Many people have not given a great deal of thought to the question of where they--or their elderly loved one--will go for long-term care once the burden of providing that care proves to be greater than what friends and family can shoulder. The common thought just runs along the lines of "We'll find a nice nursing home."
Unfortunately, nursing home care is anything but cheap, and without spending some significant time addressing the matter beforehand, a person who ends up going to a nursing home will quickly exhaust his or her resources, leaving nothing for his or her heirs. In this article we will explore the cost of a nursing home and some ways to fund a long-term stay in such a facility.
In 2014, the cost of a day in a nursing home averaged $212. That calculates out to $77,380 annually. With such a sizeable price tag, it's not surprising that nearly three-fourths of Americans find themselves with no assets after just one year in a nursing home.
Granted, the cost of care in a nursing home may not be as high as the average, depending on the needs of the person in the home. Someone requiring intensive care and supervision will incur a much higher bill than someone who is nearly self-sufficient. Nevertheless, given that the above figure is an average cost, it would be prudent to plan on spending that amount and plan accordingly.
With some planning, it is possible to reduce the cost of obtaining long-term care in a nursing home or at least protect your loved one from being impoverished as a result thereof.
To start, if you anticipate that your elderly loved one will need a nursing home in the near--but not immediate--future, you may want to consider relocating to a state where such services are cheaper. According to The PayingforSeniorCare.com website, a tool provided by the American Elder Care Research Organization, the average daily cost of a nursing home runs from $188 in Alabama (for an annualized cost of $68,620) to a staggering $650 per day in Alaska ($237,250 annually).
If you know that your elderly loved one will need to live in a nursing home for an extended period of time, it may be worthwhile considering relocation before the need arises. Moving from Alaska to Alabama would save $168,630 a year; over the course of a five-year stay the savings would reach nearly $1 million!
Another option to explore--now, before the need for a nursing home actually arises--is long-term care insurance ("LTCI"). LTCI will cover your elderly loved one's stay in a nursing home; of course, as with any insurance policy, the specifics will vary from policy to policy, so it's best to read the available policies carefully and consider which one will suit your situation.
Another option is taking out a reverse mortgage. If your elderly loved one owns his or her home, a reverse mortgage will pay him or her either a lump sum or--more commonly--monthly payments. The mortgage will not be repaid until the house is sold (in most situations; each reverse mortgage may have its own terms and conditions). If your loved one anticipates returning to his or her home after a stay in a nursing home, a reverse mortgage may be one way to pay for it.
Finally, after all other resources are exhausted, Medicaid can be useful in paying for a stay at a nursing home. Unfortunately, Medicaid will only begin to pay for care once most of the elderly person's assets have already been exhausted, subject to certain limitations. To this end, an elderly person hoping to preserve some of his or her assets should not count on Medicaid as a way of paying for care and should instead consider other venues such as long-term care insurance.
Paying for an extended stay in a nursing home can be ruinously expensive. However, careful planning can ameliorate the situation and help an elderly person preserve some of his or her assets.
Medicare.gov (website). How can I pay for nursing home care? Available at https://www.medicare.gov/what-medicare-covers/part-a/paying-for-nursing-home-care.html. Last visited November 25, 2015.
Payingforseniorcare.com (website). How to Pay for Nursing Home Care. American Elder Care Research Organization. Available at https://www.payingforseniorcare.com/longtermcare/paying-for-nursing-homes.html#cost-table. Last visited November 25, 2015.