Nursing Homes

Nursing homes are residential care facilities for older adults or people with disabilities who need around-the-clock medical supervision, assistance, and support. 

Nursing home residents may also receive rehabilitation services to address physical, cognitive, social, emotional, or other healthcare needs that have developed due to chronic mental or physical conditions. 

It varies in size from about 6 to 130 beds depending on the number of residents they are licensed to serve.

Nursing homes can provide a person with room and board, help with activities of daily living (ADLs), skilled nursing care, rehabilitation services, medication administration, and general supervision.

How Much Does a Nursing Home Cost?

The Nursing home Cost depends on several factors: Nursing Homes in different states and regions may have different rates. Nursing staff, room sizes and locations all factor into the cost. Some facilities cater to specific populations such as Alzheimer or memory care residents.

The Nursing home costs can be different for each patient because Nursing homes offer different levels of care to their residents. Nursing home residents who require a higher level of care may pay more than those who need less assistance.

Some Nursing homes offer a rent-free package, which includes the room and three meals a day. If you want to include an additional meal or snack in your rent-free package, the Nursing home costs may increase.

How Are Nursing Home Costs Divided?

Nursing homes generally divide Nursing home costs into three categories: room, care and miscellaneous. Room charges cover your accommodations and meals. Care charges include services such as nursing care, physical therapy, social services, housekeeping and maintenance services. Nursing care costs are determined by the staff-to-patient ratio in your Nursing home rooms. 

Nursing homes use a system that assigns points to different levels of Nursing care for billing purposes. Nursing homes typically bill Medicare using two methods: reimbursement or per diem rate.

Average Cost of Nursing Homes

Nursing home costs are high, but there are ways patients can save money. 

Nursing homes cost an average of $256 per day or 7,352 a month for private rooms in the Southeast and Midwest regions while nursing home care in the West costs an average of $282 daily or 8192 a month. 

Nursing homes in rural areas cost an average of $271 daily or 7,876 a month while nursing home care in urban areas costs an average $297 financial institution per day or 8,510 per month. 

Nursing homes cost the most to live in for those who need memory care and skilled nursing services at $355 daily or 11,416 a month.

Nursing Home Costs per State

Nursing home costs vary by the type of room whether it is semi-private or private. The cost also depends on which state you are located.  According to seniorliving (https://www.seniorliving.org/nursing-homes/costs/), below is the average monthly cost of nursing homes per state as of the year 2020. Data has been , 

Nursing_Home_Costs_Per_State

What Nursing Home Costs Are Covered?

Medicare is a federal health insurance program for people age 65 or older, people under age 65 with certain disabilities, and people of all ages with end-stage renal disease. 

Medicare pays for some—but not all—of the healthcare costs related to your stay in a nursing home. These are referred to as Medicare-covered services. Nursing homes typically must bill the following three components of your stay in a nursing home:

  1. Skilled Nursing Care
  2. Nursing Home Daily Rates
  3. Extra Services 

What Nursing Home Costs are Non-Medicare Covered?

There are some expenses related to your nursing home stay that are not covered by Medicare. Nursing home residents, beneficiaries, and their household members may have to pay what is called “personal costs” for the following items:

  1. Nursing Home Premiums
  2. Nursing Home Cash Accounts/Personal Money in a Nursing Home
  3. Non-Medicare Covered Nursing Home Expenses
  4. Nursing Homes that Do Not Participate in Medicare
  5. Nursing Home Special Care Units
  6. Long-Term Nursing Home Care Costs for Nursing Homes
  7. Nursing Home Per Diem Payments

Nursing home costs per diem are compensation paid to nursing homes daily for each resident living in the facility. The per diem rate is based on the facilities’ level of care, medical diagnosis, and overall services provided. 

Nursing homes are required to bill Medicare for the per diem rate billed. Nursing home residents will be responsible for additional daily charges in addition to what Medicare covers. 

These charges depend on several factors including whether or not your personal resources are sufficient enough to pay for these costs. 

Nursing homes are required to file a Nursing Home Resident’s Confidential Information Form (RIDER) with Medicare detailing your personal financial circumstances before they can begin billing you for the difference between what Medicare pays and their per diem costs.

These supplemental charges are referred to as “personal needs payments.” Personal needs payments can include extra services provided by your Nursing Home.

Payment Level Based on Care Needs

The Nursing Home Advisory Council (NHAC) created a standardized system for Nursing Homes to use when determining the per diem rates charged to a resident. There are four payment levels based on care needs.

Level I Nursing Home Services 

Nursing home services that the Nursing Home has the least amount of trouble providing. This level requires minimal assistance and supervision by Nursing home staff and could include:

  • Administrative and Personal Care

Services requiring little to no help from Nursing homes staff such as: 

  • Bathing/Showering
  • Dressing/Undressing
  • Eating/Drinking
  • Dental Care
  • Personal Hygiene
  • Toileting (incontinence care)

Level II Nursing Home Services 

Require Nursing homes staff to assist with certain elements of the service, but they can do it without supervision. These Nursing home services may include:

  • Ambulatory Nursing Home Residents (requires some assistance to ambulate or walk)
  • Transferring Nursing Home Residents (requires Nursing homes staff to transfer Nursing home residents from bed to chair, chair to toilet, etc.)

Level III Nursing Home Services 

Require Nursing homes staff supervision for some components of the service. These Nursing home services may include:

  • Dressing/Undressing Nursing Home Residents   (requires Nursing homes staff to dress Nursing home residents if they are unable to do so themselves)
  • Dependent Nursing Home Residents (requires Nursing homes staff assistance with the activity)

Level IV Nursing Home Services 

Require Nursing homes staff to assist nursing home residents in performing all of their daily living activities (ADLs). These Nursing home services may include:

  • Bathing Nursing Home Residents (Nursing homes staff must bathe Nursing home residents)
  • Feeding Nursing Home Residents (Nursing homes staff must feed Nursing home residents)
  • Toileting Nursing Home Residents (Nursing homes staff must assist Nursing home residents with bladder and bowel care needs).

Level I has the least amount of assistance, with Level IV being the highest level of care needed by nursing home residents. Nursing homes will charge more per diem as they determine their level of care needs for each Nursing Home resident.

Key Takeaways 

Nursing Home costs are based on Nursing home per diem rates. They are required to submit Nursing Home Resident’s Confidential Information Form (RIDER) to Medicare.

This form is for Nursing home residents whose personal financial information is used in deciding how much nursing home care they will receive at no charge. 

Nursing homes come up with Nursing home per diem rates by using an industry-wide standard which includes Nursing homes having to use payment levels based on Nursing home residents’ care needs.

Nursing home costs can increase or decrease depending on how high or low your personal financial information is used in Nursing home per diem rates. 

Nursing Homes use Nursing Home per diem rates to determine Nursing home costs. Nursing homes create Nursing home per diem rates by using an industry-wide standard and having to use payment levels based on Nursing home residents' care needs.
Nursing Home Costs by State vary because Nursing Homes in each state can calculate their own Nursing home per diem rates individually based on that Nursing homes geographical location, number of Nursing home beds, and the local cost-of-living index.
Nursing homes cost an average of $256 per day or 7,352 a month for private rooms in the Southeast and Midwest regions while nursing home care in the West costs an average of $282 daily or 8192 a month.
Nursing homes offer Nursing home payment assistance programs based on Nursing home's individual criteria and the patient's medical need, income, assets, and insurance status.
Nursing homes are costly because they provide staff assistance for their care needs and services as well as amenities and environment that Nursing homes in each state deem necessary to provide to Nursing homes residents.

Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.