Long-Term Care Facility vs. Nursing Home

As we get older, many of us need help on a day-to-day basis. There are several different options for how to seek this kind of care. Two of the most common are long-term care facilities and nursing homes. Long-term care incorporates staff and services to help someone with day-to-day life. A nursing home offers daily medical care and monitoring for someone with ongoing needs. Here’s how they compare.

A financial advisor can help you plan for nursing home and long-term care for your loved ones or yourself.

What Is Long-Term Care?

According to the National Institute on Aging, long-term care “help people live as independently and safely as possible when they can no longer perform everyday activities on their own.” ¹  When people can no longer perform everyday activities, these services assist them in living as independently as possible.

In essence, long-term care is about helping someone with their day-to-day routine. The details can vary widely depending on how much help a person needs. For example, at the low end, this might involve shopping, housekeeping, and providing meals. At the high end, it might involve helping someone with bathing, dressing themselves and moving around the house.

Much long-term care is provided in someone’s home. In fact, when someone’s needs are relatively light, friends and family may suffice in handling what’s necessary. When volunteer effort isn’t quite enough, many families hire professional, long-term caregivers on a full or part-time basis.

Long-term care facilities, also known as assisted living facilities, provide long-term care on a more consistent basis. For example, someone who needs help preparing meals would not likely need a long-term care facility. In that case, someone can come to their home from time to time. However, someone who needs help getting to the toilet might need staff available at all times.

A long-term care facility typically offers independent living in an apartment or series of rooms. This gets backstopped by a range of services to help someone manage their day-to-day life. While these facilities often have medical staff on hand, they are not medical caregivers. They’re oriented around someone with significant physical and social needs, not necessarily medical ones.

What Is a Nursing Home?

A nursing home is a medical facility designed to provide 24/7 care. With a nursing home, you typically receive all the services that a long-term care facility provides. This means that the residents can get meal preparation, help moving around and other daily assistance as necessary.

However, nursing homes add an extra layer of dedicated medical care. Generally speaking, a nursing home patient can receive any degree of care that nursing staff are qualified and licensed to provide. This can include:

• Administering medication
• Intravenous drips
• Physical and mental therapy
• Wound care
• Managing medical devices such as ventilators
• Monitoring vital signs

A nursing home does not typically have doctors on staff. If a patient needs a doctor or has a medical emergency the staff takes them to the appropriate facility. The nursing home may have ambulances on hand in case a patient needs emergency transport.

The purpose of a nursing home is to provide a combination of medical care and personal support for patients with ongoing medical needs. Historically, these facilities were mostly transitional. Patients would move into a nursing home after a hospital stay and would move out once well enough. Today many nursing homes offer long-term care options themselves, allowing patients with chronic health issues to live there on an indefinite basis.

How Should You Choose?

The key difference between a long-term care facility and a nursing home is this: In long-term care, the residents are there for physical and social services, whereas in a nursing home, the residents are there as patients in need of medical care.

There is significant overlap in the services that a long-term care facility and a nursing home will provide. In both cases, a resident gets help with daily living and has access to some form of health care monitoring. The main difference is in degree.

In an assisted living facility, the goal is to let someone live as normally as possible. The facility offers services built for that purpose. The staff is available for medical needs, but often just as a 24/7 point of contact to help residents get to a doctor and/or hospital. Pick this if you need help during the day and can go to the doctor as needed.

In a nursing home, the goal is to help someone who has ongoing medical needs. The facility has nursing staff and medical facilities built around that purpose. The nursing home will have daily support to help residents to live as normal a life as possible. However, the primary goal is to provide nursing treatment and medical monitoring. This is most likely an option that you will select with or at the advice of your doctor.

Both long-term care and nursing homes accept residents regardless of age. Most residents will be older since age is the most common cause of chronic mobility and mental and health needs. But it’s not uncommon for someone to need ongoing care for any number of other reasons, ranging from illness or injury to genetic disorders.

How Much Does Long-Term Care Cost?

The cost gap between assisted living and nursing home care is significant, and understanding it is essential to making the right decision for your family.

According to Genworth’s Cost of Care Survey, the national median cost for an assisted living facility is roughly $6,200 per month. A semi-private room in a nursing home runs roughly $9,580 per month, and a private room costs roughly $10,797 per month. Over a full year, that puts assisted living at approximately $74,400 and a private nursing home room at nearly $129,575. ²

These figures are national medians. Where you live makes a significant difference. Assisted living in parts of the Midwest or South may cost $4,500 to $5,000 per month, while the same level of care in the Northeast or on the West Coast can exceed $8,000. Nursing home costs follow a similar pattern, with some states running 30% to 50% above the national median.

Costs also tend to rise the longer someone stays in care. Assisted living facilities may charge additional fees for higher levels of assistance, such as medication management or memory care. Nursing homes may bill separately for specialized therapies or treatments beyond standard room and board.

How to Pay for Long-Term Care

Most families cannot cover years of long-term care costs out of pocket, so understanding the available payment options before you need them is critical:

Medicare

Medicare covers short-term nursing home stays following a qualifying hospital stay of at least three days. Coverage lasts up to 100 days per benefit period, with full coverage for the first 20 days and a daily co-pay for days 21 through 100. After that, Medicare pays nothing. Medicare does not cover long-term custodial care in either an assisted living facility or a nursing home. This is one of the most widely misunderstood aspects of the program, and many families are caught off guard when they learn that ongoing care is not covered.

Medicaid

Medicaid covers both assisted living and nursing home care for individuals who meet income and asset eligibility requirements. Qualifying typically requires spending down assets to very low levels, often below $2,000 in countable assets for a single applicant, though the rules vary by state. Many families end up paying privately for care until their assets are depleted enough to qualify. Medicaid planning, which involves structuring assets to protect a spouse or preserve some savings while still qualifying, is a common reason families consult an elder law attorney.

Long-term care insurance

If you purchased a long-term care insurance policy before you needed care, it can cover costs in both assisted living and nursing home settings. Each policy has its own payout structure, but most provide a fixed dollar amount per day or per month until the coverage period runs out. However, premiums have risen sharply over the past two decades, and fewer insurers offer these policies today. If you already have a policy in place, review the benefit amounts and any inflation adjustments to make sure they still cover current costs. If you do not have a policy, purchasing one after a health event may not be possible.

VA benefits

Veterans and surviving spouses of veterans may qualify for Aid and Attendance benefits through the Department of Veterans Affairs. This benefit provides a monthly payment that can be used toward assisted living or nursing home costs. Eligibility depends on military service history, medical need and financial qualifications.

Private pay

Before Medicaid eligibility kicks in, most families cover care costs on their own using whatever resources are available, whether that is a retirement account, liquid savings, or proceeds from selling the family home. The financial impact of paying privately can be substantial, particularly for nursing home care that lasts several years.

5 Ways a Financial Advisor Can Help Plan for Long-Term Care Costs

A financial advisor can help you plan for the cost of care before you need it and make better decisions when the time comes. Here are five ways they can help.

1. Estimate What Care Will Cost in Your Area

National averages do not tell you what you will actually pay. An advisor can research facility costs in your region and project what those costs will look like over a 3-, 5- or 10-year time horizon with inflation factored in.

Example: A couple in their early 60s wants to understand what care might cost if one of them needs assisted living at age 80. The advisor pulls Genworth data for their state, which shows a current median of $5,800 per month for assisted living. Projecting 4% annual cost inflation over 18 years, the advisor estimates that the same care could cost roughly $11,700 per month by the time they need it. The advisor uses that number to build a savings target and evaluate whether long-term care insurance makes sense.

2. Evaluate Whether Long-Term Care Insurance Is Worth the Cost

An advisor can compare the cost of premiums over time against the potential cost of care and help you decide whether a policy, a hybrid life insurance policy with a long-term care rider, or self-insuring is the better option.

Example: A 55-year-old client receives a quote for a long-term care policy at $3,200 per year with a $5,000 monthly benefit and a three-year benefit period. The advisor calculates that the total premiums paid over 25 years would be $80,000. If the client ever needs three years of nursing home care at $10,000 per month, the policy would pay $180,000. The advisor recommends the policy based on the client’s limited liquid savings and family history of extended care needs.

3. Protect a Spouse’s Finances When One Partner Needs Care

When one spouse enters a facility, the other still needs money to live on. An advisor can help structure assets so the healthy spouse is not impoverished by the cost of care.

Example: A husband enters a nursing home at a cost of $9,500 per month. The couple has $350,000 in savings and a home. The advisor works with an elder law attorney to identify which assets are exempt under Medicaid spousal protection rules, ensures the wife retains enough income and savings to maintain her household, and develops a spend-down plan for the husband’s share to establish Medicaid eligibility within a year.

4. Build a Care Cost Into Your Retirement Plan

An advisor can factor potential long-term care expenses into your retirement projections so a future care need does not derail your entire financial plan.

Example: A client retiring at 65 with $1.2 million in savings has not accounted for long-term care in their retirement plan. The advisor models two scenarios: one where the client never needs care and one where the client needs three years of assisted living starting at age 82. The second scenario reduces the portfolio by roughly $250,000. The advisor reworks the withdrawal plan and carves out a separate pool of conservative investments earmarked specifically for future care expenses, keeping it separate from the rest of the retirement portfolio so the client does not have to liquidate growth assets during a downturn to cover facility bills.

5. Navigate Medicaid Eligibility Without Making Costly Mistakes

Medicaid rules around asset limits, look-back periods and exempt property are complicated. An advisor can help you understand what qualifies, what does not and how to position assets legally before applying.

Example: A family is preparing to apply for Medicaid for a parent who needs nursing home care. The parent transferred $40,000 to a grandchild two years ago. The advisor explains that Medicaid has a five-year look-back period and that the transfer could result in a penalty period during which Medicaid will not pay for care. The advisor works with an elder law attorney to evaluate options for addressing the transfer and timing the application to avoid or minimize the penalty.

Bottom Line

Long-term care facilities help someone with day-to-day activities like cooking and cleaning. A nursing home provides 24/7 medical attention from nurses. The best option is based on whether you need help living an ordinary life, or if you need ongoing medical care. Consider matching with a vetted financial advisor to determine which services you or a loved one may need and which option is most cost-effective and appropriate.

Tips For Affording Long-Term Care

• One of the most difficult parts of long-term care is finding a way to pay for it. That’s why it’s good to begin planning this into your retirement savings and insurance plans early.
• And the best way to make those plans is with professional help, which can be provided by a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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