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Although 98% of people age 65 and older have health insurance, nearly four million of them have unpaid medical bills, according to 2023 data from the Consumer Financial Protection Bureau. That’s because most of them are covered by Medicare, which has huge coverage gaps. Fidelity found that a 65-year-old will face about $165,000 in out-of-pocket health care costs in retirement. That’s up more than 5% from 2023 and more than double the costs in 2002.
Unfortunately, these numbers don’t take into account one of the biggest expenses seniors face: long-term care. Many seniors will need it during their lifetime, and Medicare rarely covers it.
Long term care insurance can pay. But you often have to plan ahead to buy long term care coverage before you become too old to be eligible or the bonuses become too expensive.
Although there is Advantages and disadvantages likewise the best long term care insurance companiesOlder Americans Should Consider Buying Insurance Before They need services. They would also do well to explore options for long-term care services. Nursing homes and assisted living communities offer supportive solutions, but there are differences in cost and quality of care. As you plan for your future, below we’ll break down what you need to know about nursing homes and assisted living communities so you can make informed choices.
Find out here how the right long-term insurance coverage can help you.
Nursing homes or retirement homes: what you need to know
Not sure which one is the best choice for you? It is first useful to compare the costs of both services.
Costs of long-term care compared to assisted living facilities
Whether or not you have long-term care insurance, cost plays a role in determining whether long-term care or nursing home care is better. That’s because many insurance policies have daily limits. retirement homes And assisted living residences They often charge a high price, even though there are differences.
“Since assisted living care is less intensive than skilled nursing care, the costs will obviously be lower,” says Anthony Cirillo, a fellow at the American College of Healthcare Executives and president of The Aging Experience. He says many factors influence the price of specific facilities, including location, type of accommodation, services and amenities, payment structures and the level of care provided.
“Nursing home care is generally more expensive than primary care because of the need for ongoing medical care,” says Carol Bradley Bursack, CDSGF and author of “Minding Our Elders.” “Nursing homes have a much more medically qualified staff.”
How big is the price gap? While the median monthly cost of an assisted living facility was $5,350 in 2023, a semi-private room in a nursing home was $8,669, while the median cost of a private room was $9,733, according to Genworth’s 2023 Cost of Care Survey.
While nursing homes come with a higher price tag, there may be help to cover the costs. “Nursing home care is more likely to be Medicaid-eligible when the cost of care exceeds a person’s ability to pay,” Bursack said.
Unfortunately, while Cirillo explained that “Medicaid is the primary source of funding for long-term care in nursing homes,” he also cautioned that not everyone qualifies for it. “It requires a significant level of financial need and it’s pretty much the option of last resort when all your assets have been depleted,” he said.
Seniors who prefer assisted living communities will also find that Medicaid is likely to be of no help, as the program typically does not cover this option.
“I often say there is a world of ‘haves’ and ‘have-nots’ in assisted living,” Cirillo said. He explained that because Medicaid generally excludes assisted living facilities, payment options can include savings; Cashing out eligible life insurance policies; reverse mortgages; some VA benefits and sometimes long-term care insurance. “Some policies cover assisted living expenses, but coverage varies, so it’s important to check the specifics of the policy,” he cautioned.
Start exploring your long-term care insurance coverage options online now.
Differences in care between nursing homes and retirement homes
Cost is a major factor in choosing a long-term care option, as seniors can only take advantage of the options they can afford. But, for those who can afford either option, it’s worth noting that there are major differences in the quality and types of care provided by nursing homes and assisted living communities.
“Assisted living communities primarily provide assistance with activities of daily living,” Cirillo says. “Residents are typically more independent and require less medical care.” Health services are limited, staffing levels are lower, 24/7 service is typically not available, and health care professionals are often not on-site. Instead, the focus is often on social activities rather than complex care, Cirillo says.
“In general, if a senior is relatively independent but needs additional support for safety or could benefit from more socialization, assisted living would be the best, and perhaps only, option,” Bursack says. “If there are significant difficulties with activities of daily living, such as dressing or feeding themselves, or if they have a serious or chronic illness, they may be eligible for nursing home care.”
The good news is that many facilities offer the option to start in assisted living and then transition to nursing home care as the resident’s needs increase. These facilities are called continuing care retirement communities (CCRCs).
The essentials
Regardless of the type of facility seniors choose, they should do their research to ensure they are choosing not only an affordable place that offers the support they need, but also a high-quality facility that cares about its residents. Older Americans should explore both payment options and care solutions well in advance of the time they need help so they have a plan in place when the day comes when long-term care services become essential.
Have more questions? Learn more about your long-term care insurance options here.
