Coping with the cost of nursing home care

[cougarnurse]

Food for thought: Cleveland Jewish News > News > Business

There are 1.6 million nursing home residents in the United States, according to the Centers for Disease Control survey released in 2002. The average stay for a resident is 892 days, or 2.4 years. That average stay, at $258 per day in Cleveland, can cost over $230,000.

How does a person of ordinary means pay for nursing home care?

Many mistakenly believe either Medicare or private health insurance pays. Unfortunately, Medicare and health plans cover only skilled care for a limited time, usually between 20 and 100 days, depending on the plan.

Long-term care insurance is another source of funding, and it is increasingly becoming more popular. But it does not cover everything. The balance of the cost of long-term care must come from the resident’s assets, and when these are exhausted, from Medicaid.

Medicaid is a joint state and federal program, with the state administering the program.To qualify for Medicaid, an individual must have less than $1,500 in assets. Assets are divided into two categories, countable and exempt. For single people, however, all assets are virtually countable, whether it’s bank accounts, stocks, bonds or life insurance with cash value.

The only exempt assets for singles are prepaid, irrevocable funeral contracts and cemetery plots and personal effects. For a single person, the house is considered an asset and must be sold after six months.

For married couples, one house and car are exempt along with personal effects, including wedding and engagement rings. Most important, the spouse at home is entitled to keep half the couple’s assets – up to $104,400 in 2008.

In addition to asset limits, there are limits on income. For a single person, the nursing home gets all but $40 each month of the resident’s income (usually from Social Security or a pension). For a married couple, the spouse at home can keep all of his or her income and may be entitled to a portion of the nursing home resident’s income, based on shelter costs and other factors.

As the Medicaid program grows, so does political pressure to cut funds. State and national leaders are looking for ways to balance the budget on the backs of nursing home residents and their spouses.

A 2006 law expanded Medicaid’s rights to recover money when a nursing home resident dies. The state can now get paid back through probate and non-probate assets. Before the law was enacted, the state could only recover probate assets. This means the state will submit a claim on any assets owned by the nursing home resident at the time of the spouse’s death, including jointly held property, beneficiary designations, life insurance, annuities and trust assets. The spouse’s heirs are responsible for paying the claim. This is known as estate recovery.

Currently, Medicaid waits until the spouse living at home dies before pursuing probate assets to cover Medicaid costs incurred by the nursing home resident. Many times, the nursing home resident died years before, and the bill coming to the heirs after the death of the healthy spouse can be a real shock. In fact, heirs must provide detailed information to the state about the assets of the nursing home spouse years after that person dies or risk sanctions and possible criminal liability.

Many simple tools for protection from estate recovery are available, including re-titling of assets prior to the death of the resident. The key is to be aware that estate recovery exists and can be avoided. While planning for long-term care can be done at any time, taking action early rather than in a crisis makes the most sense.

A complex web of regulations applies to the different situations families face. Trying to maneuver them without the help of an attorney can be unnecessarily costly. Elder law attorneys who specialize in this area are best suited to help families in planning.

What all do you think of this? Comments?