Key takeaways
- In-home care is more expensive than a nursing home.
- Costs can vary (for both) based on a number of factors.
- There’s more financial coverage for nursing homes.
- It’s best to enlist professional help to navigate the financial process.
When it comes to caring for an older loved one, families must often prepare to make major financial decisions. One of the most significant choices will be whether an older adult receives care at home or in a nursing home when they have higher needs, such as Alzheimer’s care. Both choices have profound ramifications when it comes to financial planning, budgeting and uncovering available benefits.
Whichever you choose, experts strongly recommend researching options in advance of a medical emergency.
“Often, families react to a severe medical crisis,” says Spencer Brown, care manager at Family Tree Private Care. “It becomes a wake up call. If there is a financial cost that’s not supported by insurance or government, and it comes out of their pockets, it can be a rude awakening.”
Wondering about the price tag that comes along with each? Here’s a breakdown of the cost of home care vs nursing homes.
Cost of home care vs. nursing homes
Here’s a quick cost comparison between home care and nursing homes, using the national average rate posted by senior home caregivers on Care.com and the most recent nursing home cost info via Genworth.
Note: The in-home care costs below are representative of nonmedical home care. Older adults requiring medical support at home will need home health care, which is more expensive as it must be administered by a healthcare professional.
| Home care rate* | Nursing home semi-private room | Nursing home private room | |
|---|---|---|---|
| Hourly | $21.11 | N/A | N/A |
| Daily | $169 | $285 | $320 |
| Weekly | $844 | N/A | N/A |
| Monthly | $3,659 | $8,669 | $9,733 |
| Annually | $43,909 | $104,025 | $116,800 |
To find out the average posted in-home care rates in your area, check out our Cost of Care Calculator.
Home care costs
Basic costs
The cost of at-home care depends greatly on need. In-home care providers are posting an average starting rate of $21.11 an hour, nationally, on Care.com. But keep in mind, how much you pay will depend on the hours of required care.
For instance, for 40 hours of in-home care per week, the cost is $844 each week. For 24/7 care, the cost becomes $3,546 per week. That’s a big jump.
“Twenty-four hour care at home is universally going to be at least twice if not three times as expensive as a nursing home,” says Brown.
That said, if an older adult needs fewer hours or if a family member can step in, the cost lowers considerably.
Costs also vary widely depending on where you live. For instance, the average posted starting rate for home health aides in Tulsa, Oklahoma is $17.29 per hour, while in San Francisco, it’s $27.70.
“Twenty-four hour care at home is universally going to be at least twice if not three times as expensive as a nursing home facility.”
— Spencer Brown, care manager
Home care costs you may not have considered
Aides often charge higher rates during overnight, weekend and holiday hours, according to Rita Choula, director of caregiving with the AARP Public Policy Institute. They may also increase their rates if you hire them for one hour as opposed to, say, a three-hour block due to potential wage losses on other jobs.
“You’ll typically see two- to four-hour time slots,” says Choula. “If it’s a matter of respite and you just need an hour to go to the grocery store, it may still work out better financially for you to pay for three hours.”
In addition to an aide’s salary, families who are caregiving at home will have to pay for standard living costs such as:
- Groceries.
- Electric bills.
- Medical supplies not covered by insurance.
- Homes may also need pricey modifications in order to accommodate the senior, such as trip hazard removal or bathtub accessibility.
Family caregivers must also consider personal costs, such as transportation or time off from work in order to perform these duties.
“We all know that hiring aides for 40 hours a week isn’t going to cover it for a person who needs constant care,” says financial planner Darin Shebesta, noting that families will have to make arrangements tailored to their individual schedules.
“We all know that hiring aides for 40 hours a week isn’t going to cover it for a person who needs constant care.”
— Darin Shebesta, financial planner
Ways to pay for home care
Older adults may be eligible for federal benefits. Or, if they are able to plan ahead, they may be able to secure insurance benefits.
Medicaid/Medicare
Medicaid coverage of home care varies depending on state. Medicare pays for 30 days of at-home health aide and skilled nursing care, though the workers must operate for less than eight hours a day and less than seven days a week during that period. This does not include homemaking services.
Private health care insurance
Most private health care insurance policies don’t cover at-home care, though policyholders might be able to secure special coverage through an Employee Assistance Program, or through special programs designed for federal employees, veterans, teachers or healthcare workers.
Long-term care insurance
For those who plan in advance, seniors and caregiving proxies can purchase long-term care insurance or a combination permanent life/long-term care insurance policy in order to cover at-home care. However, these policies should be purchased well before a crisis. The costs get higher as the senior ages.
Federal programs
Federal programs, such as SNAP, exist to help low-income individuals with food costs, phone bills, home energy bills and more.
Nursing home costs
To avoid common and devastating financial surprises, it’s important to understand nursing home costs in advance.
“What usually happens is, it’s a crisis situation where someone is very sick and hospitalized, and the family realizes that they’re not able to provide the level of care their loved one requires at home,” says Choula.
Basic costs
The national annual median cost of 24/7 nursing home care is $104,025 a year for a semi-private room and $116,800 for a private one, says Genworth. This price tag includes basic daily living costs including food, housing and medical supplies in addition to round-the-clock access to skilled nurses and aides.
Like home care, costs vary widely depending on your state. A private room costs $7,483 monthly in Louisiana and $13,231 in California.
Nursing home costs you may not have considered
The cost of nursing home care can be steep for other reasons.
Residents may be charged a one-time fee for their intake health assessment. They will also pay a bed fee if they leave the nursing home but want to hold their spot.
Some nursing homes may charge extra for particular services, such as physical therapy, memory care or grooming beyond the standard measures. Choula says it’s critical to read the nursing home contract thoroughly to weed out extra costs.
Families will have to factor in transportation costs, particularly if the family lives far away from the nursing home, says Brown.
Ways to pay for nursing home care
Older adults may be able to use their existing federal and private benefits to pay for nursing home care. Here are options to look into:
- Medicaid/Medicare. Medicaid covers 100% of basic nursing home stay costs while Medicare pays for 30 days.
- Private insurance. Most private insurance policies don’t cover nursing home care. However, policyholders might be able to secure special coverage through an Employee Assistance Program.
- Long-term care insurance. Older adults can purchase long-term care insurance or a combination permanent life/long-term care insurance policy (before a medical emergency).
Assigning benefits rights
CFB Board Ambassador Marguerita Cheng also pointed to a little-known benefit to using a nursing home: A nursing home can work directly with the insurance providers if an older adult assigns the home benefits rights. This will relieve the senior and caregivers of dealing with insurance companies or government benefits programs.
How to decide which is best for your pocketbook
Making the choice between home care and a nursing home can be difficult to do on your own. Without consulting professionals and performing research in advance, many caregivers are inclined to make a knee-jerk decision in a crisis without consulting the older adult or considering what’s best for everyone, says Brown.
“Families get overwhelmed. They see some changes in their parents and they’re not used to being in the caregiver role, and so they take an immediate action that could steamroll a person’s autonomy,” says Brown. “I advise people to take a step back and exercise extreme caution.”
Families may turn to geriatric care specialists to formulate the best comprehensive aging plan. Here are a few places that can help you navigate the financial process:
- U.S. Administration on Aging, a government agency that helps families plan senior care.
- Family Tree Private Care, a private care and care management company.
- A reputable insurance broker or financial advisor with a Certification for Long-Term Care (CLTC).
By weighing the costs associated with nursing home and home care — and after consulting with experts — you will choose an option that best suits your aging loved one.
