Nursing Home Basics, Costs, Laws, and Resources

Both federal and state laws regulate nursing homes. In 1987, Congress enacted amendments, known as the Nursing Home Reform Law, to the Social Security Act, the 1965 law that created Medicaid and Medicare.

The Nursing Home Reform Law requires nursing and skilled nursing homes to provide certain services to their residents and meet specific standards to receive Medicaid or Medicare payments.

You can learn more about assisted living communities, nursing home law, and older adult residents' rights in this article.

Background and History of the Laws

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

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

Clearly, stronger federal regulation was necessary because many states failed to regulate nursing homes adequately. Congress passed the Nursing Home Reform Law the following year, in 1987.

This law applies to assisted living facilities that receive Medicaid or Medicare payments. According to a government survey, roughly 80% of all nursing homes received such payments.

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 medication (also called activities of daily living (ADL))
  • Ensure that residents are adequately supervised
  • Promote their residents' quality of life
  • Maintain their residents' dignity and respect
  • Keep accurate and complete medical records for each resident
  • Submit to unannounced inspections and allow resident interviews

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 Law only applies to those nursing homes that receive Medicaid or Medicare payments. However, other federal laws, along with state laws, help to fill the gap.

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

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 own care
  • Voice grievances without retaliation

For a more detailed list of residents' rights, read about the legal rights of nursing home residents. You can also learn about state-specific laws on our nursing home legal answers page.

State Nursing Home Laws

States have enacted their own 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:

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

Finally, Texas law requires staff to:

  • Safeguards residents' money
  • Provides residents with the right to choose their physicians
  • Regulates residents' right to work or refuse to work at the nursing home

You can search for information on your state's nursing home laws to understand each state's differences.

Nursing Home Annual Cost

As our parents, spouses, and other family members get older, the subject of nursing homes shouldn't be overlooked. 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.

And because the cost of nursing home care is so expensive, paying for it should be planned well ahead of needing it.

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

According to a 2021 Cost of Care Survey by Genworth, the average cost of a private room in a nursing home is more than $108,000 a year. The survey also revealed other facts that indicate planning for the cost of nursing home care should be a priority, such as:

  • Rising costs in long-term care services
  • Semi-private rooms aren't much cheaper at $94,000+ 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:

  1. Cash out of your pocket (from your “estate")
  2. Medicaid
  3. Private Long Term Care Insurance
  4. Medicare

How Does Medicaid Pay?

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 a certain number of 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 older adult 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. You can find nursing homes that accept Medicaid.

What Is Private Long-term Care Insurance?

Private long-term care insurance is a policy purchased separately from your primary medical 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 purchasing it. You can read more about this type of insurance.

How Does Medicare Pay For Nursing Home Care?

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

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

The earlier you begin planning for the cost of nursing home care, the better you can afford it without causing you or your family undue financial hardship.

Nursing Home Resources

To reduce the number of potential nursing homes to visit or to help you make a final decision, you may consult the following resources:

Getting Legal Help for Medicaid Programs or Skilled Nursing Facilities

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 to consider factors such as cleanliness.

Contact an attorney specializing in residential care law if you want to know about residents' rights or nursing home laws in your state.

Can I Solve This on My Own or Do I Need an Attorney?

  • An attorney is on your side during complicated decisions
  • Cases with government benefits are rarely cut and dry
  • Get tailored advice and ask your legal questions
  • Many attorneys offer free consultations

 If you need an attorney, find one right now.