Effects of Nursing Home Stays on Household Portfolios

June 2012
EBRI Issue Brief #372
Paperback, 20 pp.
PDF, 778 kb
Employee Benefit Research Institute, 2012

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Executive Summary

  • Nursing home stays among retirees have increased steadily during the past decade. Among people age 65 and higher, nursing home stays increased from 6 percent in 2000 to 8.5 percent in 2010.
  • Nursing home stays have strong and statistically significant negative effects on every type of household asset holdings except higher-risk assets (such as stocks, bonds, and mutual funds).
  • Among nursing home entrants, purchase of long-term care insurance (LTCI) has also increased steadily during the past decade, but coverage remains low (14 percent in 2010).
  • For those who spent six months or more in a nursing home facility, nearly half were covered by Medicaid.
  • Those who reported being most likely to enter a nursing home in the near future were also less likely to purchase LTCI.
  • Over the past decade, use of professional home-health care has increased steadily, as has the percentage of people with LTCI who use professional home-health care. But here also (for those using home-health care), LTCI coverage is low—13.2 percent in 2010.
  • For those who have lived in a nursing home for six months or more, the median total household wealth was only $5,518.
  • After respondents’ first entries into a nursing home, total household wealth fell steadily over a six-year period. By comparison, household wealth increased steadily over any six-year period for those who never entered a nursing home.
  • For nursing home entrants, median housing wealth falls to zero within six years after the initial nursing home entry.
  • Both mean and median levels of every type of wealth are much higher for those who did not use professional home health-care than those who did.