Nursing Homes and Retirement Homes 101

Insurance, Long-term Care Insurance, Retirement

It can be a sobering and painful time when you realize that one of your family members requires some form of senior care. Your choices can seem overwhelming and hard to understand.

Home care options are available through home healthcare services, and respite care (adult daycare) options are available for part-time assistance if you are the current caregiver. If these options are not right for your situation, consider these other types of long-term care that are located outside the home.

  • Independent Living (IL) – IL communities are retirement homes for seniors who are still relatively independent and have limited medical concerns. Typically, these are private apartments with group dining options and community social events. Monthly costs vary by location but are often between $1,500 and $3,500.
  • Assisted Living (AL) – Seniors in AL communities require some care and assistance with activities, but are still independent enough for private apartments. These communities provide round-the-clock staff and some degree of medical coverage (below that of nursing homes). Costs are around $2,500-$4,000 per month.
  • Nursing Homes – These are group facilities for seniors who require higher levels of medical care and daily assistance. Licensed skilled nurses are available 24/7. Rooms may be shared, and meals and in-house activities are provided. Costs vary widely, but a reasonable range is from $4,000-$8,000 per month.

Specialized care for seniors with Alzheimer’s or other forms of dementia may be available in some AL facilities or nursing homes, but often at a higher cost because of the extra oversight and security required.

If out-of-pocket payment is not within your reach, there are a few more options available. Most of them take advance planning, and all of them take paperwork.

  • Medicaid – Many people mistakenly believe government funded long-term care is available through Medicare. In fact, it is Medicaid that addresses long-term care. Medicare only covers short-term, medically necessary nursing home stays, not custodial care.

    IL facilities generally do not accept Medicaid. Some AL facilities accept Medicaid, but most are paid out-of-pocket. Many (but not all) nursing homes accept Medicaid.

    Medicaid qualification varies by state, but generally, seniors must “spend down” their assets below a certain point to qualify – often around $2,000-$3,000 in assets such as bank accounts, stocks, bonds and cash-value life insurance. Income must also fall below certain state guidelines. Check your state Medicaid website or local offices for details.

  • Other Government Programs – IL assistance for seniors with very low incomes may be available through Section 202 Supportive Housing from the Department of Housing and Urban Development (HUD).

    Seniors who are service veterans may qualify for long-term care assistance. Contact the VA directly for details, as the rules are not straightforward.

  • Long-Term Care Insurance – If you act far enough in advance, you can purchase long-term care insurance or a separate annuity to cover your estimated costs. You may also be able to convert an existing life insurance policy with significant death benefits into a Long-Term Care Benefit Plan – in essence selling your remaining insurance benefits to a company that will in turn pay a portion of your long-term care costs.
  • Equity Conversion – Senior homeowners may be able to use a reverse mortgage to pay long-term care costs out of the equity of their home, effectively selling their home back to the bank incrementally. If there are no heirs to consider, this may be a good strategy – but consult a professional to help you understand the potential pitfalls of reverse mortgages.

Advance planning is important in selecting a facility. Waiting lists are common for low-income or popular long-term care facilities, with backlogs of several years in some cases.

As unpleasant as the topic may be, you should find out the long-term care preferences of your loved ones and get on the preferred waiting lists in advance. If an opening appears before it is time, you can decline and get back on the end of the list.

How do you determine the quality of care? Nursing homes are regulated and inspected by states, with widely varying standards. All facilities that accept Medicare must meet federal standards as well and are periodically inspected for verification. Inspection results are available online at your state Health and Human Services Department or similar state organization.

There are plenty of options available online to research the details further, ranging from government resources such as or private resource collections such as A Place for Mom ( ProPublica has an online resource to ferret out nursing home problems by state, and has a nice guide to selecting nursing homes and a checklist to use when visiting potential care facilities.

We hope that we have provided enough information for you to follow the best care path for you or your loved ones. Good luck on your journey.

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