According to the Centers for Medicare and Medicaid Services, over 40 percent of people ages 65 or older will spend some time in a nursing home.
Even a short stay in a nursing home can be financially devastating. A 2014 Genworth Financial Cost of Care study showed that the average daily rate for nursing home care in Pennsylvania was $272 for a semi-private room and $292 for a private room. This means that individuals can expect to pay approximately $100,000 per year for nursing home care.
Traditional Medicare will pay for up to 100 days of skilled nursing care after a 3 day inpatient hospital stay. Medicare will pay for nursing home care only when a patient requires services that can only be provided by a licensed nurse or a therapist on a daily basis. Medicare will pay for the first 20 days of skilled care at 100%. However, days 21-100 require that the patient pay a 20% copayment of up to $152 per day for year 2014. Also, Medicare does not pay for care that is considered “custodial,” or non-skilled personal care such as assistance with activities of daily living, such as bathing, dressing, or eating.
Many individuals are now replacing Traditional Medicare with a Medicare Advantage plan. Medicare Advantage plans are offered by private companies that contract with Medicare to provide Part A and Part B benefits. Plan types include preferred provider organizations (PPOs), Health Maintenance Organizations (HMOs), Private Fee For Service Plans, and Special Needs plans. One benefit of Medicare Advantage plans is that some plans may not require a 3 day inpatient hospital stay in order to be eligible for skilled nursing benefits. However, plans range greatly and copayment costs to the individual may be higher than traditional Medicare.
Private payment is another way to finance a nursing home stay. This payment type typically occurs as copayments during a Medicare or Medicare Advantage stay, or as a primary method of payment for residents who require only custodial care. As mentioned before, nursing home care can be quite costly. One way to help offset these costs is if the individual has a long-term care policy. These policies can help reimburse the individual for at least a percentage of their out-of-pocket costs. Again, policies range greatly and terms and conditions for coverage may apply.
Medicaid health insurance programs are state operated programs that provide for nursing home care, including custodial care. It is a “safety net” for individuals requiring nursing home care when other payment options are unavailable. There are federal requirements for eligibility and coverage, but states have significant latitude in tailoring their programs. Each state has specific asset and income levels that must be met in order to qualify for Medicaid insurance. Not all nursing homes participate in the Medicaid program, so it’s important that the nursing home facility you select participates.