Cost of Home Care vs. Nursing Homes: Preparing for the Next Step

There’s no denying it. Taking care of an aging loved one can be incredibly difficult and demanding, and it’s often around-the-clock work.

If you’re feeling overwhelmed or questioning your ability to provide care, remember that both you and your loved one will benefit from extra help.

Whether your search for help was instigated by a medical emergency, a sudden decline, or the sense that your loved one will soon need more assistance than you can give, first figure out exactly what your care needs are. This can help you determine whether home care is the right option for your family or if it’s time to move to a nursing home. Next, understand the costs of home care and nursing homes to help you make the right decision.

Home care agencies and nursing homes provide different services, and their costs are calculated differently. Nevertheless, with a median cost of $4,957 a month, home care is typically cheaper than a nursing home, which is $7,908 a month.

What type of care is right for my loved one?

Choosing the right type of care for your loved one can often feel like a balancing act between wants and needs. Taking into account your loved one’s health and care needs, preferences, and budget will help you determine the best fit for your family.

If home care, also called in-home care, seems like the most desirable option at this point, you’re not alone. Many people — both caregivers and their senior loved ones — like the idea of continuing to live at their own residence while receiving care.

Home care provides non-medical care for seniors who want to age in place. Services tend to include companionship, transportation, light housekeeping, and assistance with daily activities, such as bathing, dressing, and grooming.

Home care differs from home health care, which is usually prescribed by a doctor and offers medical care for people recovering from an illness or after a surgery.

If your loved one needs full-time skilled nursing care due to an illness or a severe impairment, or because they are bedridden or unable to feed themselves, they may need nursing home care.

How much does home care cost?

Home care is almost always calculated hourly. According to Genworth’s annual Cost of Care Survey, the median cost of home care in the United States in 2021 was $26 per hour, based on 44 hours of care per week.

Because of its hourly pay structure, home care usually isn’t the best option for seniors needing 24/7 assistance — families could spend tens of thousands of dollars each month on that level of care. However, many families who require fewer hours appreciate the flexibility of paying hourly, although agencies often have minimum time requirements.

Location influences cost

Like most senior living options, the cost of home care is closely tied to one’s location. For someone living in Kansas City, Missouri, the annual cost of 44 hours a week of home care is on par with the national median at $59,488. But if you live in Los Angeles, the cost jumps up to $70,928.

According to the Genworth survey, the most expensive states for home care in 2021 were:

• Minnesota, at $6,673 monthly and $80,080 annually
• Washington, at $6,547 monthly and $78,570 annually
• Colorado, at $6,387 monthly and $76,648 annually
• California, at $6,101 monthly and $73,216 annually
• New Hampshire, at $6,006 monthly and $72,072 annually

In 2021, the least expensive states for home care were:

• West Virginia, at $3,527 monthly and $42,328 annually
• Louisiana, at $3,623 monthly and $43,472 annually
• Mississippi, at $3,813 monthly and $45,760 annually
• Alabama, at $3,813 monthly and $45,760 annually
• Arkansas, at $4,185 monthly and $50,222 annually

Independent caregivers vs. agency costs

As you begin looking for home care, you’ll notice a difference between private in-home caregivers and those who contract with an agency. However, there are some things to consider before deciding between the two:

• Private caregivers can be more flexible and charge lower rates because they can choose their own hours, and none of their salary goes to an agency. Many agencies require minimum hours to cover the cost of transportation and charge extra fees on top of a caregiver’s salary.
• Agencies can provide a layer of security by prescreening caregivers with background checks and drug tests, providing training, and offering caregivers coverage if they get injured on the job. Families may be liable to pay for any injuries sustained by independent caregivers. If you end up wanting to work with an agency over an independent caregiver, make sure you choose the right agency for you and your loved one.

How much do nursing homes cost?

Nursing home costs are calculated daily. According to the Genworth survey, in 2021, the median cost for a semi-private room (at least two occupants) in a nursing home was $260 per day. Private rooms are more expensive, with a median daily cost of $297.

Nursing home costs vary by location

Like home care and all other types of senior care, nursing home costs vary depending on the city and state. In Kansas City, Missouri, the median cost of a semi-private room in a nursing home is $77,563 annually. In Los Angeles, the cost rises to $109,500 a year for the same type of room.

According to the Genworth survey, the most expensive states for nursing homes in 2021 were:

• Alaska, at $378,140 annually
• Connecticut, at $165,163 annually
• New York, at $153,300 annually
• Massachusetts, at $151,475 annually
• Hawaii, at $150,015 annually

In 2021, the least expensive states for nursing homes were:

• Texas, at $61,503 annually
• Missouri, at $63,145 annually
• Oklahoma, at $65,700 annually
• Louisiana, at $69,113 annually
• Arkansas, at $73,000 annually

How to pay for the next step of senior care

For most families, paying for senior care can add another layer of stress at an already difficult time. Maybe a loved one is experiencing a fast decline but you’re unsure of how to pay for the help you need.

Here are the most common ways to pay for home care and nursing homes:

• Out of pocket. Most families end up paying out of pocket for most or all of a loved one’s care, either by tapping into savings, taking out a reverse mortgage (for home care), or renting out a family home.
• Medicare. While it doesn’t cover non-medical home care, Medicare does cover some aspects of home health care when it’s deemed medically necessary by a doctor. It will also cover short-term rehabilitation stays at a nursing home.
• Medicaid. This government program will pay for home care or long-term nursing home care if the senior qualifies.

While selecting and paying for a loved one’s care can be daunting, there are resources available to smooth out the process. If you need help, our Care Advisors can connect you to care options, including local home care providers, that match your particular needs and budget.

Sources:
Cost of Care Survey (https://www.genworth.com/aging-and-you/finances/cost-of-care.html)
Genworth Cost of Care Survey: Ranked State Data Tables (https://pro.genworth.com/riiproweb/productinfo/pdf/298701.pdf)