Odds are high that someone in your family will need a nursing home sooner or later. A majority of people over age 65 will require some type of long-term care services during their lifetime, and over 40 percent of people will need a period of care in a nursing home, according to the Centers for Medicare and Medicaid Services. The cost of that care can financially cripple a family. But there are steps you can take—whether a nursing home is needed now, next month, or next decade—to minimize the strain.
Ideally, financial planning for long-term care should occur long before the need arises, says Wendy Boglioli, a spokesperson for insurer Genworth Financial. Long-term care insurance, Medigap, and employer-provided or private health insurance plans can offset the cost of long-term care. But if these policies aren't in place before a major health event occurs, they are usually no longer available to consumers.
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If your family's facing imminent need for nursing care and doesn't have an insurance plan for it in place, there are still options to help defray the costs.
Make no mistake: Those costs can be staggering. In 2012, a private room cost an average of $248 daily, or more than $90,500 annually, according to a 2012 survey by MetLife. A semi-private room ran $222 daily, or more than $81,000 per year. And the average nursing home stay is 835 days, or more than two years, according to the government's latest National Nursing Home Survey.
Costs widely vary from person to person, both because of geographical difference in rates and because each resident's length of stay differs. While nearly one in 10 residents age 75 to 84 stays in a nursing home for five or more years, nearly three in 10 residents in that age group stay less than 100 days, the maximum duration covered by Medicare, according to the American Association for Long-Term Care Insurance. Convalescent nursing home care, which follows a major surgery or other hospitalization, is typically short-term and can be covered by Medicare.
"Even if you or your loved one doesn't need care right now, but you think it may be coming, at least look at the costs now and in five years to gauge what the hit will be," says Boglioli.
Seniors and their families facing a near-term need for a nursing home should first determine whether Medicare will cover at least a portion of the stay. The Medicare program provides coverage for rehabilitation—but not long-term care. If an individual has spent at least three days in a hospital for medically necessary care, Medicare will pick up the tab for up to 100 days of convalescent care immediately following discharge, as long as the patient goes to a home that's a Medicare-certified skilled nursing facility. Medicare can also help if a long-term nursing home situation looks inevitable but isn't immediately necessary. For as long as the individual is able to stay at home, Medicare can be tapped for up to 35 hours per week of home health services. Medicare covers home health services like intermittent skilled nursing care, physical therapy, speech-language pathology, and occupational therapy for up to 60 days at a time, called an "episode of care."
To secure these funds, individuals must be living at home, not in a nursing home or other long-term care facility, must have their physician approve a plan of care, and must use a Medicare certified agency. If you require help only with personal care, such as meal preparation, bathing, using the bathroom, and dressing, you do not qualify for the Medicare home health benefit. A government-published guide offers details on which home health services Medicare covers.
U.S. News's Best Nursing Homes indicates which nursing homes in each state accept Medicare.
If an individual lacks enough savings to cover the cost of a nursing home—or if the cost of a protracted stay exhausts their assets—they can become eligible for assistance from Medicaid. To qualify for Medicaid, applicants must have minimal assets—no more than $2,000 in cash and cash equivalents such as bonds and IRAs. For married couples, the spouse staying at home may have assets worth an additional $115,920, the annually adjusted Social Security cap for 2013. While some seniors might be tempted to make large financial gifts to their children or grandchildren in order to hasten qualification for Medicaid, doing so within the five years prior to applying for the program could disqualify them from receiving its benefits.