If you have parents who are 70 or older, listen up. This article is for you.
Most of us have some experience with nursing homes, one way or another. Advances in medical science means that Americans are living longer than ever before. Unfortunately, it has become increasingly common for people to experience some period of disability late in life which requires long-term care. And the people most often tasked with coordinating a patient’s care are his or her adult children.
Nursing home care, unsurprisingly, is expensive. In Alabama, it costs about $5,500 per month (or $183 per day). Most people can’t afford that kind of expense for long. When patients begin to run out of money, they have to look for help from other sources.
This is the point in which a great deal of “beauty shop/coffee shop” advice begins to float around. Everyone has an opinion on what to do next, but most of what you hear on the street is just plain wrong.
One of the most common misconceptions is that the nursing home will “take your house.” This is just not true. But that doesn’t mean that you should not do anything. To the contrary, the threat of losing a great deal of money to the cost of long-term care is very real. According to the U.S. Department of Health and Human Services, at least 70% of Americans over 65 will require some long-term care services at some point. Over 40% of Americans over 65 will need long-term care in a nursing home, and the average length of stay is 2.8 years.
Medically speaking, nursing homes provide care to patients who need assistance with their “Activities of Daily Living” (ADL’s) which include things like dressing, bathing, grooming, toileting and walking. The AARP reports that people over 65 have a 68% probability of either requiring assistance with two or more ADL’s, or of suffering from cognitive decline like dementia.
Entering a nursing home is never anyone’s first choice. Many families try everything they can to keep a loved one in their home for as long as possible. According to a study conducted by Genworth Financial, 6 out of 10 potential caregivers responded that they were unprepared to handle the more difficult caregiving tasks, such as bathing, dressing and toileting.
When a loved one does enter a nursing home, someone is going to have to pay for the cost of their care. At first, Medicare will pay for up to 20 days of nursing home care, but only for rehabilitation purposes. After that, Medicare will pay only a small portion of the cost of care for another 100 days, but only if you (or your Medicare supplement policy, depending upon which one you have) pay a hefty daily co-pay.
After that, you’re on your own.
If you have a long-term care policy, it may cover some or all of the cost of care, depending on the policy. If you don’t then you have to pay the monthly bill out of your own pocket.
Once you run out of money, the last resort is to turn to Medicaid, which is a combined state and federal program which provides medical care for the very poor. While many nursing home patients don’t start out as “very poor,” most middle class people will run out of money sooner than later, and will have apply for Medicaid.
This doesn’t mean that the nursing home will take your house to pay their bill. The source of this misconception is the fact that you cannot have more than a limited amount of assets ($2,000) in order to qualify for Medicaid. Importantly, however, some assets are “exempt” and do not count against that $2,000 limit.
For example, a patient’s primary residence will not be counted as long as they have an “intent to return home” in the future, or if they have a spouse or a blind or disabled child living in the home. If none of those exceptions apply, then the house may eventually be counted, and Medicaid (not the nursing home) may require a lien against the property as a condition of eligibility. But even this lien will not be foreclosed during the patient’s lifetime. Instead, Medicaid has the right to recover money from the sale of the property after the patient’s death, and only up to the amount that Medicaid expended on the patient’s care.
Does this mean that you should “do nothing” to protect the house or other assets? Of course not. Consider Medicaid Planning as part of your overall estate plan. A qualified elder law attorney can help you (or your parents) create a plan to protect the maximum amount of your assets from the cost of long-term care.