Nursing home deposit requests catch many families off guard during an already stressful time. A loved one may be leaving the hospital and need care within days. Then the admissions office asks for a large upfront payment before move-in. Is that legal? Will you get the money back?
The answers depend on who is paying for care: Medicare, Medicaid, or the resident. Federal rules from the Centers for Medicare & Medicaid Services (CMS) limit when a facility can ask for money in advance. State laws often add more protections. Knowing these rules before you sign helps you avoid paying money you don’t owe. It also helps you get back any money you are owed later.
A nursing home deposit is usually an advance payment held by the facility. It may cover the first month of care, future charges, or possible unpaid bills. Some facilities call it a “security deposit,” “advance payment,” or “pre-admission fee.” The label matters less than the payer. Federal law treats a private-pay resident very differently from someone covered by Medicare Part A or Medicaid.
How Medicare and Medicaid Rules Limit Deposits
Medicare Part A covers skilled nursing facility (SNF) care only in limited cases. First, you need a qualifying inpatient hospital stay of at least three days. Formal admission must also count as inpatient status; time spent “under observation” does not count. Medicare then pays in full for days 1 through 20. For days 21 through 100, you owe a daily coinsurance amount. After day 100, Medicare pays nothing for that benefit period.
Under federal provider rules at 42 CFR 489.22, a Medicare-certified provider generally cannot require prepayment for covered inpatient services as a condition of admission. A facility also cannot turn away a Medicare-covered patient because they can’t pay a requested amount upfront. However, a facility may bill the coinsurance amounts once they come due. As a result, a large upfront deposit for a Medicare-covered SNF stay is a red flag.
Medicaid protections are even stronger. Federal nursing home regulations at 42 CFR 483.15 bar facilities from charging, soliciting, or accepting any gift, money, or donation as a condition of admission for a Medicaid-eligible resident. The same rules prohibit requiring a third party, such as an adult child, to personally guarantee payment. Facilities also cannot make you waive your right to apply for Medicare or Medicaid. Medicaid is the main payer for long-term nursing home care. According to KFF, it is the primary payer for about six in ten nursing home residents.
When a Nursing Home Deposit Is Refundable
Whether a nursing home deposit is refundable depends on your contract, your payer status, and state law. Private-pay residents are where facilities have the most room to collect deposits. Even then, the money is generally an advance against charges you’ll owe, not a fee the facility keeps. In most cases, any unused portion must be returned after discharge or death.
Federal rules require nursing homes to tell residents, in writing, about their charges and their refund policies. The admission agreement should explain how a deposit is applied and when it is returned. Some states set firm refund deadlines. For example, several states require refunds of prepaid amounts within 30 days of discharge or death. Other states leave the timing to the contract. Your state’s long-term care ombudsman can tell you which rules apply.
Separately, the federal rules protect personal funds a resident asks the facility to manage. Facilities must keep resident funds over a set threshold in an interest-bearing account. After a resident dies, the facility must convey those funds and a final accounting to the estate within 30 days. These personal-fund rules are different from a deposit, but families often confuse the two.
| Payer Situation | Can the Facility Require a Deposit? | Refund Rules |
|---|---|---|
| Medicare Part A covered SNF stay | Generally no prepayment as a condition of admission for covered care | Any overpayment of coinsurance must be refunded |
| Medicaid-eligible resident | No; gifts, donations, or deposits as a condition of admission are prohibited | Any improperly collected money should be returned |
| Medicaid application pending | Varies by state; some facilities request private payment until approval | Payments made during the retroactive coverage period may be refundable |
| Private pay | Yes, if disclosed in the admission agreement | Unused portion typically refunded per contract and state law |
The pending-Medicaid row deserves special attention. Medicaid can cover care retroactively, often up to three months before the application month in many states. If you paid privately during that window, part of that money may come back once Medicaid approves. However, some states have limited or ended retroactive coverage for certain groups. Ask your state Medicaid office how this works where you live.
What to Do Before and After You Pay
Start by confirming the payer before you hand over any money. Ask the hospital discharge planner whether the stay will qualify for Medicare Part A. Confirm that the hospital stay was a formal inpatient admission lasting at least three days. If the patient has a Medicare Advantage plan from a carrier like UnitedHealthcare, Humana, Aetna, or Blue Cross, call the plan directly. Many Medicare Advantage plans waive the three-day rule. However, they often require prior authorization and use in-network facilities.
Next, read the admission agreement carefully before signing. Look for any clause labeled “responsible party” or “guarantor.” A family member can agree to manage a resident’s money. Still, federal rules say they cannot be forced to pay from their own pocket as a condition of admission. Cross out or question any language that seems to create personal liability. You can also ask for a copy of the agreement to review at home.
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Here are practical steps to protect any money you pay:
- Get a written receipt that labels the payment as a deposit or advance payment.
- Ask exactly how the deposit will be applied to monthly bills.
- Request the facility’s written refund policy and the expected refund timeline.
- Keep copies of all billing statements and payment records.
- Notify the facility in writing when the resident is discharged or passes away.
- Request a final itemized accounting within 30 days.
If a refund doesn’t arrive, act quickly. Start with a written request to the facility’s business office. If that fails, contact your state’s Long-Term Care Ombudsman Program. Ombudsman services are free and confidential. You can also file a complaint with your state survey agency, which inspects nursing homes for CMS. For Medicare coverage questions, your local SHIP (State Health Insurance Assistance Program) offers free one-on-one counseling. The Medicare Care Compare tool on Medicare.gov also lists inspection results and past complaints for each facility.
Finally, plan ahead for long-term costs. Medicare does not pay for custodial care, such as help with bathing, dressing, or eating, when that is the only care you need. Long-term care insurance from carriers like Mutual of Omaha may help. Otherwise, many families spend down savings until they qualify for Medicaid. Groups such as AARP publish planning resources. An elder law attorney can also help you understand your state’s Medicaid look-back period, which is 60 months in most states.
Frequently Asked Questions
Can a nursing home deposit be required if I’m on Medicaid?
No. Federal rules prohibit nursing homes from requiring a nursing home deposit, gift, or donation as a condition of admission for Medicaid-eligible residents. If a facility asks for one, contact your state ombudsman. Any money collected improperly should be returned.
How long does a nursing home have to refund a deposit after death?
It depends on state law and the admission agreement. Typically, states that set a deadline require refunds within about 30 days. Resident personal funds managed by the facility must go to the estate within 30 days under federal rules.
Does Medicare pay the nursing home deposit?
Medicare does not pay deposits. For a covered SNF stay, a facility generally can’t demand prepayment as a condition of admission. Instead, you owe daily coinsurance starting on day 21. A Medicare Supplement (Medigap) plan may cover that coinsurance, depending on the plan letter.
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Official Sources & Resources
For verified information on Medicare regulations and consumer protection:
- Medicare.gov (Official Site): medicare.gov
- CMS (Centers for Medicare & Medicaid Services): cms.gov
- NAIC (National Association of Insurance Commissioners): naic.org
- KFF Medicare Research: kff.org/medicare
- Social Security Administration: ssa.gov
Content last reviewed November 2026. If you notice any outdated information, please contact us.