:

  1. initially require a hospital stay of three nights or longer
  2. require skilled nursing or rehabilitative care as judged by a physician
  3. move to a nursing home within 30 days of hospitalization

Without hospitalization, the person may be eligible for Medicare home nursing visits instead. When a patient is eligible for Medicare nursing home care, the program may pay the full cost of nursing home care for up to 20 days.

  • Medicare will also supplement a stay for an additional 80 days (for a total of 100), but the patient has a co-pay of more than $150/day.
  • If psychiatric care is needed, the period of care with Medicare supplements may be further extended.

Medicaid, on the other hand, helps pay for long-term personal care (such as assistance with bathing and eating) in nursing homes and other settings. Because Medicaid is partly state-run, eligibility and benefits vary by location. You can see the latest state government policies at benefits.gov. Tip: Shifting one's financial assets could bring Medicare/Medicaid eligibility. For example, when planning for senior care more than five years in advance, a person could reduce their assets in a "Medicare-friendly" way by transferring a property deed to a relative. A person could also set money aside for funeral expenses and it won't be counted as an asset, unlike if the money were kept in savings.

Veterans Benefits

The Veterans Administration or VA has three nationwide programs for supporting veterans with nursing home care:

  1. Community Living Centers (CLCs)
  2. State Veterans' Homes
  3. Community nursing home program

Priority is given to veterans who need nursing home care for service-connected disabilities. Some programs are paid for entirely by the VA. Others require co-payments.

VA Community Living Centers

Community Living Centers or CLCs were formerly called VA nursing homes. They're especially home-like facilities for veterans of all ages. Social activities are planned, and residents are free to personalize their rooms and can keeps pets. Usually a CLC housing arrangement is temporary but some veterans stay lifelong. Services range from personal care to skilled nursing and palliative care. The VA operates more than 130 CLCs across the country, and most are located near VA hospitals. Benefits at all Community Living Centers include:

  • 24-hour skilled nursing care
  • Rehabilitative care
  • Access to social work services
  • Geriatric care

Additionally some CLCs provide these services:

  • Mental health care
  • Memory care
  • Respite care
  • Hospice care

In some cases a co-pay is required for VA CLC housing. Coverage depends on financial need and the veteran's disability status as it relates to service.

State Veterans' Homes

More than 1500 state-run nursing homes are approved by the Veterans Administration. When an eligible vet chooses care at any of these homes, the VA will pay part of the daily charge. Although all state veterans' homes meet certain VA standards, lots of variation results from states setting their own eligibility criteria and lists of services. In some states non-veteran spouses and Gold Star military parents are eligible for residence as well. You can find state veterans' homes in your region with the long-term care locator at va.gov.

Community Nursing Home Program

The VA Community Nursing Home program partners with nursing homes in vets' own communities. This expands options for vets who don't live near CLCs or state veterans' homes, and want to stay close to their families while in a nursing home. VA-approved community nursing home care includes:

  • 24-hour skilled nursing care
  • Occupational therapy and physical therapy
  • Access to social work services

Additionally some community nursing homes provide:

  • Short term rehab services
  • Hospice and palliative care for the end of life
  • Special care for dementia

The Veterans Administration determines its payment subsidies based on military service, level of disability and financial need.

Questions to Ask Nursing Homes

Before choosing a nursing home for a loved one, visiting more than once is recommended. For example, one day you could observe afternoon activities. Another day you could visit for dinner and then see how the community winds down for the night. Sharing a meal with residents and staff can be an especially valuable way to get insights about the facility. Touring a nursing home, you'll note generalities such as the cleanliness of the rooms and hallways, and how kindly or not-so-kindly people interact with one another. You might also find that one facility is more fitting than another in ways that matter to your loved one -- for example, it might have gardens, a therapy dog, or bilingual caregivers. Here are specific questions to ask directors at nursing homes and similar facilities:

  1. How many residents live at the nursing home? If the population is large, are residents separated into smaller communities?
  2. What is the ratio of caregivers to residents? Are particular caregivers assigned to particular residents?
  3. What is the staff turnover rate? If worker satisfaction is low, often this shapes the residents' quality of life.
  4. Does the facility provide three balanced meals daily? Do residents have choices at each meal?
  5. Can residents personalize their rooms with art and other belongings? What furniture is provided?
  6. When can residents spend time outdoors?
  7. What safety precautions are in place for residents with Alzheimer's disease or other dementia? Nursing homes might have secure perimeters, for example, or require certain patients to wear electronic bracelets.
  8. Does the nursing home provide transportation for medical appointments and to help residents with errands?
  9. What social activities are sponsored by the home? Can residents choose from more than one activity calendar? Generally the larger the nursing home community, the more diverse the offerings.
  10. What special services are available? Examples are tailored memory care, sensory therapy rooms, and hairdressing.
  11. What sources of payment are accepted? Some facilities limit their numbers of Medicare and Medicaid patients because they're permitted to charge more when billing privately.
  12. What are the move-out criteria? When might a senior be asked to leave against his or her will? Knowing the answer to this question is especially important if dementia becomes as issue, as some dementia patients tend to disrupt community life.