How nursing homes get paid

Discover 3 Ways How Nursing Homes Get Paid

Most nursing homes in the United States are private, for-profit businesses

Posted: October 3rd, 2022

A report by shows that above the age of 65, 70% of senior citizens will need nursing care at some point. 20% of them require care for over 5 years. Nursing homes are a necessity in our society. Yet, they can be costly for many people in need. You are probably wondering how nursing homes get paid.

Planning how to pay for a nursing home can help put things into perspective. It is difficult to pay for a nursing home as many people at that age require financial assistance. Medicaid pays for medical costs for nursing homes. Several factors dictate the payment criteria, including personal care, whether a patient gets a semi-private room, and many more.

Most nursing homes in the United States are private, for-profit businesses. That means they are in business to make money. They do this by charging residents (or their families) for the care they provide.

The nursing home charges differ from state to state. In some states, there are limits on what nursing homes can charge daily or monthly. In other states, there are no limits.

In this article, we examine how nursing homes get paid and nursing home care costs.

Nursing home costs

The annual median pay for a nursing home for a private room is $106,000. The average adult day care services cost $19,240 for five days a week. A recent Glentworth report gave the figures above.

Nursing home and nursing care costs have become a crisis. Skilled nursing care can be more costly as skilled nursing facilities differ from assisted living facilities and extend certain degrees of care to the patient.

A look into how nursing homes get paid can help understand how nursing homes cover their costs. It would not be profitable to run a nursing facility if no one was paying.

How Nursing Homes Get Paid

How nursing homes get paid is not a mystery. Nursing homes get paid for the care they provide in two ways:

 Private pay: This includes payments from individuals or their families. It can also include payments from long-term care insurance policies.

– Government pay: This includes payments from Medicaid and Medicare. Medicaid is a government program that pays for health care for low-income people. Medicare is a government program that pays for health care for people 65 years and older.

In most states, nursing homes must accept Medicaid patients. But they can choose whether to accept Medicare patients.

What happens if a nursing home does not get paid?

If a nursing home does not get paid, it can close. When this happens, the residents have to find another place to live. This can be hard, especially for people who have no family or friends to help them.

It is important to plan for nursing home care. This way, you can ensure you afford the care you or your loved one needs.

Nursing Home Payment Plans

Medicaid and Medicare payments for skilled nursing care

Medicaid and medicare are key ways of how nursing homes get paid. The state programs are accessible for many senior citizens.


Nursing homes also receive payments from Medicare and Medicaid. Medicare is a federal health insurance program for people 65 and older and some disabled people of any age. Medicaid is a joint federal-state health insurance program for low-income people of any age.

Medicare only covers nursing home payments for a short-term stay. It also covers medical care costs. In addition, medicare covers skilled nursing services, therapy, speech pathology, and occupational therapy.


According to the American Health Care Association, one is eligible for Medicaid if they exhaust their savings and resources on medical care. Medicaid covers nursing home care costs.

There is an eligibility criterion that determines if a patient will get Medicaid. According to the American Health Care Association, a patient decides what happens to their estate.

In most cases, nursing homes must accept Medicare and Medicaid patients. But there are a few exceptions. For example, if a nursing home is part of a hospital, it may not have to accept Medicare or Medicaid patients.

Long Term Care Insurance

A long-term care insurance policy is one of the best investments anyone can make for their future. It stands to pay off medical are when you need long-term care. It is a great investment as it can save you the headache of finding care when you grow old.

Insurance comes in handy as there are few out-of-pocket expenses to cover. Insurance companies are in charge how nursing homes get paid if their client gets admitted to a nursing home.

Long-term care insurance ensures that you do not dig into your personal savings and personal resources to facilitate your nursing home care.

Nursing Home Payment Terms

Nursing homes get paid in one of two ways:

1. Per diem: It means the nursing home gets paid a set amount for each day that a patient is in its care. The amount varies depending on the level of care the patient needs.

2. Case-mix: It is based on the type of patients it has. The types are determined by their level of need, which is measured by the Resident Assessment Instrument (RAI). The RAI is a tool that nursing homes used to assess each patient’s needs. The information from the RAI helps place the patient in one of nine care levels. The higher the care level, the more money the nursing home gets.

The two options above explain the terms on how nursing homes get paid.

Assisted Living vs Skilled Nursing Facilities

Assisted living covers the basic care needs of a patient. It is less involving for medical professionals and the patient. Assisted living facilities provide more freedom and flexibility for residents.

A skilled nursing facility offers medical treatment and rehabilitation for patients. A skilled nursing facility differs from a nursing home as it does not provide long-term care.

Some states offer additional coverage to their residents. The cover works alongside Medicaid or medicare to help raise money for nursing home residents. In Indiana, a resident can use the cover to pay for nursing home costs.

If you or your loved one are planning on getting into the nursing home program, consider all the options. Skilled home nursing care may not be an option if no one is available to stay with the patient. Private insurance gives the patient better personal care preferences.

While Medicaid pays for nursing home costs, getting an additional fund can boost the payments. Veterans Affairs will take over if a veteran needs senior care.

You now understand how nursing homes get paid. Plan using the options above ad decide what will work best.

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