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Paying for the Cost of Skilled Nursing Home Care

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Nationwide, the average monthly cost of assisted living is approximately $3,600. State by state averages range dramatically from as low as $2,500 to as much as $6,000. Southern states tend to be slightly less expensive than the national average. 

There are tax credits and deductions that can be applied to offset some of the cost of assisted living. However, these same tax advantages can be applied to the cost of skilled nursing within the home. (For this reason, tax breaks do not make a substantial difference when comparing costs.) 

Payment Options & Financial Assistance for Nursing Home Stays

Private Pay

The very wealthy can simply pay out of pocket for whatever long-term care they need. These costs can range from approximately $80,000 per year to $150,000 per year. All but the wealthiest individual will find that long-term care costs are absolutely devastating to the life savings of the LTC recipient (and will put undue stress upon their spouse and/or family).

Medicare’s Benefits for Nursing Homes / Convalescent Care

The benefits that Medicare offers toward the cost of nursing home care are limited. Medicare is not intended to provide a long term care solution; rather it is designed for those who need skilled nursing care for a limited time. Note that some people refer to short-term nursing home care as convalescent care. Medicare will pay for twenty days of care at 100% of the cost. For the eighty days following, Medicare will pay 80% of the cost. For those who subscribe to a Medicare Supplemental Insurance plan, the secondary insurance will pay the remaining 20% of the cost for the last eighty days of coverage. Neither Medicare nor Medicare Supplemental Insurance will pay for nursing home care after the 100-day maximum is reached. 

Further limiting Medicare’s coverage is the policy that skilled nursing / convalescent care be only for those recovering from an illness or injury, not for those with an irreversible long term or chronic condition. For example, a person who requires care to recover from a hip injury will be covered while a person suffering from Alzheimer’s who requires nursing home care, will likely not be covered.   

Medicaid and Nursing Homes

Medicaid, through its state affiliates, is the largest single payer for nursing home care. While estimates vary, it is safe to say that Medicaid pays between 45% and 55% of the total nursing home costs in the United States. While on the surface, this may sound encouraging for families whose loved one requires nursing home care, it is important to be aware that Medicaid is a means-tested program, meaning that the applicant’s income and financial assets are closely analyzed prior to acceptance into the program. Persons must meet strict financial guidelines in order to qualify. However, should an individual qualify, Medicaid will pay for 100% of their nursing home costs at a Medicaid approved skilled nursing facility.

Medicaid’s eligibility requirements vary depending on the age, marital status and state of residence of the applicant. In addition, they change each year. In 2017, a rule of thumb for financial eligibility is the applicant’s monthly income cannot be greater than $2,205 (or annually $26,460). The value of their financial resources cannot be greater than $2,000. However, they are many exceptions to these rules. Certain resources, such as one’s home, are considered exempt from counting, other resources can be allocated to a non-applicant spouse. There are similar exceptions made for the applicant’s income. 

Veterans Assistance for Nursing Homes

There are two options specifically for veterans.  The first is the Aid and Attendance Benefit, also referred to as the Improved Pension.  This is a program that provides financial assistance to war-time veterans that “require the aid of another person in order to perform his or her activities of daily living”. The Aid and Attendance program is intended to help those with limited financial means (though not as limited as Medicaid).  A veteran’s income and financial assets are both considered during the application process.   Veterans can use the Benefit towards the cost of nursing home care or assisted living.  Read about how the Aid and Attendance Benefit calculates income or the program’s eligibility requirements.

The second option for veterans and their spouses which is not limited to those who served during war-time, are state VA nursing homes. Care in a VA nursing home is offered as an alternative to the Aid and Attendance benefit; one cannot concurrently receive both benefits. The state VA nursing homes, unfortunately, do not have a unified eligibility or application process. However, a rule of thumb is the veteran or their spouse must be at designated at least 70% disabled. Each state has its own nursing homes and each nursing home has its own eligibility requirements. There are a limited number of spaces available within each home and not all of them are designated for long term care. Waiting lists for admission to a VA nursing home are very common. 

Other Options

Reverse Mortgages

Reverse mortgages can be used to help pay for nursing home care in some limited situations.  A reverse mortgage is a loan that a borrower takes from a bank against the value of their home. The loan can be paid out in monthly installments which can be used to offset the cost of nursing home care. 

Reverse mortgages have several requirements of the borrower(s). Most relevantly, the homeowners must be at least 62 years of age and they must continue to live in the home against which the mortgage is taken. This limits a reverse mortgage’s usefulness in this situation as an individual cannot simultaneously live in a nursing home and at home. However, if they are married and their spouse continues to live at home, then the spouse can collect the monthly proceeds and use them to help pay for care. Read more about the pros and cons of reverse mortgages as a funding source for long term care. 

Long Term Care Insurance

Most individuals who have long term care insurance are aware of its benefits with regards to nursing home care and most individuals who do not have it and have a need for nursing home care, probably cannot afford the premiums. That said, long term care insurance is worth mentioning as it is estimated to pay for approximately 5% of the total US nursing home bill. Typically, long term care insurance has a triggering event, something based on the medical or care needs of the beneficiary which allows them to start receiving insurance payouts. Those payouts can usually be put towards any care requirement the individual has, be that nursing home fees or companion care at home. Monthly premiums escalate with the advancing age and deteriorating health of the enrollee. Individuals over 65 and with considerable health problems may be presented with monthly premiums in the thousands of dollars or be denied coverage outright.

Nursing Home Tax Deductions

Nursing home care is tax deductible. Medical procedures performed at nursing homes as well as the cost of room and board are both deductible. Most frequently, these costs are deducted by using the Medical and Dental Expense Tax Credit. Nursing Home Tax Deductions

Nursing Home Tax Deductions

Nursing home care is tax deductible. Medical procedures performed at nursing homes as well as the cost of room and board are both deductible. Most frequently, these costs are deducted by using the Medical and Dental Expense Tax Credit.

* The American Elder Care Research Organization

If You Have Questions

At Limestone Health Facility, we accept Medicare, Medicaid, private insurance and private pay. Senior Rehab & Recovery Center at Limestone Health Facility is one of the few Skilled Nursing Facilities in Alabama that remains locally owned and operated and is not a “chain”. Operated by the same company for 50 years, we provide skilled nursing, short term rehab and long term restorative care. We help you or your loved one get back in the community as soon as possible! Schedule a tour of our facility or call Edie Belue to have your questions answered. We would love to show you how we take care of our residents. Call 256-667-8642 today.



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