Financial Planning and Taxes
How to Pay for Nursing Home when Your Money Runs Out

How to Pay for Nursing Home when Your Money Runs Out

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how to pay for nursing home


How to pay for Nursing Home when you don’t have any money left? When residents run out of money to pay for a Nursing Home, they usually turn to Medicaid for financial assistance. However, this isn’t free. Medicaid may eventually claim your assets to pay back loans.

To qualify for Medicaid, you will need to down spend your assets to $2,000, which can be done by paying off debts i.e. mortgages, credit cards.

If you would rather leave your house to your children or do not want to down spend your assets,  a common option is to cash out part of your life policy in order to pay the Nursing Home out of pocket.

Forty-six percent of moderate-income senior citizens face the possibility of severe financial hardship. Sixteen percent report that they have no financial plan for retirement whatsoever.  And will probably struggle to manage their health over the next 5 to 10 years.

With Nursing Home charges averaging $245 a day, seniors in need of nursing but don’t have that much saved up for retirement are likely to run out of money.

Should you find yourself in a situation where you can no longer pay for the Nursing Home – here are some options to look into.

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1. Medicaid or Medicare

Medicare and Medicaid are state/federal paid health care policies. Medicare is a short-term health insurance program for people over 65 or young people with disabilities and some terminal diseases. Part A Medicare will cover care in a skilled nursing facility while Part D helps cover the cost of prescription drugs (including many recommended shots or vaccines.)

Medicaid provides health coverage for eligible low-income adults and elderly adults. Unlike Medicare, Medicaid does cover Nursing Home costs long-term. In September 2020, over 70 million people were enrolled under Medicaid.

2. Veteran benefits     

If you are a US Veteran or a spouse of one, you could qualify for government benefits. The US Department of Veteran Affairs offers veterans privileges like aid and attendance pension. Check if you are eligible for them. If you are, this pension can fund a big part of your Nursing Home payments.

3. Rent out your spare room

If you are lucky enough to be a homeowner, as most people above 60 are, you probably have a spare room or a cottage as well. Make some space and start interviewing potential tenants to lodge in your home. If you renovate the space first and make it modern and furnish it, you could be able to charge enough to pay for your nursing home costs.

4. Cash-out Life Insurance

Depending on your insurance policy, you may be able to cash out at least part of your life insurance while you are still alive. You can use this to pay for the nursing home. However, if you end up cashing out all of it, the IRS will come knocking for the tax due on that amount.

The best approach for financing your Nursing home is to talk to a financial planner and an experienced attorney.

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What Does a Skilled Nursing Facility Actually Mean?

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A skilled nursing home facility is an institution that houses old sick people ideally on a temporary basis. It is designed to help patients recover under specialized medical care.

What Happens if You Can’t Pay Anymore?

These days, Medicaid will pick up the bill if a Nursing home resident runs out of money. Some states allow nursing homes to file a civil court action to obtain financial support or cost recovery, while others can impose criminal penalties on children who do not support their indigent parents. The National Consumer Voice for Quality Long term Care reports that a few states allow both criminal and civil action.

More than half of US states have filial responsibility laws in effect that could obligate adult children to pay nursing home bills for their improvised parents. Since 1995, after the creation of Medicaid, most states stopped enforcing these laws. However, States like New Jersey and Pennsylvania resurrected the laws or left the door open for nursing homes to demand payment from family members or residents with unpaid bills.

If you can’t pay your Nursing Home fees anymore, the facility will usually give you a notice. This will encourage you to begin making changes in order to qualify for Medicaid. If, for some reason you do not qualify for Medicaid, the Nursing Home reserves the right to discharge or advise you to leave after 14 days.

Adult children who help their parents sign the residency agreement can also find themselves liable for their parent’s nursing home bills. This clause may be buried in fine print in residency agreements.

How Long Can You Stay in a Skilled Nursing Facility?

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Nursing home lengths of residency are brief for the majority of decedents. Length of stay varies markedly according to factors related to social support. According to a survey done by the American Geriatrics Society, female residents entering institutions can expect to stay in long-term institutional care for 1,064 days on average and male residents for 686 days.

Other factors that can cut a nursing home stay short are the end of Medicaid or Medicare cover, after the standard 100 days, or the depletion of funds. Dual-eligibles (medicare and Medicaid) are more likely to become long-stay nursing home residents than Medicare-only beneficiaries if treated in SNF with a low nurse-to-patient ratio.


It is important to have a plan in place for how you will pay for nursing home care if your money runs out. Because failure to pay for nursing homes may land you in civil or even criminal course cases. There are options available, and it is best to explore them all before you need the care. Medicare, Medicaid, veterans’ benefits are good sources to get funds, but sometimes you may have to look for alternative sources of money like renting out a spare room or cashing out your life insurance.

There are also organizations that offer these services or cover the cost for you if you are truly indigent. Since each scenario is different, getting advice for your special situation after diligent research on what the state can offer you is your best bet.

Frequently Asked Questions 

Who pays for nursing home care? 

Medicaid covers about 45%-65% of the total cost for nursing home care in America. It is the largest payer for nursing home care. You can also cover these costs with your savings or with cash from your life insurance policy, if you have it! 

How long does Medicare pay for nursing home? 

Medicare coverage is limited to 100 days of “skilled nursing care” and does not cover long-term care costs. There are also certain requirements that must be met before this benefit can take effect. For example, the care requirement needs to be deemed medically necessary, otherwise, Medicare will not pay for it. 

How to get Medicaid to pay for nursing home? 

If you are a low-income senior, you may be able to get Medicaid to pay for your nursing home stay. The first step is to apply for Medicaid and see if you qualify. You can do this online or through your local Department of Social Services. If you are approved, Medicaid will pay for most or all of your nursing home stay if they are deemed medically necessary. 

Does insurance pay for nursing home? 

The answer to this question is not a simple yes or no. It depends on various factors, including the type of insurance policy in place and the specific needs of the individual who requires nursing home care. Generally speaking; however, most types of insurance will cover at least some of the costs associated with nursing home care. But they do not cover long-term care costs

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