5 Hidden Costs of Nursing Homes
Dear Rich Lifer,
No one wants to move into a nursing home.
But the reality is almost 70 percent of today’s 65-year-olds will need long-term care at some point, according to the U.S. Department of Health and Human Services.
Whether you want to move into a nursing home or not, you might not have a say.
And because so many retirees are in denial of this fact, there’s a severe lack of long-term care planning happening in this country.
Ask any retiree the following three questions and I bet you’re met with a blank stare…
- How much does a nursing home cost?
- How many years do most people stay in a nursing home?
- How many days in a nursing home will Medicare cover?
If you’re one of the people putting off long-term care planning, that’s okay, but my hope is that after today the financial reality to these simple questions will move you to take action.
For starters, the national median cost of a semi-private room in a nursing home in 2017 for one year was $85,000, and it was $97,455 for a private room, according to a Genworth Financial survey.
The average stay in a nursing home was 835 days (almost 3 years), according to the latest National Nursing Home Survey, conducted by the Centers for Disease Control and Prevention (CDC.)
And, 62 percent of nursing home costs in the United States are paid for by Medicaid, according to the Kaiser Family Foundation.
Medicare, however, will only cover costs, in full, up to 20 days. Anything beyond the 20 days, up until 100 days, will be partially covered. After 100 days, it’s the resident’s responsibility.
The good news is that nursing homes in most states have to follow strict laws — including how they bill you for their services.
Of course, rates will differ depending on your health needs. But, most nursing homes will have a flat-rate fee covering the basics, like room and board, and medical and personal care.
Some nursing homes will charge an all-inclusive fee for all medical services, while others will charge more of an a la carte rate based on services.
The important thing to note here is you need to understand exactly what the terms of your nursing home cover. Get everything in writing and keep a close eye on any unusual fees that pop up on your bill.
I’m sharing this with you because it’s not uncommon for seniors to get hit with a nursing home bill they didn’t expect.
Here are five possible hidden fees to watch out for…
1) Health assessment fee
When you first move in to a nursing home, you’ll have to do some sort of health assessment. While most facilities include this service as part of basic care, some facilities will charge you a seperate, one-time fee, for the health assessment.
To budget for this variable, simply ask when you’re researching different facilities if a health assessment fee is included or not.
2) State assessment fee
If your state is footing part of the bill for your long-term care or you have long-term care insurance, then there’s usually a nursing home assessment fee added to your bill.
If you are paying the bill for the nursing home, this assessment fee is passed on to you. The good news is you can deduct this assessment as a tax credit. Just make sure you remember this and account for it when you’re budgeting.
3) Leave of absence fee
It’s not uncommon for nursing homes to charge you a leave of absence fee, also known as a bed-hold fee. Basically, this is a fee for residents who have to leave the nursing home for an extended period of time.
This could be due to having a surgery, getting treatment at different facility or any number of possible reasons. Nursing homes will charge you a fee to hold your room so you can return later.
If you don’t sign a bed-hold agreement, the home can technically discharge you and rent out your room to someone else.
To avoid losing your spot, talk to the nursing home staff administrator to understand whether leave of absence is covered in your plan. If it’s not, make sure you sign a bed-hold agreement to ensure you don’t lose your spot should you have to leave temporarily.
4) Additional service fees
Extra care, like social services, money management, and therapies beyond the basic care standards will likely be charged to you as an additional service fee.
This will ultimately depend on where you live and what kind of special care you require, however it’s important to know which services are included in your plan and which ones are not. Also, make a note of how much these extra services cost, in case you need to add these services later on.
If you can get your hands on a sample bill first, that’s a good way to see what potential charges you have in store.
5) Annual cost increases
If you do end up living in a nursing home, pay attention to the pre-bill they send you with the monthly statement, this should contain an estimated cost for the next month.
Several nursing homes increase the costs of their basic services annually. When you’re researching homes, ask how often they raise their rates. And, if rates start changing month to month, call the home and ask to speak to the billing staff to understand what’s changed.
Moving into a nursing home is not all bad. In fact, for most people it’s a good move, since it provides a safe and comfortable environment to live out your remaining years. And nursing homes have come a long way since your grandparents’ days.
It’s not unusual for nursing homes to plan outings, have regular lectures, and game and movie nights organized for the residents.
To a richer life,
The Rich Life Roadmap Team