Financing Nursing Home Care

Currently, nursing home care costs around $82,000 per year for those who pay out of pocket. Few Americans can afford these costs. Nor can most afford insurance coverage for nursing home care, which typically is extremely expensive. As a result, most residents rely on Medicare to pay their bills—at least initially. However, Medicare pays only for skilled nursing care and at most for the first 150 days. As a result, most individuals who need only custodial care or need more than 150 days of care must turn to Medicaid to pay their bills. To be eligible for Medicaid, however, they must first sell all of their assets (minus their houses if they are married) and spend all of their savings (minus the cost of burial expenses and minimum living expenses for their spouses). Thus, long-term nursing homes residents (and their spouses) usually end up impoverished. Moreover, Medicaid reimbursement for nursing homes is often less than the homes’ usual charges. As a result, nursing homes actively work to solicit Medicare patients and avoid Med- icaid patients. In addition, to free up beds for Medicare patients, nursing homes often move Medicaid patients to less desirable areas (such as dementia wards) or discharge them to lower-quality nursing homes.