Via SeniorLiving.org – Jeff Hoyt, Editor in Chief, author
Scott Witt, Elder Home Care Expert, editor
According to Genworth’s Cost of Care Survey, a private room in a nursing home costs $290 per day, or $8,821 per month.[1] Semi-private rooms are more affordable, though they average $255 per day, or $7,756 per month.
What can you expect to spend on nursing home care? That’s a complex question, as there are several factors that can impact the cost of a nursing home stay, including location, length of stay, and care services required, among others. However, regardless of the cost of nursing or in-home care, there are many ways families can make it more affordable.
Let’s look at what you can expect to spend and how most families pay for nursing, assisted living, or in-home care.
What Is a Nursing Home?
Before jumping into the costs of nursing homes, let’s first answer a basic question: What is a nursing home? Nursing homes provide nursing care for the elderly around the clock, with 24-hour medical care available. These types of care are also referred to as skilled nursing care and convalescent care. While seniors typically transition into a nursing community on a permanent basis, some homes also provide short stays for those in need of rehabilitation after an injury, illness, or surgery that may require skilled nurses and/or therapists.
Whether one uses these services part-time or full-time, nursing home care does come at a premium price compared to other health care options. However, it also provides seniors with all the valuable services they need concerning medical care, socialization, rehabilitation, and housekeeping services amid environments designed to offer the comforts of home.
Average National Costs of Nursing Home Care
The long-term cost of nursing home care will depend on many factors, such as your location, the provider you choose, how long you plan to stay, and whether you need any special considerations. In some cases, facilities’ rates are all-inclusive, while others may charge additional fees for certain services, such as physical therapy, speech therapy, and memory care.
| Room Type | Daily | Monthly | Annually |
| Semi-Private Room | $255 | $7,756 | $93,075 |
| Private Room | $290 | $8,821 | $105,850 |
Rates have climbed considerably in recent years, a trend that looks to accelerate over the next several years. If projections hold, the monthly cost of a semi-private room in a nursing home will be well over $10,000 by 2030, an increase of about one-third. For private rooms, expected annual costs already have eclipsed the six-figure mark. Here’s a look at past, present, and projected annual costs:
| Room Type | 2016 | 2020 | 2030 |
| Semi-Private Room | $82,128 | $93,075 | $125,085 |
| Private Room | $92,376 | $105,850 | $142,254 |
The Cost of Nursing Home Care by State
Not only do costs vary by room type, but also, nursing home care is much more affordable in some states than others. Here’s a look at average monthly costs for nursing home care for semi-private and private rooms.
| State | Semi-Private | Private |
| Alabama | $6,540 | $6,911 |
| Alaska | $37,413 | $36,378 |
| Arizona | $6,844 | $8,213 |
| Arkansas | $5,931 | $6,540 |
| California | $9,247 | $11,437 |
| Colorado | $8,517 | $9,733 |
| Connecticut | $12,927 | $13,992 |
| Delaware | $12,349 | $12,699 |
| District of Columbia | $12,471 | $14,357 |
| Florida | $8,669 | $9,817 |
| Georgia | $6,722 | $7,173 |
| Hawaii | $12,015 | $13,802 |
| Idaho | $8,669 | $9,125 |
| Illinois | $6,235 | $7,026 |
| Indiana | $7,133 | $8,486 |
| Iowa | $6,570 | $7,148 |
| Kansas | $6,692 | $7,026 |
| Kentucky | $7,330 | $7,939 |
| Louisiana | $5,536 | $5,840 |
| Maine | $9,642 | $10,615 |
| Maryland | $10,190 | $10,646 |
| Massachusetts | $12,623 | $13,535 |
| Michigan | $8,973 | $9,733 |
| Minnesota | $11,026 | $12,025 |
| Mississippi | $7,057 | $7,148 |
| Missouri | $5,080 | $5,749 |
| Montana | $7,665 | $8,273 |
| Nebraska | $7,194 | $7,931 |
| Nevada | $9,262 | $10,585 |
| New Hampshire | $10,646 | $11,315 |
| New Jersey | $11,254 | $11,863 |
| New Mexico | $7,406 | $8,304 |
| New York | $12,319 | $12,927 |
| North Carolina | $7,300 | $8,060 |
| North Dakota | $12,167 | $12,764 |
| Ohio | $7,148 | $8,213 |
| Oklahoma | $5,323 | $5,779 |
| Oregon | $10,114 | $11,178 |
| Pennsylvania | $10,038 | $10,828 |
| Rhode Island | $8,669 | $10,220 |
| South Carolina | $7,298 | $7,861 |
| South Dakota | $7,011 | $7,521 |
| Tennessee | $7,072 | $7,619 |
| Texas | $5,019 | $6,388 |
| Utah | $6,388 | $8,365 |
| Vermont | $9,779 | $10,311 |
| Virginia | $7,665 | $8,821 |
| Washington | $9,581 | $10,950 |
| West Virginia | $11,376 | $12,136 |
| Wisconsin | $8,684 | $9,429 |
| Wyoming | $8,258 | $8,714 |
In every state, the cost of both types of rooms in nursing homes rose between 2016 and 2020, and for some states, the increases have been dramatic. More than half of all states have seen the cost of semi-private rooms rise by double digits. Alaska, which already had the highest average cost, also had the largest increase both for semi-private and private rooms. Here’s a look at each state’s increase in annual nursing home costs between 2016 and 2020:
| State | Semi-Private | Private |
| Alabama | 8% | 7% |
| Alaska | 60% | 49% |
| Arizona | 7% | 8% |
| Arkansas | 15% | 13% |
| California | 14% | 18% |
| Colorado | 11% | 14% |
| Connecticut | 3% | 4% |
| Delaware | 16% | 16% |
| District of Columbia | 26% | 36% |
| Florida | 10% | 11% |
| Georgia | 8% | 7% |
| Hawaii | 5% | 4% |
| Idaho | 17% | 15% |
| Illinois | 10% | 8% |
| Indiana | 7% | 9% |
| Iowa | 14% | 15% |
| Kansas | 21% | 14% |
| Kentucky | 9% | 8% |
| Louisiana | 7% | 7% |
| Maine | 5% | 9% |
| Maryland | 12% | 7% |
| Massachusetts | 8% | 9% |
| Michigan | 13% | 13% |
| Minnesota | 35% | 34% |
| Mississippi | 9% | 8% |
| Missouri | 3% | 5% |
| Montana | 6% | 4% |
| Nebraska | 14% | 17% |
| Nevada | 27% | 28% |
| New Hampshire | 10% | 7% |
| New Jersey | 12% | 11% |
| New Mexico | 17% | 12% |
| New York | 11% | 10% |
| North Carolina | 7% | 6% |
| North Dakota | 14% | 17% |
| Ohio | 5% | 8% |
| Oklahoma | 19% | 9% |
| Oregon | 15% | 21% |
| Pennsylvania | 8% | 8% |
| Rhode Island | 2% | 18% |
| South Carolina | 13% | 15% |
| South Dakota | 11% | 10% |
| Tennessee | 16% | 15% |
| Texas | 10% | 6% |
| Utah | 14% | 20% |
| Vermont | 12% | 11% |
| Virginia | 7% | 12% |
| Washington | 12% | 16% |
| West Virginia | 17% | 19% |
| Wisconsin | 10% | 5% |
| Wyoming | 17% | 8% |
Cost of Nursing Homes vs. Assisted Living
The cost of assisted-living facilities continued to rise as well, though centers like those are much more affordable than nursing homes. Assisted living facilities average $141 per day, which translates to $4,300 per month and $51,600 per year. While this represents an increase over the past few years (about seven percent since 2018), assisted living is far more affordable than semi-private or private rooms in nursing homes.
It’s important to note, however, that these figures don’t account for specialized care, such as memory care or considerations for disabilities.
Cost of Nursing Homes vs. In-Home Care
In-home care provider options include homemaking-service providers, who can help older people with daily activities of living and household tasks like cleaning, cooking, and running errands; and home health aides, who are trained in providing more extensive care yet still serve as companions. In some cases, individuals and families may opt for skilled in-home nursing care, which would typically be provided by a registered nurse or certified therapist who can administer medication and monitor vitals.
The more intense the medical care required, the more expensive it is. Typical homemaker services cost about $147 per day, home health aides cost $150 per day, and for 10 hours of work, a typical registered nurse would make $352. In most cases, these services are not needed all day or even every day.
Are Nursing Home Costs Tax Deductible?
In most cases, out-of-pocket nursing home costs are generally tax-deductible under itemized medical expenses. If you, your parent, spouse, or another legitimate dependent is in a nursing home primarily for medical care, then expenses related to medical care, lodging and meals are deductible. However, seniors in nursing homes for personal rather than medical reasons will only be allowed to deduct costs associated with actual medical care but not meals and boarding costs.
How to Pay for Nursing Home Costs
The costs of nursing care expenses can be paid for privately, but they can also be offset in several ways, such as through health insurance, life insurance, long-term insurance policies, savings, reverse mortgages, and local and regional agency assistance. We’ll take a closer look at your various options below.
Did You Know: One way to cut down on nursing home costs is to age in place with a medical alert system.
Medicare Coverage for Nursing Home Costs
Medicare will only cover skilled nursing care expenses in very specific situations and is not designed to pay for nursing home or custodial care costs long term. One such situation is when a senior has been hospitalized and released, but still requires a bit of specialized care. Medicare will help pay for short-term stays in nursing homes if they:
- Were admitted to the hospital for a minimum of three days as an inpatient.
- Have been admitted to a Medicare-certified facility within 30 days of the hospital stay.
- Need skilled care like physical therapy, speech therapy, and other types of rehabilitation.
Those who meet all those conditions under original Medicare will qualify for assistance as follows:
- Up to 20 days of nursing care is 100% covered by Medicare.
- After day 21 and up to day 100, patients will pay a copay that averages $170.50.
- After 100 days, Medicare coverage ends, and all payments are the patient’s responsibility.
Medicaid Coverage for Nursing Home Care
Medicaid is an excellent option for low-income older adults. This coverage assists individuals with many types of medical care, including doctor’s visits, hospital stays, and long-term care services such as those received in a skilled nursing facility. Often, this program covers 100% of these costs, but there may be copayments for certain beneficiaries. For those who qualify for Medicaid, this is the best choice for nursing care coverage.
Veterans Benefits for Skilled Nursing Care
Veterans requiring long-term care services for service-related injuries and disabilities enjoy full coverage from the Department of Veterans Affairs (VA) at specified locations, or through certain providers approved by the department. Those without service-related disabilities may also qualify for VA benefits if they meet certain qualifications. Depending on a veteran’s household income, copayments may be required.
Private Pay
It’s common to pay for nursing home care privately at first, then move to Medicare or another funding source later. The main benefit of paying privately is flexibility. With Medicare and other taxpayer-subsidized programs, seniors have fewer choices because nursing homes can limit their numbers of publicly-funded enrollees. For this reason, it’s important to know the accepted payment setups before deciding to move into a particular facility. Sources of private funds could be savings or money from cashing out IRAs and other investments. People also borrow from life insurance policies, sell their homes, and get reverse mortgages, as explained below.
Annuity (Savings)
When planning for long-term care, a person with savings can buy an annuity. The underwriter receives a lump sum of cash and then issues regular monthly payments to the individual after retirement. The individual can use these payments for a nursing home, a car payment, or anything else. The main advantage of having an annuity is financial discipline. The annuity forces savings to be stretched out over time and regular payments are guaranteed. Also, certain indexed annuities provide a home health care income doubler which can potentially provide additional money for long-term care needs.
Additional annuity advantages:
- Savings put into an annuity are shielded from consideration on applications for government aid.
- A person who lives a long life could draw more from the account than they put into it.
The main disadvantage of annuities is that value is lost in annual charges. Also, penalties are charged if funds are withdrawn early.
Some annuity companies require the owner to be confined to an accredited long-term care facility. Other annuity companies will provide additional income if the owner is still at home but unable to complete a minimum of two of the six Activities of Daily Living (ADLs) as signed off by an attending medical doctor.
The six ADLs generally recognized as essential to independent living include:[2]
- Bathing: The ability to clean oneself and perform grooming activities like shaving and brushing teeth
- Dressing: The ability to get dressed by oneself without struggling with buttons and zippers
- Eating: The ability to feed oneself
- Transferring: Being able to either walk or move oneself from a bed to a wheelchair and back again
- Toileting: The ability to get on and off the toilet
- Continence: The ability to control one’s bladder and bowel functions
Life Insurance
A whole life insurance policy – NOT a term policy – can be tapped for long-term care payments. However, this reduces the financial benefit for heirs. Three approaches are:
- Surrendering a policy
- Selling a policy
- Converting life insurance to “life assurance”
First, a whole life insurance policy can be surrendered to the provider. This means that the issuing agency buys the policy back from the policyholder. However, they typically pay just 50-75% of the face value.
Similar terms are offered for the second approach: selling the policy to a “life settlements” company. Again, the typical offer is 50-75% of the policy’s value. The life settlements company continues to pay the policy’s premiums until the policyholder passes away. The company then receives the financial payout.
Life insurance conversion to “life assurance” is a third option designed specifically to pay for long-term senior care. Like life insurance, life assurance includes a savings guarantee plus an investment portfolio. Life insurance conversion accounts might give less for senior care but preserve a death benefit (inheritance). The advantages and disadvantages vary from person to person.
There are certain Indexed Life and Guaranteed Universal Life Insurance Policies that provide accelerated benefits for conditions such as chronic, critical, and terminal illness. This is a unique way qualified policyholders can leverage the death benefit to receive most of it in advance when they meet certain requirements. Please consult with your Financial Advisor for all the options and details to see if this might be a fit for you.
Long-Term Care Insurance
When a person is planning well in advance to pay for senior care, buying long-term care insurance can be a smart move. It allows more freedom of choice compared to using Medicare and other public programs for nursing home payments. People buy policies paying anywhere from about $2,000-$10,000 per month. To guard against dramatic market changes, inflation protection can be included with monthly premium payments. It’s important to know that long-term care insurance policies vary in terms of when they’ll pay benefits. Generally, to receive payments for nursing home care or assisted living, a person must need help in at least two activities of daily living. A doctor’s statement documenting this need is required as part of the claim.
Renting Out a Property
When a senior leaves their old living space empty, renting it out with careful management could be a valuable income source. Turning a home into a rental might become a permanent source of income for the family or just a temporary source of income until the home is sold. Ideally, any rental arrangement should be made while the homeowner is still a competent decision-maker. For a loved one to take over, that person will need legal guardianship or power of attorney over the homeowner.
Bridge Loan
Bridge loans can cover people’s living expenses as they await a property sale, pension payout, or another virtually guaranteed source of income. A bridge loan is a short-term loan, but often the first payment isn’t due until 90 days after signing. Typical loan lengths vary from three months to two years.
Reverse Mortgage Loan
While a bridge loan can help during a pending home sale, a reverse mortgage loan helps keep the home until the second spouse moves out or passes away. The loaned money can help pay for nursing home care. The advantage of using a reverse mortgage loan for nursing home payment is covering two housing costs at once. However, when the second person no longer lives in the home, loan payments become due. Heirs often opt to sell the property rather than maintain payments.
[1] Genworth, 2021 Cost of Care Survey: www.genworth.com/aging-and-you/finances/cost-of-care.html
[2] Partners Richmond, LLC, Activities of Daily Living https://www.partnersrichmond.com/articles/activities-of-daily-living.php
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