What is Nursing Home Insurance?

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  • Written By: wiseGEEK Writer
  • Edited By: O. Wallace
  • Last Modified Date: 15 January 2019
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Nursing home insurance could mean a couple of types of insurance. One type benefits nursing homes or long term care facilities if they get sued. This may be termed nursing home liability insurance. Other times, people mean private long term care insurance when they discuss nursing insurance, and this will help pay some of the costs of long term care or assisted living should it be required.

Any medical facility, whether it’s a nursing home or hospital runs the risk of getting sued for negligence, poor quality care or for other issues. A lawsuit may decimate a business if it doesn’t have financial protections in place. Most nursing homes have liability nursing home insurance in order to protect the business against lawsuits. This has gotten increasingly more expensive since lawsuits can assess punitive damages. Unfortunately some long-term care facilities may have created part of the price issue because they are not maintaining the highest standards of care for patients.

Purchasing nursing home insurance to cover potential lawsuits becomes something of a vicious circle. Higher costs for this insurance drive up prices of care or force the facility to make cuts that reduce care quality. Poorer quality care can translate to more lawsuits, and thus increases premium payments on liability insurance in the future.


The fact that nursing home insurance for liability drives up nursing home prices is of great concern to people who might require long term care. Those who need longer term care insurance will obviously pay higher premiums if it will cost more to receive long term care. It should be noted that many insurance policies, including things like Medicaid, do not fully cover extended stays in long term care facilities or home care needs. Yet many people cannot afford this insurance unless they make a fairly sizable income and have assets they want to protect. Studies in the US show that about 75% of people who purchase this insurance make over $100,000 US Dollars (USD) per year.

Long term care insurance may not fully cover stays in facilities either, and on average may only cover about 70% of costs, though this can vary by policy. Still this reduction may make the cost of long term care affordable without completing draining a person’s life savings. This is one of the major concerns about the need for long term care. People may run out of money and medical coverage and lose everything they acquired over the years. Once they’re in a position where they only qualify for Medicaid coverage, their choices in nursing homes may be few.

Protecting assets so that they can be inherited by family can be an important reason to buy nursing home insurance, but even more important is protecting assets shared by a couple. The potential financial consequences to the member of the couple who does not require nursing home care are severe. Almost all money may be lost during one person’s very long illness or years of hospitalization, and this may seriously affect the financial status of the well member of the couple. Many people choose to buy long term care insurance to protect their spouses, should either spouse have long term care needs.



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