Nursing Home Costs 2024: Medicare, Medicaid & Planning

The Numbers Almost Nobody Plans For

The 2024 Genworth Cost of Care Survey puts the national median monthly cost of a semi-private nursing home room at $8,669 and a private room at $9,734 — or roughly $104,028 to $116,808 per year. Over a three-year stay, which is near the U.S. average for nursing facility residents, a family could face $312,000 to $350,000 in out-of-pocket costs. Nearly 70% of Americans turning 65 today will need some form of long-term care in their lives, according to the U.S. Department of Health and Human Services. Yet surveys consistently find that most people vastly underestimate these costs or assume a government program will pay for everything. That assumption is wrong in critical ways.

What Medicare Actually Covers

Medicare is the federal health insurance program for people 65 and older, and most people believe it covers nursing home stays. It does — but only under narrow conditions and only for a limited time.

Medicare Part A covers skilled nursing facility (SNF) care only following a qualifying hospital inpatient stay of at least three consecutive days (not counting the discharge day). The care must be for a condition treated during that hospital stay, and must require daily skilled nursing or therapy services.

Medicare does not cover custodial care — help with activities of daily living (ADLs) such as bathing, dressing, eating, and toileting when no skilled nursing or therapy is required. This custodial care is what most nursing home residents actually need for the long term. Medicare stops. Residents and their families must then turn to other sources.

Medicaid: The Primary Long-Term Care Payer

Medicaid is jointly funded by the federal government and individual states and is the single largest payer of nursing home care in the United States, covering roughly 60% of all nursing home residents. Unlike Medicare, Medicaid covers long-term custodial care — but only for people who meet both medical and financial eligibility requirements.

Financial eligibility rules vary by state but follow federal guidelines. In most states, a single applicant must have:

• Assets at or below $2,000 in countable resources (exempt assets include the primary home under certain conditions, one vehicle, and personal property)
• Income at or below the nursing facility cost in "income cap" states, or subject to spend-down in other states
• No disqualifying asset transfers within the 60-month (5-year) lookback period

For married couples, the Community Spouse Resource Allowance (CSRA) allows the spouse still living at home (the "community spouse") to keep up to $154,140 in assets (2024 maximum) and a minimum monthly maintenance needs allowance (MMMNA) of at least $2,555/month from the institutionalized spouse's income.

The Five-Year Lookback Period

Medicaid imposes a 60-month lookback period on asset transfers. Any transfer of assets for less than fair market value made within five years of applying for Medicaid triggers a penalty period during which Medicaid will not pay for nursing home care. The penalty period is calculated by dividing the uncompensated transfer amount by the average monthly nursing facility cost in the state.

• Example: A $90,000 transfer in a state with a $9,000/month average facility cost creates a 10-month penalty period
• Penalty periods begin at the date of Medicaid eligibility, not the date of the transfer
• Transfers to a spouse, a disabled child, or a "caretaker child" who lived with and cared for the parent for at least two years may be exempt

Planning Options Before Crisis Strikes

The most effective strategies require time. Starting planning five or more years before a potential nursing home need allows full use of the lookback period.

Geographic Variation Is Dramatic

National medians mask enormous regional variation. Alaska's 2024 median for a private room is $34,441/month. Oklahoma's is $5,627. States with higher Medicaid reimbursement rates and higher overall costs of living tend to have higher nursing facility costs. Planning strategies must account for the specific state where care is most likely to be needed.

Geographic arbitrage — moving to a lower-cost state before a nursing facility need arises — is sometimes discussed as a planning option but involves significant personal disruption and may not align with the location of family caregivers.

This article is for informational purposes only and does not constitute legal advice.