How to Cover Nursing Home Costs with Social Security: Step-By-Step

Contributing writer, former long-term care admissions counselor and social worker

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Have you been confronted with the decision to put a loved one into a nursing home? If so, it can be an emotional situation. Once the dust settles a bit, one of the first questions you might have could be this — How much does it cost? 

Jump ahead to these sections:

Your loved one may be collecting Social Security, so why not use that to cover some of the costs? Here’s how Social Security can help your loved one who must go into a nursing home.

Step One: Take a Look at Finances

Take time to look at the amount of money that comes in and goes out of your loved one’s accounts. Poke around in retirement accounts, pensions, annuities, insurance policies, and more. 

The average cost per day starts at $245 for a semi-private room, according to a Genworth study. Use the $245 figure as a guide to pencil in how much it’ll take to cover nursing home expenses.

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Step Two: Decide Who will Manage Finances

Once your loved one becomes a permanent nursing home resident, financial management responsibilities can be relinquished to the family or the facility. A power of attorney document can appoint someone else to manage your loved one’s finances. 

A representative payee can receive income supplements for a person who is not fully capable of managing his or her benefits. It could include income like Social Security Disability, which are benefits for those unable to work because of physical or mental conditions, or Supplemental Security Income, which are additional payments on top of Social Security for those who are blind or disabled. 

Deciding who will manage finances is a good idea early on so you can start the paperwork at the beginning of the admission process. You may want to set up a personal needs account, Social Security direct deposit, pension and other income with the nursing home facility. 

Step Three: Complete Facility Application 

You’ll need to complete an application in detail. The application will require information including (but not limited to):

  • Advanced directives 
  • End-of-life planning
  • Emergency contacts
  • Demographic information
  • Medical information 
  • Financial information, including bank account and investment information, monthly income, proceeds from insurance and more

You must submit this application to the facility to review. Acceptance is based on whether the level of care is appropriate for the individual. 

During the admission process, feel free to reach out to an admission representative for questions and concerns. The representative will be able to help you by giving you an idea of what the facility will cost and the next steps. 

Step Four: Admission to Facility 

Once the facility has decided to accept your loved one’s application, the admission process moves forward to admission paperwork and payment. The facility will notify Social Security of admission to the nursing home. Social Security will confirm that it has been notified and include any necessary changes — including changes to the benefit amount your loved one will receive. 

Admission paperwork must be reviewed and signed. The admission agreement is made between the resident and the facility and discusses the rules and regulations, as well as legal and financial details. 

Other Ways to Pay for Nursing Home Care

There’s no denying nursing home care is expensive. The average Social Security benefit in June 2019 was $1,470 per month — disabled and aged widows received even less. The average nursing home stay costs up to $7,350 per month. That means that in most cases, Social Security won’t completely cover the costs. 

There are other ways to pay for nursing home care, and the facility can give you guidance and options on how to afford care. 

Applying for Medicaid 

You might be eligible for Medicaid, which helps with medical costs if you have limited income and resources. Most nursing homes require you to apply for Medicaid before your loved one is admitted to the facility. A Medicaid application requires extensive paperwork and a five-year financial review. The financial review includes a look at all income sources and bank accounts. Any deposits or payments over $2,000 within five years will be flagged and questioned.  

It should be noted that the individual's assets are taken into account, and like other Medicaid guidelines, these are different in each state. In 2020, most states allow $2,000 in countable assets for a single nursing home resident to be eligible for nursing home care. New York State requires $15,750 in countable assets. 

If you believe your loved one is eligible to apply for Medicaid, you can contact your local department of social services or the Medicaid coordinator working with your desired facility.

Once Medicaid is in place, your loved one will owe the nursing home his or her monthly income minus the allowed allotment, which varies by state. Your loved one will keep this for monthly incidentals and personal purchases. 

VA assistance  

If your loved one is a veteran and meets some criteria, he or she may be eligible for benefits. You can’t use this assistance toward room and board bills, but it helps for incidentals and other needs during the month. 

Out of pocket 

Your loved one may not qualify for Medicaid because he or she has more than the allowed amount in the bank. In this case, you or your loved one may need to spend down what he or she has in the bank first by paying for care out of pocket. 

It can get tricky when there is a spouse, home, car, and other assets involved, so work with a Medicaid coordinator to determine the right way to do this. 

Cover Nursing Home Costs

Still overwhelmed? Start slow. Get the power of attorney paperwork completed and filed. Look through finances and get an understanding of how much money is coming in each month in Social Security and other income. Be honest on your loved one’s nursing home application — share all sources of income. The facility will be able to determine if your loved one’s current income is enough or steps need to be taken to apply for additional assistance. 

Even if you don’t think your loved one needs Medicaid right now, it may be needed in the future, so organization is key. Consider saving any receipts for large payments or deposits over $2,000 in preparation for Medicaid’s five-year financial review. 


Sources

  1. “Powers of Attorney & Medicaid: What You Need To Know.” Medicaid Planning Assistance, American Council of Aging, 29 July 2019, www.medicaidplanningassistance.org/power-of-attorney/ 
  2. “Social Security Administration Facts for Nursing Homes.” SSA, www.ssa.gov/phila/PDF/nursinghomes.pdf 
  3. “Cost of Care Survey 2019.” Genworth. 29 November 2019,  www.genworth.com/aging-and-you/finances/cost-of-care.html 
  4. “How to Apply for Medicaid Long Term Care.” Medicaid Planning Assistance, American Council of Aging, 13 March 2019, www.medicaidplanningassistance.org/how-to-apply-for-medicaid/ 
  5. “VA Nursing Homes, assisted living, home health care.” VA, US Department of Veteran Affairs, 8 August 2019, www.va.gov/health-care/about-va-health-benefits/long-term-care/ 
  6. “Benefits By Type of Beneficiary.” SSA, https://www.ssa.gov/OACT/ProgData/icp.html  
  7. “Understanding the Benefits.” SSA, https://www.ssa.gov/pubs/EN-05-10024.pdf

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