5 Scary Facts About Nursing Home Costs (And What to Do About Them)

Don’t let nursing home care catch you off-guard. Find out the frightening facts and how to be ready when the time comes.
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Nursing homes aren’t all bad. A nursing home can provide a safe and comfortable environment for those with medical needs requiring specialized care.

Still, no one envisions they will go to a nursing home, so it’s not surprising so many people fail to plan for it. It’s simply not a cheery subject, and many undoubtedly live in denial that they will ever need that level of care.

“Lincoln [Financial Group] has done research, and what we’ve found is people say long-term care planning is important, but when you ask, they haven’t done it,” says Mike Hamilton, vice president at Lincoln in Radnor, Pennsylvania.

If you’re one of the people putting off long-term care planning, the financial reality of nursing home expenses might scare you into action. However, it isn’t all bad news. Keep reading for more on the easy options available to prepare for long-term care costs and why moving into assisted living earlier may make you happier.

Here are five scary facts about nursing home care:

Fact #1: You could spend $96,000 a year on nursing home care

The figures vary by region, but A Place for Mom, a senior living referral service, pegs the average cost of a nursing home room at anywhere from $4,000-$8,000 a month. For that price, you may not even get your own room – you may have to share your space with someone else.

Fact #2: Most people will need long-term care at some point

It’s comforting to think that you’ll be one of the people who lives in their own home until the day they die. However, the reality is nearly 70 percent of today’s 65-year-olds will need long term care at some point, according to the U.S. Department of Health and Human Services. The silver lining of this terrifying fact is that you may not need to go into a nursing home to get that care. More on that later.

Fact #3: Your Medicare won’t pay for most long-term care

You may think Medicare will pay for your long-term care, but you’d be mistaken.

“People might think they can get coverage through Medicare, but what they don’t realize is Medicare will only cover short-term acute care,” Hamilton says.

In other words, Medicare might pay for you to be in a nursing home while recovering from surgery, but it won’t pay for you to be there indefinitely.

Fact #4: If you rely on government assistance, you may have no choice but to go into a nursing home

Although Medicare doesn’t pay for long-term care, Medicaid does. Unfortunately, that isn’t always a good thing, according to Sue Johansen, director of sales for A Place for Mom.

“Public programs have very limited parameters and limited beds,” she says.

For instance, you may be capable of living in an assisted living facility, which offers more freedom. However, government programs won’t pay for independent or assisted living care. Instead, you could be forced into a nursing home environment prematurely because that’s all Medicaid will cover.

Fact #5: Using Medicaid for long-term care could wipe out any inheritance you plan to leave

The other problem with Medicaid is that you need to be practically destitute to be eligible for it. That means wiping out savings, investments, and other assets you may own. Some states exempt your home when determining Medicaid eligibility, but Medicaid recovery laws may mean your children or heirs will have to sell it to pay back the government after you die.

The good news about long-term care

Those five facts don’t paint a very pretty picture of long-term care, but it’s certainly not all bad news. In fact, with a little planning, you may be able to delay or avoid going into a nursing home.

Plenty of options exist for long-term care planning.

In the past, long-term care insurance came in only one flavor. Today, Hamilton says a variety of products are available to help people prepare for the costs of long-term care. He breaks them down into the following four categories:

  • Traditional stand-alone long-term care insurance: Policyholders pay a monthly premium for coverage. The policy pays out if long-term care is needed based on the plan’s terms. If a person never needs long-term care, the policy pays nothing.
  • Hybrid life/long-term care products: These products combine life insurance with a rider that will pay out the death benefit in advance for long-term care. Some policies offer the option to purchase extended benefits if needed.
  • Life insurance with an acceleration rider: Life insurance with an acceleration rider allows for a portion of the policy’s value to be paid monthly toward long-term care expenses if needed.
  • Annuities with a long-term care rider: Similar to life insurance with a rider, this option allows people to pull payments for long-term care from the value of their annuity.

The best part of these products is that they may pay for a number of different long-term care options. Unlike Medicaid, which may only pay for you to be in a nursing home, these plans may cover assisted living or other care arrangements.

This isn’t your grandmother’s long-term care.

Speaking of assisted living, Johansen says people should be aware that many long-term care facilities today are a far cry from the lonely, sterile environments you may be envisioning.

“Today’s assisted living environment is much different than a nursing home,” she says. Johansen notes some facilities are more akin to five-star hotels and offer amenities such as lecture series, planned outings, and music programs.

Moving to long-term care earlier is actually a good thing.

Finally, Johansen says we shouldn’t necessarily fear long-term care.

“People defer going into a care environment,” she says, “but then become isolated.”

While no one wants to lose their independence, the right facility doesn’t limit residents unless they need advanced care. Instead, many assisted living environments allow for largely independent living with plenty of activities to create and maintain social connections. Plus, getting long-term care earlier means it’s done on your terms.

Don’t let these five scary nursing home facts get the best of you. Have a plan for how to pay for long-term care and decide in advance when will be the right time to make a move – whether that be after a spouse dies or when you can no longer drive safely. Then, you won’t have to fear a nursing home because you’ll be in charge of your own care choices.

Maryalene LaPonsie brings over a decade of experience in personal finance and banking, making her a trusted voice in the field. This Michigan-based writer’s insights are regularly featured in outlets like U.S. News & World Report, enhancing readers’ understanding of complex financial topics. Her comprehensive coverage extends to retirement planning, helping individuals navigate their financial journeys. Maryalene’s unique perspective is enriched by her 13-year tenure in the Michigan Legislature, where she honed her analytical skills, making her a discerning commentator on banking trends and policies.
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