Insurance and Nursing Homes

Insurance and Nursing HomesWithout a comprehensive healthcare plan, elderly patients frequently have trouble affording medical services. Nursing home and assisted living facility expenses are exceptionally large. In 2012, a private room in a long-term care facility for one elderly patient cost an average of $90,500 per year. For this reason, it is important to understand which facilities will accept various forms of health insurance and financial reimbursement. It is also important to keep an eye on how many allotted Medicare days an elderly patient has left.

Elderly Health Insurance

Elderly patients typically have large medical bills, but they are no longer working so they do not have an employer-subsidized healthcare plan to fall back on. American citizens begin to receive financial assistance for medical needs through Medicare at age 65. Typically, when an American citizen retires, they are not yet eligible for Medicare.

For this reason, mature adults may have a few years where they need to pay extra to continue their employer’s healthcare plan. Although many health insurance groups will offer the company’s discounted prices to the retired employee, the cost to maintain this type of private health insurance is massive. It equates to double or triple the amount that the person was paying for healthcare insurance while still employed.

Health Insurance Options

Whether or not the retired person chooses to continue a previous healthcare plan attained through an employer, there are many other elder health insurance options to choose from. Some retirees sign up with a supplemental health insurance plan, which they can continue in conjunction with Medicare services that begin at age 65. Other retirees may have pension plans.

Pension plans are a method of providing financial support to a retired employee. This method of retired financial support was replaced in the 1980’s by 401(k) plans, so it is not as widely-used today. Generally, a pension plan provides the retired employee with a small, but stable, paycheck and continued health insurance through the previous employer. Today’s elderly patients, union workers, and certain public workers still have pension plan options.

Nursing Home Payment Options

Nursing home costs are particularly large, but they can also become complicated while defining eligible health insurance options. An elderly patient placed in a nursing home is typically over the age of 65, so he or she may be eligible for Medicare. In the event of using Medicare to help pay for nursing home costs, the elderly patient must select a skilled nursing facility that is approved for Medicare or Medicaid.

While using Medicare, some elderly patients elect to purchase a supplemental health care plan. This is a form of health insurance that is meant for use in conjunction with a preexisting health care plan. Supplemental health insurance is not meant to be used by itself. Though specific options vary from state to state, the American Association of Retired Persons (AARP) offers supplemental health care plans that are popular among elderly patients.

Long-term health care plans may also be purchased to supplement an elderly person’s nursing home costs. However, long-term health care plans are generally purchased by the elderly person’s children or younger loved ones. Long-term health care plans are available through an employed person’s current health insurance plan that is subsidized by the employer.

A serious problem, experienced by many elderly patients and their families, is that the children are retired by the time their parents require a nursing home stay. The long-term health care plan would have been dropped with the rest of the health insurance policy at the point of retirement. As a result, the long-term health insurance is no longer beneficial by the time the elderly patient is in a nursing home. Some families circumvent this issue by electing for long-term health care through the employed grandchildren.

How to Pay for Nursing Home

When deciding how to pay for an elder patient’s nursing home stay, the family can take these basic steps:

  1. Assess the elder’s current health care situation. Does the elderly person have private or supplemental insurance? Does the elderly person qualify for Medicare or Medicaid?
  2. Find a nursing home that is supported by the elderly patient’s current health insurance. For example, if the elder is already using Medicare, make sure to select a skilled nursing facility that is approved for Medicare and Medicaid.
  3. Once the nursing home is selected, create a plan for the most effective method of payment. It is important to remember that inpatient days supplemented by Medicare are limited. It makes sense for most families to analyze elder health insurance in the following order:
    1. If the elder has Medicaid, or is eligible for Medicaid, it will cover all medical expenses and should be used.
    2. If the elder has a pension plan, use that managed health insurance option first. However, some health insurance obtained through a pension plan may not support an overnight stay at a skilled nursing facility.
    3. If the elder is supported by a long-term care plan, through a younger family member’s health insurance policy, use this health insurance for a nursing home stay. Long-term health insurance specifically addresses the needs of elderly patients and nursing home residents.
    4. Medicare is the next option for nursing home payment. Medicare allows for 100 days of inpatient nursing care per benefit period. At a nursing home, or skilled nursing facility, this means that the elderly patient must be referred for skilled nursing care by a doctor when discharged from a hospital. Medicare does not cover the cost for elder patients who are strictly in need of custodial services. The skilled nursing facility must have a Medicare license.
    5. If the elder has purchased any supplemental health insurance plan, such as an AARP or Medigap plan, this can be used in conjunction with Medicare or after Medicare resources have been fully used.
    6. Any further expenses must be paid for out-of-pocket, by either the elderly patient or supportive family members.

It is important to keep payment options in mind while selecting a skilled nursing facility. Some health insurance plans will provide different levels of financial support depending on the contract the insurance company may, or may not, have with the skilled nursing facility. It is important to always ask about payment plan options with the nursing home facility. Any elderly patients that are eligible for Medicaid should not pay for medical services at a nursing home out-of-pocket.

Nursing Home Fraud

In May of 2012, the Federal Bureau of Investigation (FBI) reported new information a Medicare nursing home scam. George Dayln Houser and his wife, Rhonda Washington Houser, owned three nursing homes in the state of Georgia. They were licensed with Medicare, which requires the owner to maintain a specified standard of living for the nursing home residents.

Medicare Nursing Home Scam

Through several years of operation, George Houser received $32.9 million in Medicare and Medicaid payments. These payments were cited specifically for use in the residents’ care. Instead of using the money to care for patients and keep the skilled nursing facility clean, George Houser kept the money for personal use.

When this Medicare nursing home scam was discovered, the residents had been living in filth for several years. The roof was badly leaking, the facilities were unclean, trash was piled up outside, and there was a severe problem with rodents, mold, and mildew. Furthermore, the Housers’ nursing home didn’t supply residents with enough food and had inadequate staffing. They failed to maintain a comfortable temperature inside the facility.

Medicare Nursing Home Lawsuit

The Housers’ Medicare nursing home scam set precedence in court. Houser was investigated by the FBI’s Atlanta office, as well as the Department of Health and Human Services’ Office of Inspector General and the Internal Revenue Service’s (IRS) Criminal Investigation. It was the first federal conviction of a defendant at trial for supplying payment claims for worthless services. Since his conviction, George Houser’s nursing home facilities in Georgia have been shut down and the residents were moved to better nursing facilities.




“Long-Term Care Insurance and Nursing Home Use.” The National Bureau of Economic Research. The National Bureau of Economic Research, n.d. Web. 10 Jun 2013.

Mullin, Emily. “Health: How to Pay For Nursing Home Costs.” U.S. News & World Report. (2013): n. page. Web. 10 Jun. 2013.

“Nursing Homes: Cost and Coverage.” AARP. American Association of Retired Persons, n.d. Web. 10 Jun 2013.

United States. Department of Justice. Nursing Home Abuse: Owner Cheats Government and Neglects Residents. Federal Bureau of Investigation, 2012. Web.

United States. Medicare. Nursing Homes: Paying for Care. Centers for Medicare & Medicaid Services, 2013. Web.