At any given time, 13% of Americans with dementia reside in nursing homes, yet 60% of nursing home residents have some level of dementia. Because the later-stage symptoms of dementia are so severe, it is safe to assume that if loved one has Alzheimer’s or related dementia, a nursing home may be a consideration at some point in the progression of their disease. Given the annual cost of nursing home care is approaching $100,000 (or exceeds that in some states), planning for how to pay for nursing home care is of critical importance to most families.
Prior to a discussion about nursing homes and dementia / Alzheimer’s care, it may be helpful to have a clear definition of what nursing home care is and is not. Nursing homes must be differentiated from assisted living and assisted living specifically for persons with dementia which is called memory care. Assisted living / memory care provides less care than a nursing home and has different regulations. Skilled nursing (facilities) is another phrase that is sometimes used interchangeably with nursing homes but to do so is inaccurate. Skilled nursing facilities, while residential, are intended for short term care, rehabilitation or recovery from injury. Nursing homes provide long term care, on an ongoing basis.
To be admitted to a nursing home, one must require a “nursing home level of care” (NHLOC). The definition of NHLOC varies in each state. A diagnosis of Alzheimer’s or other related dementia does not automatically make one eligible for admission to a nursing home (in any state). In fact, the majority of persons with dementia in the early stages will not require nursing home level care and therefore will not be eligible. However, many of those in the middle stages of dementia will be eligible and essentially all persons with late-stage dementia are eligible.
Most states require nursing home residents to need assistance performing 2 – 3 “activities of daily living” (ADLs), such as bathing, eating or dressing. As persons with mid and late stage dementia very often require assistances with their ADLs, they will likely be nursing home eligible from a medical perspective.
One cannot discuss nursing home eligibility without consideration to finances. Some nursing homes have no financial criteria for admission. These are referred to as “private pay” meaning the resident pays for the complete cost of their care. However, since the majority of Americans with dementia cannot afford to “private pay” for their care, they rely on Medicaid. Medicaid has financial eligibility criteria to pay for nursing home care and those eligibility criteria are exceedingly complicated, vary with marital status and are different in each state.
Briefly, Medicaid requires persons with dementia (and all candidates in fact) to be nearly impoverished to be financially eligible. The rule-of-thumb is that an applicant must have less than $2,000 in monthly income and less than $2,000 in countable assets. However, there are many, many exceptions to these rules and some states offer exceptions for those with dementia specifically. See state specific Medicaid eligibility criteria. Learn more about how to qualify for Medicaid.
In 2019, the average daily cost of a private room in a nursing home in the US was $275. Monthly, this equals approximately $8,000 and annually close to $100,000. Nursing home care does not cost any more or less for persons with dementia vs. those without the condition. Unlike assisted living / memory care, the cost of care in a nursing home does not change (in any significant way) based on the amount of care required by the resident.
However, the cost of nursing home care does vary dramatically by state. In Alaska, care can cost as much as $900 per day, while in some southern states, the average daily cost is closer to $200. See nursing home costs by state and region.
There are very few, if any, financial assistance programs designed for nursing home care for persons with dementia. Instead, most assistance programs are designed to help individuals avoid nursing home placement. However, it is worth discussing the benefits of the following 3 programs as these programs pay for the vast majority of nursing home costs for persons with dementia.
Medicare’s nursing home benefits for persons with dementia are limited at best. Here we offer a fuller explanation of Medicare’s benefits for persons with dementia. With regards to nursing home care specifically, Medicare’s benefits are limited to 100 days, they are not intended for the long term or ongoing care. For those 100 days, Medicare pays 80% of the cost. Medicare supplemental insurance may cover the remaining 20% if the individual maintains such a policy. For those requiring nursing home care, Medicare’s benefit is really just offer a window of opportunity to apply for Medicaid which can cover nursing home care for the long term.
For persons who are both financially and medically eligible, Medicaid will pay for all their nursing home costs, which includes care costs and room and board. A diagnosis of dementia does not mean that a person is medically eligible for Medicaid, but a person with dementia who requires nursing home care would be medically eligible. Financial eligibility criteria are very restrictive, very complex and are discussed in detail on this page. In short, the applicant must have less than $2,000 in monthly income and less than $2,000 in assets. Unless married, they must surrender all their monthly income to Medicaid (except for approximately $20 – $100). In return, Medicaid will pay for the complete cost of their nursing home care for as long as they require it.
Many persons who eventually obtain assistance from Medicaid are not immediately eligible from a financial perspective. Instead they go through a process called Medicaid planning, which entails working with a financial planning professional to help them gain eligibility and preserve enough income and assets for their immediate family members and / or their spouses. Working with a Medicaid planner can ensure family members maintain enough resources to continue living independently.
For veterans with Alzheimer’s or other form of dementia, the VA Health Care system offers some level of assistance. Their dementia need not be related to their military service. Proving such a connection would be difficult. And how much of the cost of nursing home care the VA will cover depends on many variables too granular to be discussed in this article. That said, these variables include level of disability, income, as well as service-connected status. The VA has both state veterans’ homes and contracts with private nursing homes to provide care for veterans.
Placing a loved one with dementia in a nursing home seems like it should be a relatively straight-forward process, but like everything associated with dementia, it is harder than it appears or should be. While there is a medical need assessment during the admission process, that assessment is more to determine how the nursing home will be able to serve the candidate’s needs. It is less about whether their needs are severe enough to require admission to a nursing home.
The more challenging component of a nursing home admission is how the nursing home ensures they will receive payment. All nursing homes will investigate how they will be paid prior to admitting a resident. If a resident intends to pay out-of-pocket, admission will be easier, but very few nursing home residents with dementia intend to pay out-of-pocket for the long term. Given a candidate could require care for years and the cost is approximately $100,000 per year, most individuals will eventually turn to Medicaid as payer for their care. This is where the complexity of admission begins. People who intend to use Medicaid tend to follow one of two approaches for a nursing home admission.
The Medicaid-pending approach means the applicant is applying for Medicaid but has yet to be accepted. The preparation and review process for Medicaid is lengthy. At best, 90 days are required but often families spend 6 months on the process. Some nursing homes accept Medicaid-pending residents and defer fees on the assumption that the individual will be accepted to Medicaid and Medicaid will pay retroactively for their care. As one would imagine, these nursing homes are few and far between. The challenge to families is finding a nursing home that accepts Medicaid-pending individuals.
The second approach families take is to private pay (pay out-of-pocket) during Medicaid “spend-down”. Since the asset limit for nursing home Medicaid eligibility is so low (approximately $2,000), many applicants exceed this limit. These families will private pay the nursing home to spend down their assets until they reach the Medicaid asset limit. This is less desirable then the Medicaid-pending approach in that the last of an individual’s or couple’s assets are spent on nursing home care instead of allowing a spouse a better lifestyle or allowing for an inheritance.
Neither approach is perfect, nor easy. While looking for a nursing home for long term care (as opposed to for rehabilitation) families should, at the very least, expect to spend several months on the admissions process. More details on the nursing home admission process. One can also search for nursing homes that accept Medicaid.
Families have many concerns, rightfully so, about the quality of care at the nursing home into which they are placing a loved one. Fortunately, information about care quality is readily available. Because Medicaid and Medicare (both government programs) pay for the vast majority of nursing home care in the US, they have available to them vast information about the care quality at nursing homes that accept Medicare and / or Medicaid. To its credit, the government make this information available to the general public. One can search on this website by zip code or nursing home name and compare care quality about the vast majority of nursing homes in a specific area.
Does dementia get worse in a nursing home? Does putting someone in a nursing home accelerate their cognitive decline? One recent reputable study found that persons with dementia did no better or no worse than others because they were placed in a nursing home. Having said that, it is believed in years past, this was not always the case. Today, approximately 15% of nursing homes have Special Care Units (SCU) with staff trained specifically to assist individuals with dementia. When choosing a nursing home, it is recommended that families 1) Use Medicare’s nursing home compare tool and 2) Seek out a nursing home with a dementia special care unit.