Nursing Home Basics: Costs, Laws, and Resources

Both federal and state laws regulate nursing homes. In 1965, the federal government passed the Social Security Act, which created the public benefit programs Medicaid and Medicare. In 1987, Congress enacted amendments to the Social Security Act, known as the Nursing Home Reform Act.

The Nursing Home Reform Act requires nursing homes to provide certain services to their residents and meet specific standards to receive Medicaid or Medicare payments. In 2021, Congress passed the Nursing Home Reform Modernization Act, establishing a ranking system for long-term care facilities.

This article explores the history of elder care law, nursing home residents’ rights, and nursing home and long-term care facility requirements.

Long‑term care is costly, often exceeding $130,000 per year. Families typically rely on Medicaid, Medicare, private insurance, or personal funds to cover expenses. An elder law attorney near you can help you plan for asset protection, Medicaid eligibility, and long‑term care strategies so you can afford the care you need.

Background and History of Nursing Home Laws

In 1986, at the request of Congress, the Institute of Medicine issued a report on assisted living providers in the U.S. The report concluded that many senior caregiving facilities had:

• Low-quality living areas and rooms
• Poor level of care from staff
• Many residents who were dissatisfied with their care

It became evident that stronger federal regulation was necessary, as many states failed to regulate nursing homes adequately. As a result, Congress passed the Nursing Home Reform Law the following year, in 1987.

The Nursing Home Reform Law applies to assisted living facilities that receive Medicaid or Medicare payments. According to a Kaiser Family Foundation study, as of December 2025, Medicaid was the primary payer for 63% of nursing home residents, and Medicare was the primary payer for 14% of nursing home residents.

Nursing Home Requirements

Nursing homes subject to the Nursing Home Reform Law must:

• Have sufficient staff
• Assess each resident’s particular personal care needs
• Develop comprehensive care plans for each resident, including proper hygiene, nutrition and diet, and medical care (also called activities of daily living or ADL)
• Ensure that residents are adequately supervised
• Promote residents’ quality of life
• Maintain residents’ dignity and respect
• Keep accurate and complete medical records for each resident
• Submit to unannounced inspections and allow resident interviews
• Provide the services of a full-time social worker (if the nursing home has more than 120 beds)

If a nursing home fails to comply with these requirements, penalties can include fines, imposed staff training, increased monitoring, temporary outside management, and loss of Medicare and Medicaid certification.

Nursing Home Reform Law Basics

Note that the Nursing Home Reform Act only applies to those nursing homes that receive Medicaid or Medicare payments. However, other federal laws, along with state laws, help fill this gap.

For example, the federal Elder Justice Act requires employees and staff at certain long-term care facilities to report crimes committed against residents within specified time frames, including elder abuse.

Residents’ Rights Under the Nursing Home Reform Law

The Nursing Home Reform Law sets requirements for nursing homes and provides residents with certain rights. These include the right to:

• Be treated with respect and dignity
• Be free of abuse, mistreatment, and neglect
• Be free of physical restraints
• Privacy
• Participate in social or family groups
• Communicate freely
• Make decisions about their care
• Voice grievances without retaliation
• Accommodation of medical, physical, and other special needs

To further protect your rights before entering into a nursing home, it is important to establish advance directives, such as a durable power of attorney or a living will. Doing so will avoid conservatorship and ensure that healthcare providers know your preferences if you become incapacitated.

State Nursing Home Laws

States have enacted their nursing home laws to complement federal law.

California, for example, regulates the number of nurses on a shift based on the number of resident beds. California also requires nursing homes to:

• Follow specific procedures when admitting new residents
• Inform residents of the services provided by the facility’s daily rate
• Provide residents with a copy of the state’s Patient’s Bill of Rights

New York also has a Patient’s Bill of Rights. The state requires that residents have access to dental care and are provided with meals appropriate for their religious or dietary needs.

While some laws impacting nursing home residents are federal, others vary by state. An attorney near you can explain the legal protections in your state and what they mean for your older loved one.

Nursing Home Annual Costs

As parents, spouses, and other family members get older, conversations about nursing home care, while uncomfortable and emotional, are necessary. While we’d all like to grow old at home or under the care of close family, sometimes that isn’t possible. A nursing home may be the best option.

A nursing home facility is a full-time residential community. It can provide short-term or long-term care. It provides rooms, meals, and around-the-clock care for people who don’t need to be in a hospital but can’t be cared for at home.

The cost of nursing home care is incredibly expensive. How you will pay for it should be planned well ahead of needing it.

How Much Does It Cost to Stay in a Nursing Home?

According to a 2025 Cost of Care Survey by Genworth, the average cost of a private room in a nursing home is more than $135,528 a year. The survey also revealed other facts that indicate planning for the cost of nursing home care should be a priority, such as:

• Costs for long-term care services are rising significantly.
• Semi-private rooms aren’t much cheaper at $118,104 a year.
• Residents are charged more for Alzheimer’s, dementia, or memory care.

Add this to the fact that the average stay in a nursing home lasts over three years. It’s easy to see that you could lose your life’s savings paying for nursing home care without proper planning.

How Can I Pay for a Nursing Home Stay?

There are four main ways to pay for a nursing home stay:

• Cash out of your pocket (from your “estate”)
• Medicaid
• Private Long Term Care Insurance
• Medicare

An elder law lawyer can help you shelter your savings and use government benefits so you are prepared to pay for long-term care.

How Does Medicaid Pay for Nursing Home Care?

Medicaid is a joint federal and state government program that helps people with low income and few assets pay for their nursing home costs.

Generally, your income and asset levels can’t exceed the levels outlined in your state to be eligible for Medicaid. Medicaid officials will “look back” at your financial information over several years to determine if you have been getting rid of property to receive Medicaid.

However, if you have assets over the allowable level, you are permitted to “spend down” or decrease your assets before you receive Medicaid. Typical spend-down costs include:

• Medical expenses
• Mortgages
• Other debts
• Funeral expenses

Your house and car are generally not counted against you for qualification purposes. This means they don’t have to be spent down.

Medicaid State Laws and Eligibility

States vary in their eligibility requirements, so you should check with your state social services office or an elder law attorney for specific information.

Also, remember that not all nursing homes accept Medicaid, so you’ll need to ask about a particular nursing home’s policy. Finding nursing homes that take Medicaid may be helpful before starting your search.

What Is Private Long-term Care Insurance?

Private long-term care insurance is purchased separately from your primary health insurance. It is similar to buying life insurance.

In other words, the insurance coverage that covers your doctor’s appointments and prescriptions won’t cover nursing home stays. You’ll have to purchase long-term care coverage if you want nursing home costs covered.

Long-term care insurance can be very costly, and not all policies are the same, so it is essential to thoroughly evaluate all policy information before buying it. 

How Does Medicare Pay for Nursing Home Care?

Medicare helps pay for short stays (not more than 100 days) in a nursing home if:

• You have had a recent hospital stay of at least three days
• You were admitted to a Medicare-certified nursing home within 30 days of your previous hospital stay
• You need skilled nursing care services

The earlier you begin planning for the cost of nursing home care, the better you can afford it and avoid causing you or your family undue financial hardship.

Make an Estate Plan Before You Enter a Nursing Home

Another important consideration when making a long-term care plan is your estate. Establish an estate plan to avoid probate and ensure your assets immediately pass to your intended beneficiaries.

Planning for Nursing Home Care: Helpful Resources

To reduce the number of potential nursing home visits or for help in making a final long-term care facility decision, you should consult the following resources:

• Your state or local long-term care ombudsman program (which is an advocate for nursing home residents)
• Your state or local office on aging
• Hospital discharge planners and social workers
• Doctors and nurses who are familiar with nursing homes
• Clergy persons who are familiar with nursing homes
• Nursing home residents
• Family members and friends of nursing home residents
• Nursing home employees
• Medicare and Medicaid inspection reports for the nursing home
• Medicare’s website search feature, Nursing Home Compare
• The Centers for Medicare and Medicaid Services (CMS), previously known as the Health Care Financing Administration (HCFA), is the federal agency that oversees Medicare and Medicaid
• The National Citizens’ Coalition for Nursing Home Reform
• The American Association of Retired Persons (AARP) website
• Your local elder law attorney

Need More Help With Nursing Home Laws? Get Legal Help

If you’re looking for a suitable nursing home for yourself or a loved one, visit the Medicare website to find a nursing home near you. It’s essential to speak with staff and residents and consider factors such as cleanliness before deciding.

An attorney specializing in residential care and older adult law can explain your state’s residents’ rights or nursing home laws. FindLaw’s directory of elder law attorneys can get you started. Enter your city or ZIP code for a list of qualified legal professionals near you. Your search results will also show important details about prospective attorneys, like ratings and whether they offer free case evaluations. 

If you or someone you know is experiencing neglect or has suffered a personal injury at a nursing home, contact a nursing home abuse attorney near you.