HOW TO CHOOSE THE BEST NURSING HOME INSURANCE

Planning to reside in a nursing home or sending a loved one to a facility can be stressful and confusing. More than 1.5 million Americans are currently living in nursing homes, according to the Nursing Home Compendium of 2015, conducted by the Department of Health and Human Services. When planning and preparing for nursing care, money is often the biggest concern.

A private room will cost, on average, around $83,000 per year. Luckily, nursing home insurance makes it so that personal savings do not run out and the resident is not relying on Medicaid or Medicare when needing long-term care. Having quality nursing home insurance will also ease the strain on the resident’s children, so they are not left with the financial burden of the care.

What Is Nursing Home Insurance?

 Nursing home insurance is a form of healthcare coverage designed to help people who are 65 years or older in need of a nursing home, assisted living, long-term care, nursing care, in-home care and other services (there are policies in place for individuals in need of care who are under 65 years of age). The insurance coverage aids with the cost of living in the nursing home and the specific care the individual receives.

The insurance coverage varies whether it is a private room or semi-private room and the different care that includes. Private rooms with skilled nursing will cost more than a semi-private that primarily has custodial care. The average cost of care per day in nursing home facilities is around $227 with an average cost of $83,000 per year. The majority of families and individuals cannot afford this on their own.

If Medicaid or Medicare pays for a portion of that, then there is still quite a bit of money coming out of the patient’s pocket for a large amount of the expenses. Typically, private insurance in a nursing home will cover between $100 and $500 of the daily cost of care depending on the type of insurance policy, commonly referred to as a long-term care policy. The amount covered will vary depending on the insurance plan and is only guaranteed as long as premium payments are met.

The Cost Of Nursing Home Insurance

The cost of the average long-term care policy is around $3,000 per year if it is arranged when the individual is 65 years of age or older. Age plays a vital factor in the type of coverage received. Rates will gradually increase with age in most cases. The younger an individual is, the lower their rates are and vice versa. It costs more for an older individual to obtain nursing home insurance.

The average plan is for a four-year period and will cost around $219,000 in all. That is around $4,200 per month and $150 a day.  This includes skilled nursing and custodial care in nursing homes, assisted living facilities and in-home health care. If the insurance company accepts an individual with an average plan, there will be a zero-day elimination period, meaning coverage is effective immediately.

Due to the price differences in premiums based on an individual’s age bracket, many experts suggest buying long-term care coverage as early as age 40. In a person’s forties, the average annual cost for a typical plan is around $1,300. The cost goes up around $300 when a person is in their fifties. By age 64, the cost can be around $2,800. There is less of a chance of being turned down for coverage as a forty-something versus someone in their sixties due to the average quality of health.

Ways to Decrease Cost

Being cost-friendly is something the majority of policyholders want. There are ways to be money savvy by choosing coverage that is less expensive. This is useful if the policyholder does not have pre-existing conditions that would naturally result in higher premiums and is willing to have a semi-private room.


Utilizing the various ways of decreasing the cost will benefit those who cannot afford the inflation-adjusted policy, following the “some coverage is better than no coverage” mantra. As previously mentioned, it is cheaper to purchase a long-term care policy earlier in life rather than later. Buying earlier will decrease the cost burden later.

Increasing the elimination period is another great tactic; pay for the initial part of care out of pocket to decrease the premium. If purchasing nursing home insurance after the age of 60, choosing simple interest will aid in decreasing the premium while the benefits stay on track with inflation. Choosing to pay the premium annually will also decrease its cost.

What Factors Need To Be Considered?

Choosing the right plan comes down to specific needs, income and the benefits provided by the policy. Different nursing home facilities offer different benefits. For example, a high-end facility that offers rehabilitation and has special programs in place will cost more than one without those extra benefits. This means location is another factor that may affect costs.

Unfortunately, like any type of insurance, coverage may be denied based on a number of different factors. If it is not denied, the cost of the insurance will likely be much higher. What factors need to be considered that will affect costs?

Pre-existing Conditions may hinder the ability to obtain coverage. If insurance is granted to an individual with a pre-existing condition, it is possible the company may withhold payment for the pre-existing condition for a specified time-frame. The most common wait time is six months. If the insurer discloses they will withhold payment, it is time for the patient to decide if the withheld payment is something that can be lived with for the specified time-frame, or if it is a deal breaker? In some cases, failing to disclose a pre-existing condition will lead to the specific care to be paid out-of-pocket.

Premiums And Income are other important factors to discuss. Will the premiums be able to be paid during every policy period for several years? It is common for premiums to increase gradually. This may correspond to a decrease in income over time. If premiums cannot be paid, the money invested into the insurance policy will be lost. If a person has too low of an income before seeking insurance, coverage will not be possible through a long-term care policy. That is when Medicaid and Medicare step in, which involve their own set of qualifications.

A Support System is not only helpful emotionally, but it can also be beneficial financially. If people from a support system are able and willing to provide some care for a long period of time, it can limit the amount of care insurance needs to cover. This is also dependent on the individual’s needs, if they want help from someone they know, what their expectations for care are and if they can be met.

The Type Of Room desired also affects the cost of premiums. Does the individual in need of care desire a private room or can they settle for a semi-private room? Private rooms are more costly.

Additionally, will there be joint coverage with a spouse?  This is shared, long-term coverage for couples that allow them to dip into the other one’s funds if their policy benefits run out. The couple needs to have the same insurer and policy to have shared benefits.

What A Policy Should Include

The right policy will be one that is affordable and does not exclude what is needed for the policyholder’s health and well-being. The right policy varies from person to person. Asking questions is important to understand the ins and outs of any policy. Will coverage change or be terminated if the policyholder develops Alzheimer’s disease or dementia later in life? Will they cover what is of major concern to the policyholder at all?

Along with protection for these diseases, the policy should include a guarantee that the policyholder will not lose coverage from cancellation, termination or from non-renewal due to old age or a decrease in overall health. Will it offer an inflation protection option? An inflation protection option provides the choice between either increasing the benefit level annually or the right to increase benefit levels from time to time without the need of providing proof of insurability.

Sometimes policies may include requirements that are unnecessary. They may require that the policyholder first be hospitalized, already have received skilled nursing care/in-home custodial care or already be in a nursing home to be eligible to receive benefits. These types of policies should be avoided. All of these benefits will be included in the coverage outline that should be provided.

The outline will describe all the benefits, limitations and exclusions of that policy. It is used to compare policies and is vital for choosing long-term care. If a policy is purchased, the ability to return the policy within 30 days for any reason should also be included in the deal. This is often referred as a “free look” period.

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Average Cost of a Private Nursing Home Room Per Year

Nursing home insurance makes it so that personal savings do not run out and the resident is not relying on Medicaid or Medicare when needing long term care.

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