Nursing home care can be expensive. The average national cost for care in a nursing home is more than $77,745 a year for a private room and more than $68,985 for a semi-private room, although the actual cost can vary depending upon the area in which you live and the level of care required.* For most people, finding a way to pay for these costs is a big concern. Before you sign any legal documents, be sure you understand the terms. The admissions staff of the nursing home you select should provide you with terms and fees, in writing. For example, nursing homes charge either a basic daily or monthly rate. Ask what the rate is and what it includes. Find out what various levels of care are offered, what level your loved one needs and how the charges differ for each level.

Are there extra charges for doctors’ fees, medication, laundry, special feeding, incontinent patients, wheelchairs or walkers? For speech or physical therapy? Is a deposit required? How much? When are payments due? What is the policy on holding a bed if your loved one has to enter the hospital briefly or is able to join the family for a vacation? Does the facility offer insurance counseling? Think about all of the necessities of daily living that you include in your own monthly budget, and then add in extras necessitated by illness or aging and discuss who will pay for these things and how.

To help determine how nursing home care will be paid for, the administrator or admissions director will usually ask for detailed financial information. Financing options may include:

Personal Resources. Many residents or their families initially pay for nursing home care from personal resources, such as income and savings. But because the care can be expensive, they may use up their savings and eventually apply for Medicaid assistance. Medicaid assistance is only for the poor, so one must typically use up their assets before they can become eligible. Note that the law typically provides some breaks to married people to allow a spouse remaining at home to retain some of the couple’s assets and income, and there may be plans you can make to preserve some of your assets. It may be beneficial to consult an experienced attorney if you think this may be a situation in which you or your loved one may find yourself in the future.

Private Insurance. A relatively new type of insurance designed to help cover the potentially significant costs of a nursing home is private long-term care insurance. Coverage and cost vary greatly from company to company. Some considerations with respect to long-term care insurance policies that you should be aware of include:

• What the policy covers, specific diseases, home health care, nursing home care and level of care
• Eligibility requirements
• Premiums and whether they continue once the insured enters a nursing home
• When payments are instituted and whether inflation is figured in
• Time limits of payments
• Conditions under which the company can cancel a policy

Medicare. Many people are under the impression that Medicare, the federal government’s health care insurance program for persons over the age of 65, covers the cost of long-term care. Actually, Medicare’s coverage of long-term care costs is limited. In some cases, Medicare insurance will pay for a fixed period of skilled nursing care in a Medicare-certified nursing home. For more information, contact your local Social Security office.

Medicaid. A joint federal/state program that pays for health care for people with limited income and resources. Medicaid does typically pay for custodial nursing home care, but it must be in a Medicare-certified facility. To find out if your loved one is eligible for Medicaid and how to apply, contact the Medicaid office or Department of Social Services in your area.