How to Pay for Nursing Home Care

One of the greatest fears people have about aging is loss of health and ending up in a nursing home.  How are you going to afford to pay for long-term care? There are basically four ways to pay for the cost of a nursing home:  


  1. Long-Term Care Insurance- Long Term Care Insurance is the best option by far.  It allows the insured to preserve the estate without the fear of losing everything.  The problem with this option is the insurance is expensive if you can get it. Many people can’t qualify for it due to strict underwriting.  If you do qualify, then there is the problem of affording it. But if you can get this coverage and can afford it, you should seriously consider purchasing it.  


There are new options available today with new insurance products that are a hybrid of Long-Term Care Insurance and Life Insurance.  These new policies guarantee the premium paid will not be lost. If the insured never collect for Long Term Care claims, the policy will pay at the death of the insured a death benefit to a designated beneficiary.  This is an appealing product in that it guarantees a return of investment on the dollars paid in. The downside is the premium for these products is higher than for a regular Long Term Care policy.


Bottom Line:  If you can get this coverage you should.


  1. Pay with Your Own Funds- This option I didn’t need to tell you about.  You already knew you could pay out of your pocket for the care, assuming you have the money.  Unfortunately, with nursing home bills averaging between $5,600 and $7,500 per month in our area, few people can afford to pay out of pocket for very long.  


  1. Medicare- Take note, there is a difference in Medicare and Medicaid.  What is Medicare?  

Medicare is the federally funded and state-administered health insurance program primarily designed for people 65 years of age and older (i.e., those over 65).  There are some limited long-term care benefits that can be available under Medicare.  In general, if you are enrolled in the traditional Medicare plan, and you’ve had a hospital stay of at least three midnights, and then you are immediately admitted into a skilled nursing facility with a doctor’s order for rehab, Medicare could pay for a maximum of 100 days.  Without the 3 midnights, an immediate discharge to a long-term care facility from a hospital and a doctor’s order, you are on your own, Medicare will not pay to the nursing home.  


Assuming you meet all the criteria stated above, then Medicare will pay 100% of the first 20 days.  Medicare will also pay for another 80 days but minus a daily deductible that is about the same cost as the daily price of the nursing home, which means once again you are on your own.  But if you have a Medicare supplemental policy, it will pick up that deductible for those 80 days.


But in order to keep Medicare paying, the patient must continue to show improvement in the rehab.  Once improvement levels out or flattens, Medicare will not pay for rehab any longer. Once again you are on your own to pay for the care.   


Bottom Line:  Medicare provides short-term assistance with nursing home costs, but only if you meet the strict qualification rules.


  1. Medicaid- What is Medicaid?  This is a state and federally funded state-administered medical benefits program which can pay for the cost of the nursing home if certain asset (resource) limits and income tests are met.  Since Medicaid is primarily funded by the federal government and administered by each state, the rules vary from state to state.


Medicaid is a program requiring two areas of qualification: Income qualification and Resource qualification.


Countable and Non-Countable Resources:

To qualify for Medicaid, applicants must pass some strict tests on the amount of resources that they can keep.  To understand how Medicaid works, you need to understand the terminology.  Medicaid has what are known as countable and non-countable resources.  Non-Countable Resources are the ones which Medicaid will not count towards determining Medicaid eligibility.  Countable Resources are those resources Medicaid will take into account.  In general, the following are the primary non-countable resources:


  • The residential real property, up to around $858,000 in equity value.  This real property must be the principal place of residence. The Medicaid Applicant is required to show some “intent to return home” even if this never actually takes place.
  • Personal belongings and household goods.
  • One car or truck with unlimited value.
  • Income-producing real estate (there are very strict rules on the requirement).
  • Burial spaces and certain related items for applicant and spouse.
  • Irrevocable prepaid funeral contract.
  • Value of life insurance if the death benefit value is $1,500 or less.  If the death benefit does exceed $1,500, then the cash value is countable.
  • Any asset the Medicaid applicant is a partial owner of where the other owners refuse to sell.


All other assets are generally countable.  Basically, all money and property, and any item that can be valued and turned into cash, is a countable resource unless it is one of those assets listed above as exempt.  


While the Medicaid rules themselves are complicated and tricky, it’s safe to say that a single person will qualify for Medicaid as long as the countable resources are no more than $2,000 and the income of the person is less than $2,205 a month.  A Miller Trust will solve the income problem.  

If you have questions about how to expedite Medicaid Qualification, give us a call.  We have attorneys waiting to help you navigate the complicated fields of Medicare and Medicaid.

Other interesting blawgs on the topic:

Arkansas Medicaid: What You Need to Apply

How Not to Lose Your Home