6 Options for How to Pay for a Nursing Home

Resources to Pay for Skilled Nursing Facility (Long-Term Care)

Elderly at the nursing home
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While skilled nursing facilities (also referred to as nursing homes, sub-acute rehabilitation centers, or long-term care facilities) are expensive, they’re often less costly than hiring 24-hour care at home. These facilities can provide long-term care, but many also offer short-term rehabilitation with the goal of returning home. If you or your loved one may need care in a nursing home, it pays to know your payment options upfront.

Options for paying for nursing home (skilled nursing facility) care include the following:

1) Medicare

Medicare is a federal benefit that will pay for the cost of a limited number of days of inpatient rehabilitation at a skilled nursing facility. This is often called "sub-acute rehab" or "post-acute care." Many people experience a short-term, inpatient rehabilitation stay as a result from a hip fracture, stroke, or a cardiac condition, although there are many other reasons someone could need physical, occupational, or speech therapy, and consequently access this coverage. 

To be eligible for Medicare, you must be over age 65, have a documented disability, or have end-stage renal disease.

If you qualify, Medicare provides excellent coverage of nursing home costs, but it's important to know that this coverage is only for a short time and is only available under certain circumstances. Medicare does not pay for skilled nursing facility care on an ongoing basis.

How to Access Medicare Coverage

The financial benefit of Medicare is not something you have to apply for or file a claim that explains your need. You automatically qualify for these benefits if you have Medicare Part A and Medicare Part B coverage. Generally, if you receive a Social Security benefit or a Railroad Retirement Board benefit, you will generally be covered under Medicare Part A and Part B.

What Costs Will Medicare Cover?

Medicare will cover the daily rate for you to receive inpatient physical therapy, occupational therapy, and/or speech therapy. Medicare also covers your medications, treatments, and medical supplies during this time.

What Are the Conditions Under Which Medicare Will Pay for This Care?

You must meet the following conditions:

  • 3-Day Hospital Stay

You must have had a three-day hospital stay that was considered an “in-patient” stay by the hospital. What this means is that if you were only classified as an “observation” patient, Medicare will not cover the services of a skilled nursing facility rehabilitation.

Additionally, if your hospitalization was classified as inpatient but you were only there over the course of two midnights (the time they use to mark another day), Medicare will not cover an inpatient rehabilitation stay.

You should ask at the hospital whether your stay has been deemed inpatient or observation, as well as verify that you have met the three-day stay requirement in order to access Medicare benefits for inpatient rehabilitation.

  • Timing Requirements

If you met the three-day stay hospitalization requirement, you can use the Medicare benefit right after your hospital stay by transferring directly to the skilled nursing facility for rehabilitation.

However, you can also access this Medicare benefit up to 30 days after a qualifying hospitalization. For example, this means that you could decide to go right home from the hospital after you had a hip surgery, and three weeks after this, you could still choose to be admitted to a facility for rehab and access the Medicare benefit to get your stay and therapy paid for by Medicare. The reason you enter a skilled nursing facility must be the same condition for which you were hospitalized.

  • Medical Criteria

Once at a skilled nursing facility, you must also continue to meet criteria for Medicare coverage.

This criteria is based on the Medicare Data Set (MDS) assessment which the staff must repeatedly conduct at set intervals to determine your functioning. The MDS is a detailed evaluation completed by staff members from several different areas including nursing, dietary services, activities and social work. It measures your current abilities and your progress toward your goals.

If you continue to require skilled care, such as physical, occupational, or speech therapy, or care provided or supervised by licensed nursing staff, Medicare will pay for your inpatient rehabilitation stay. As soon as you don't need this care according to the MDS, you will receive a written notice that warns you that Medicare will no longer be paying to cover these services.

Does Medicare Pay the Whole Cost?

The short answer: It depends on how long you're receiving care at a skilled nursing facility.

The longer answer: Medicare will cover 100 percent of the first 20 days of rehabilitation in a long-term care facility, as long as you continue to meet criteria during those 20 days to qualify for that coverage.

Beginning on day 21, you will be responsible for a co-payment per day and then Medicare will pay the remainder of the charge per day for up to 100 days. 

You can purchase insurance coverage to pay this co-payment by buying a supplemental policy (also called Medigap insurance). Many supplemental policies cover that full co-payment so that there ends up being no out-of-pocket expenses for your inpatient rehabilitation stay.

Does Medicare Always Cover 100 Days of Inpatient Skilled Rehabilitation?

Many people are under the false impression that Medicare will automatically provide 100 days of skilled nursing facility/rehab coverage. Medicare will provide this benefit for up to 100 days, but due to the criteria established, many people only receive a few days or weeks of this coverage. There is no guarantee as to the number of days that Medicare will pay for this benefit; rather, it depends on each individual's needs and their MDS assessment.

How Often Can Someone Use This Medicare Benefit?

Medicare will pay for nursing home coverage more than once. In order to access this coverage if you've already used it previously, you need to have 60 days where you did not use it, and then you will become eligible again. In other words, If 60 days pass without you using your Medicare benefit in the hospital or a skilled nursing facility, the benefit renews and is again available. 

In Which Facilities Will Medicare Pay for Inpatient Rehabilitation?

The skilled nursing facility must be certified by Medicare to provide this kind of medical care. You can review a list of nursing homes on Medicare.gov, as well as see how each facility is rated. Choosing and researching a facility can be a daunting task, but there are several resources available to help.

2) Medicare Advantage Plans

Some people have opted out of the traditional Medicare plan and instead have chosen what’s called a Medicare Advantage plan. This is Medicare coverage administered by another group instead of the federal government. Medicare Advantage plans (also called Medicare Part C) provide similar coverage as compared to the traditional Medicare plan, with a few exceptions:

  • Some Advantage plans don’t require a three-day inpatient hospital stay. They may provide financial coverage at a skilled nursing facility even if the person is admitted right from her own home or has had a less than three-day hospital stay.
  • Some Advantage plans have certain facilities that they consider in-network (or preferred) and other that are specified as out of network. If the skilled nursing facility you would like to go to for inpatient rehabilitation is not in your Advantage plan’s network, your services might not be covered or they may be covered at a reduced rate.
  • Many Advantage plans require prior authorization by the insurance plan for your services to be covered, while traditional Medicare does not require this. This prior authorization involves the nursing home or hospital sending your medical information to the insurance plan where it is reviewed. The Advantage plan then makes a determination about whether they will or won't cover your rehabilitation at a skilled nursing facility. If the prior authorization is not conducted or your stay is not approved, the Advantage plan will not pay for your care at an inpatient facility.

3) Long-Term Care Insurance

Long-term care insurance is insurance that you can purchase that pays for a certain amount of time in a nursing home / skilled nursing facility. The cost and amount of coverage varies significantly according to length of coverage you purchase and whether you opt for full or partial coverage.

Additionally, most long-term care insurance companies have a list of conditions or medications that might make an individual ineligible for coverage or increase the cost significantly. Those often include neurological conditions like Alzheimer’s disease or other dementias, Parkinson’s disease, certain heart conditions, and the use of certain psychotropic medications.

If you apply for long-term care insurance when you are younger and generally healthier, you will pay premiums over a long period of time but at usually a much lower rate. If you apply when you’re older when the likelihood of needing a nursing facility increases, your monthly rate for long-term care insurance will be much higher.

Whether long term care insurance is right for you depends on many factors, so you will want to speak with your insurance agent about cost and coverage options.

4) Medicaid

Many people set aside money for their care later in life, but sometimes the cost of their care uses that money up very quickly, even if they've tried to plan well and save their money. If your financial resources have been exhausted, you can then apply for Medicaid.

Medicaid is federal government assistance that is administered by each state for those whose money has been depleted. An individual must qualify financially (by having less than $2,000 in countable assets) and qualify medically (by meeting a level of care assessment that shows that he or she actually needs nursing home care, instead of assisted living or home care.)  

Medicaid also has some provisions to prevent impoverishment for a spouse of a nursing home resident who will continue to live in their own home or in another facility (such as an independent living center or an assisted living facility). 

5) Veterans Administration Aid and Attendance

If you and/or your spouse are a veteran, you may be eligible for financial assistance through the Veterans Administration. You need to submit an application which may take approximately three months to be processed. After approval, you will be eligible for a monthly benefit per person who served. This money can then be used to help pay for nursing home care.

6) Private Pay (Out of Pocket)

One other way to pay for care in a facility is to pay out of pocket, or what’s often referred to as private pay. Paying privately for facility care usually means that you have many options about which facility you choose, since most facilities prefer private pay or Medicare clients, rather than Medicaid.

Paying privately for nursing facilities is expensive, with costs that can often range anywhere from $250-$350 per day (and more) for the care. That can approach ranges of $80,000 to $125,000/year, and that may be only for a semi-private (shared) room. Some facilities offer private rooms for an additional fee per day.

A Word From Verywell

Planning ahead and knowing your options can be very helpful if you're faced with the possibility of paying for skilled nursing facility care. Additionally, some community agencies and nursing homes have staff members available to help you access these benefits.

While the expenses of nursing home care are significant, we hope that it is reassuring to know that there are different options available to help cover those costs if, like many, you're not able to pay for the full cost of this care. 

Sources:

Medicare.gov. Nursing Home Compare. https://www.medicare.gov/nursinghomecompare/search.html?

Medicare.gov. How can I pay for nursing home care? https://www.medicare.gov/what-medicare-covers/part-a/paying-for-nursing-home-care.html

U.S. Department of Health and Human Services. LongTermCare.gov. Who pays for long term care? https://longtermcare.acl.gov/the-basics/who-pays-for-long-term-care.html​

U.S. Department of Health and Human Services. LongTermCare.gov. Medicare.  \https://longtermcare.acl.gov/medicare-medicaid-more/medicare.html​

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