Medicaid is the primary payer for the majority of nursing home care in the United States.
Understanding Nursing Home Care Funding
Navigating the costs associated with nursing home care can be complex, as expenses are substantial and often exceed what many individuals can afford out-of-pocket. The financial burden is primarily shouldered by government programs, especially for long-term stays.
The Role of Medicaid
Across the United States, Medicaid, a joint federal and state program, covers approximately 70 percent of nursing home care. This makes it the single largest payer for long-term care services provided in nursing facilities. Eligibility for Medicaid nursing home benefits is based on strict income and asset limits, which vary by state. Many individuals or their families may need to spend down their assets to qualify, a process often referred to as "Medicaid planning." Learn more about Medicaid
Other Funding Sources
While Medicaid covers the lion's share, other payment methods contribute to nursing home funding:
- Out-of-Pocket Payments: Many individuals initially pay for nursing home care directly from their savings and income. Given that the average cost of a nursing home exceeds $90,000 per year (though this can vary significantly by state), personal funds are quickly depleted for most.
- Long-Term Care Insurance: This type of private insurance is designed to cover services like nursing home care, assisted living, and in-home care. However, relatively few people have long-term care insurance policies, either due to their cost, lack of awareness, or not anticipating the need.
- Medicare: It's a common misconception that Medicare pays for long-term nursing home care. In reality, Medicare (the federal health insurance program for people 65 or older and certain younger people with disabilities) only covers short-term skilled nursing facility stays for rehabilitation following a hospitalization, not indefinite long-term custodial care. Explore Medicare benefits
- Veterans Benefits: Eligible veterans and their spouses may qualify for certain benefits from the U.S. Department of Veterans Affairs (VA) that can help cover nursing home costs, such as the Aid and Attendance benefit. Find VA long-term care benefits
How Costs Are Distributed
The distribution of who pays highlights the critical role of government assistance for long-term care.
| Payment Source | Coverage Scope | Primary Use Case |
|---|---|---|
| Medicaid | Approximately 70% of all nursing home care | Long-term, custodial care for eligible low-income individuals |
| Out-of-Pocket Savings | Initial period of care, before Medicaid eligibility | Short-term or until funds are exhausted |
| Long-Term Care Insurance | Varies by policy, can cover extended periods | Supplements/replaces out-of-pocket, if available |
| Medicare | Short-term, skilled nursing facility stays (up to 100 days) | Post-hospitalization rehabilitation |
| Veterans Benefits (VA) | Varies by program and eligibility | For eligible veterans and their families |
Planning for Nursing Home Care Costs
Understanding these payment structures is crucial for anyone anticipating the need for long-term care. Consulting with an elder law attorney or financial advisor specializing in long-term care planning can provide tailored strategies, including:
- Medicaid planning to ensure eligibility while protecting assets where permissible.
- Evaluating the benefits and drawbacks of long-term care insurance.
- Exploring other government benefits for which one might qualify.
By recognizing that Medicaid covers the vast majority of nursing home expenses, individuals and families can better prepare for the financial challenges of long-term care.
