Assisted living facilities vs. nursing homes: What to know about cost and care
Although 98% of seniors 65 and over have health insurance, close to four million have unpaid medical bills, according to 2023 data from the Consumer Financial Protection Bureau. That's because most are covered by Medicare, which has huge coverage gaps. Fidelity found a 65-year-old will incur an estimated $165,000 in out-of-pocket healthcare expenses during retirement. That's more than a 5% increase from 2023 and more than double the costs from 2002.
Unfortunately, these numbers don't include one of the biggest expenses seniors face: Long-term care. Many seniors will require it during their life and Medicare rarely covers it.
Long-term care insurance can pay. But you often must plan ahead to buy long-term care coverage before you become too old to qualify or premiums become too expensive.
While there are pros and cons of even the best long-term care insurance companies, older Americans should explore insurance before they need services. They'd also do well to look into options for getting long-term care services. Both nursing homes and assisted living facilities provide supportive solutions, but there are differences in costs and quality of care. As you prepare for your future, below we'll break down what you should know about both nursing homes and assisted living facilities so you can make informed choices.
Learn how the right long-term insurance coverage can help here.
Assisted living vs. nursing homes: What to know
Not sure which is better for you? It first helps to compare the costs of both services.
Costs of long-term care vs. assisted living
Whether you have long-term care insurance or not, cost plays a role in determining whether long-term care or nursing home care is the best solution. That's because many insurance policies have daily limits. And nursing homes and assisted living facilities often charge a high price -- although there are differences.
"Because assisted living care is less intensive than skilled nursing care, the costs will obviously be less," explained Anthony Cirillo, a fellow of the American College of Healthcare Executives and president of The Aging Experience. Cirillo says many factors impact the price of specific facilities, including location, type of accommodations, services and amenities, payment structures and the level of care provided.
"Nursing home care is generally more expensive than basic assisted living due to the need for ongoing medical care," explained Carol Bradley Bursack, CDSGF, and author of "Minding Our Elders." "Nursing homes have significantly more medically trained staff."
Just how big is the price gap? While the median monthly costs of an assisted living facility totaled $5,350 in 2023, a semi-private room in a nursing home facility was $8,669 while a private room's median cost totaled $9,733, according to Genworth's 2023 Cost of Care survey.
Although nursing homes have a higher price, there may be assistance available to cover the cost. "Nursing home care is more apt to qualify for Medicaid once the care costs exceed a person's ability to pay," Bursack said.
Unfortunately, while Cirillo explained that "Medicaid is the primary source of funding for long-term nursing home care," he also warned that not everyone qualifies. "It requires a significant level of financial need and is pretty much the option of last choice when all of your assets have been depleted," he said.
Seniors who'd prefer assisted living facilities will also find Medicaid is likely no help at all, as the program generally doesn't cover this option.
"I often say is that there is a world of the 'haves' and 'have nots' in assisted living," Cirillo said. He explained that since Medicaid typically excludes assisted living facilities payment options may include savings; cashing in eligible life insurance policies; reverse mortgages; some VA benefits, and sometimes long-term care insurance. "Some policies cover assisted living expenses, but coverage varies, so it's important to check the specifics of the policy," he warned.
Start exploring your long-term care insurance coverage options online now.
Care differences between assisted living vs. nursing homes
Cost is a critical factor in choosing a long-term care option as seniors can only take advantage of the solutions they can afford. But, for those who can pay for either option, it's worth noting there are major differences in the quality and types of care provided by nursing homes versus assisted living facilities.
"Assisted living facilities primarily offer help with activities of daily living," Cirillo explains. "Residents are generally more independent and require less medical care." According to Cirillo, healthcare services are limited, staffing levels are lower, 24/7 service isn't usually available and medical professionals often aren't on site. Instead, the focus is often on social activities rather than complex care.
"In general, if an older adult is relatively self-sufficient but needs extra support for safety or would benefit from more socialization, then assisted living would be the best, and possibly only, option," Bursack explained. "If there are significant challenges with activities of daily living such as dressing or feeding or severe or chronic illness, they may qualify for nursing home care."
The good news is that many facilities offer the option to start in assisted living and transition into nursing home care as a resident's needs increase. These are called Continuing Care Retirement Communities (CCRCs).
The bottom line
No matter the type of facility seniors select, seniors should do their research to make sure they select not just an affordable place that offers the support they need, but also a high-quality facility that cares about their residents. Older Americans should explore both payment options and care solutions long before the time they need assistance so they have a plan in place when the day comes that long-term care services become essential.
Have more questions? Learn more about your long-term care insurance options here.
