Where Does My Money Go When I Pay for a Nursing Home?

Nursing homes are expensive and becoming more so. A private room in a nursing home facility costs $290 per day on average nationwide, according to the 2020 Cost of Care Survey conducted by Genworth. A semi-private room carries a rate of $255 per day. As a nursing home resident or the responsible family member, what exactly are you paying for?

The majority of U.S. nursing home residents — somewhere between 65% and 70% — pay under the Medicaid system, says Bob Lane, president and CEO of the American College of Health Care Administrators. “But for private pay, room and board is the main thing,” Lane says.

[SEE: 11 Red Flags to Look for When Choosing a Nursing Home.]

Standard Nursing Home Costs

Your monthly bill won’t spell out most of these items, which are folded into the daily rate. However, standard costs, which are detailed on the admission agreement when a resident moves into a nursing home, typically include these basic care services:

Room with functional furniture. A bed, bedside table and dresser are basic furniture pieces, along with some closet space for the resident’s belongings.

Dietary services. Menu planning and meal preparation to meet the resident’s individual dietary needs and restrictions, with three daily meals, beverages and snacks all falling under room and board.

Personal care services and supervision. Certified nursing assistants provide day-to-day care such as helping residents with their hygiene, dressing, toileting, transferring and walking as needed around the clock.

Nursing services. Licensed practical or licensed vocational nurses provide higher-level care such as monitoring vital signs, administering medications and wound care. Registered nurses develop residents’ treatment plans, and are responsible for advanced care such as starting intravenous infusions, monitoring blood glucose levels, giving oxygen, collaborating with physicians and supervising other nursing staff.

Activities. Recreational, spiritual and other group and individual programs are standard nursing home activities.

Bedding and linens. Sheets, pillow cases, towels, washcloths and gowns are all provided.

Housekeeping. The residence provides room and facility cleaning and sanitation services.

Personal hygiene items. Nursing homes stock routine items such as hand soap, bath soap, shampoo, toothbrushes and toothpaste.

In-house laundry. Residents’ personal clothing items are laundered as needed.

Prescription drug administration. Medication management and administration are essential nursing home services.

Behind-the-scenes costs such as trash and lawn services are also built into the budget, Lane notes. Transportation services, often using facility-run vans or minivans, may be incorporated in the basic rate. However, transportation may be limited to certain purposes or destinations, like doctor’s office visits.

What’s considered a standard supply can vary among individual facilities or nursing home companies.

“After room and board, some of this is going to depend on the provider,” Lane says. “Some providers actually will build their room rate inclusive of supplies.” For instance, he says, “common things that we all take for granted in terms of what we use on a daily basis,” such as facial tissues and toothbrushes, are often incorporated into the standard rate. Certain other supplies like incontinence briefs may also be included, he says.

However, other providers may apply a markup to supply costs charged by their vendors, Lane says. “It’s usually more prevalent with a proprietary provider,” he says. “Not-for-profit providers may not apply a markup. Then again, they might, simply because you obviously at least want to cover your costs, from a business perspective.”

Special Services

Although many long-term care residents receive them, the following are typically considered extra or special services involving add-on costs:

— Dental or oral care beyond basic dental hygiene.

— Eye exams, hearing evaluations, podiatry services.

— Medical supplies.

Prescription medications and some over-the-counter drugs.

— In-room cable TV or individual phone lines.

— Beauty salon or barber services.

— Physical therapy.

— Private duty nursing.

— Dry-cleaning.

Field trips or outings, such as to concerts or shows, are offered in some long-term care facilities. “Generally, you’ll see this with higher-end properties that may have assisted or independent living,” Lane says. “If there are tickets associated with that, some communities will charge. Others will absorb that as part of the fees they get for room and board.”

[SEE: 24 Gift Ideas for Nursing Home Residents.]

Climbing Costs

Over a single year, private room rates in nursing homes increased by nearly 3.6% on average nationwide, or to an average cost of nearly $106,000 per year, according to the 2020 Genworth survey. Semi-private room rates increased by nearly 3.25% on average, to a yearly cost of about $93,000.

Climbing long-term care costs is not a new problem. A large study evaluated nursing home rates in eight states between 2005 and 2010. Yearly out-of-pocket costs increased substantially, for instance a 30% hike in California during the overall study period, according to findings published in June 2019 in Medical Care Research and Review.

“It’s been rising across the board and rising faster than the Consumer Price Index and also the Medical Care Price Index,” says lead study author Sean Huang, an associate professor in the department of health systems administration at Georgetown University. Released by the Bureau of Labor Statistics as part of the CPI, the MCPI excludes major payers such as Medicaid and can be used to focus on out-of-pocket expenses.

Location affects nursing home prices. For the final study year, Texas had the lowest out-of-pocket costs, whereas New York state costs were the highest.

COVID-19 Impact

The COVID-19 pandemic helped escalate the cost of care in 2020 in several ways, a follow-up Genworth study concluded. Labor shortages, employment challenges and wage pressures, as well as supply and demand issues, all contributed to rising costs.

“Labor costs are the single highest component of any operating budget,” Lane says. Now, he says, providers are paying higher wages to try to keep staff positions filled. “When that happens, unfortunately, there’s an element of cost-shifting that has to occur. Ultimately, private-pay patients pay the brunt of that.”

Complying with regulatory changes such as infection-control guidelines from the Centers for Disease Control and Prevention also boosted costs. Personal protective equipment such as masks and gloves was another escalating expense for facilities. “With supply chain issues, this pandemic has wrought havoc on pricing for supplies for a lot of providers, too,” Lane says.

[READ: How to Evaluate a Nursing Home’s Disaster Plan.]

Cost Breakdowns

You receive a breakdown of costs as you make initial arrangements and go over the contract for long-term care.

“Typically, when you sign up to go into a facility, the director or financial person will sit down with you and go through everything that’s included and not included, and what the costs are for the stuff that’s not included,” says Shanna Tingom, a financial planner and co-founder of the investment firm Heritage Financial Strategies in Gilbert, Arizona. “Then you’ll get an invoice.”

You can’t assume that rates will remain the same indefinitely, particularly for an extended nursing home stay. “Typically on an annual basis, they’ll reevaluate if you need more services or not,” Tingom says. “Sometimes that happens as we age. Sometimes that happens as maybe somebody has a fall or an illness and they may need more care.”

Rate increases with increased care are to be expected. “They’re a business just like any other business,” Tingom says. “So, if they’re seeing that they’re providing more services than you’re paying for, they’re absolutely going to say: Hey, you know, we need to increase your service level.”


With nursing home costs disclosed on admission agreements, you shouldn’t face hidden costs or major unexpected charges with monthly invoices. “Things are so regulated from the standpoint of either state or federal laws in terms of the level of transparency, there really should be no surprises,” Lane says.

That said, there’s little room for bargaining on basic nursing home costs. “In terms of the negotiability, I don’t know that it’s really, truly an option,” he says. “Most providers’ margins are so thin that even if they wanted to, they probably wouldn’t have the ability to negotiate.”

[See: Beyond Bingo: Innovative Activities at Today’s Nursing Homes.]


Quality is a crucial factor when choosing a nursing home. You can locate facility possibilities and find inspection data by searching the U.S. News Best Nursing Homes rankings.

“Cost, of course, is a leading consideration,” Lane says. “But it’s about quality of care and peace of mind. For families that are looking at placement for a loved one, it’s not just looking at numbers.” With COVID-19 restrictions easing, he says, it’s once again becoming possible to visit potential nursing home choices in person, sit down with administrators or nursing directors and have an in-depth conversation about what the facility offers.

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Where Does My Money Go When I Pay for a Nursing Home? originally appeared on usnews.com

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