ROCHESTER, N.Y. — Navigating the complexities of placing a loved one in a nursing home can be challenging, and unexpected costs can add to the stress. One such cost is New York State’s nursing home bed tax, which many families may not be aware of.

The tax ultimately falls on the residents and their families. The tax, which started 22 years ago to address budget shortfalls, is included in the monthly fees paid by residents. Nursing homes then send the tax to the state each month.

Bill Adams, whose aunt recently entered a nursing home in Rochester for rehabilitation, was surprised when he received a letter detailing rate increases for the upcoming year. The letter included a 6.8% state tax, which applies to every nursing home.

“When you got that letter, and it mentioned the nursing home bed tax, that must have come as a surprise to you?” Chief Investigative Reporter Berkeley Brean asked.

“Oh absolutely. I thought what’s this place running here, a hotel?” Adams replied.

While the tax has been around for 22 years, many people are unaware of it until they have a loved one in a nursing home. Adams noted that if you’re a private pay, you can deduct the 6.8% tax from your taxes, but it is not deductible if Medicare covers the cost.

The average annual cost of a nursing home in the area is $173,000. In addition to the nursing home bed tax, there are also state taxes on money collected by hospitals and on the cost of in-home health care, though these are less than half a percent.

In the 2023-24 fiscal year, the nursing home bed tax generated $641 million. So far, for 2024-25, it has generated $470 million.

When asked about the tax the state sent News10NBC this statement:

“The Health Facility Cash Assessment Program (HFCAP) requires New York State designated providers to pay an assessment on cash operating receipts on a monthly basis under the Health Facility Cash Receipts Assessment Program pursuant to Chapter 1 of the Laws of 2002 as amended by various subsequent period Chapter Laws. It’s a tax on all cash receipts of hospitals (.35%), nursing homes (6.8%), and Long-Term Home Health Care Program/Certified Home Health Agency/Personal Care (.35%).”

The answers the state provides to Berkeley Brean’s questions are below:

1. What is the assessment % currently in 2024?
   The assessment percentage in 2024 is unchanged at 6.8% of cash operating receipts on a monthly basis, pursuant to Chapter 1 of the Laws of 2002 as amended by various subsequent period chapter laws.
2. Where does the money go?
   The dollars are used as a funding source for Medicaid programs, including spending on nursing homes and other long-term care programs.
3. How much did the state collect in the nursing home bed assessment in the 2023-24 state fiscal year?
   The total collected in SFY23 was $641 million.
4. How much has it collected this year?
   The collection total thus far in SFY25 is $470 million through Dec. 12, 2024.
5. For private pay, why doesn’t the tax deduction equal the actual assessment? The maximum deduction is 6%.  
   As a part of the Medicaid Redesign Team (MRT 1) actions, Across the Board (ATB) cuts were being enacted in order to balance the budget. The budget did allow for alternative savings proposals, provided that they achieved the necessary fiscal targets. The nursing homes of New York State moved forward with an alternative savings proposal of an additional .8% assessment in lieu of receiving an ATB cut of 2%. Accordingly, the 0.8% assessment is not comparable to the base 6%, and is handled differently – please see the relevant form (IT-258) from the Department of Tax and Finance here: https://www.tax.ny.gov/pdf/current_forms/it/it258_fill_in.pdf

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