LONG-TERM CARE PLANNING
Many people are not aware that the cost of private nursing home care can approach or even exceed $100,000 per year. For all but the wealthiest, spending money at this rate will rapidly deplete and eventually erase life savings. For those contemplating the future long-term care needs of a family member, the following discussion is designed to provide sufficient information to allow an educated decision about how to best plan ahead.
A. ASSISTED LIVING FACILITY vs. LONG-TERM NURSING CARE FACILITY
When considering the options available to those who are no longer capable of caring for themselves at home, it is critical to evaluate options in order from least to most restrictive after consideration is given to the person’s physical and cognitive limitations. While it is often possible to put off placement for a time through provision of home health care, placement outside the home may ultimately become the only safe option. In this event, it is necessary to determine whether that placement should be in an assisted living facility or a long-term nursing care facility. An assisted living facility is a “home away from home” designed to provide custodial care in a setting that resembles a personal residence. Some assisted living facilities offer secured living areas to prevent the wandering that often accompanies certain types of dementia. In most cases, residents of assisted living facilities maintain a higher functional capacity than those of long-term nursing care facilities. A long-term nursing care facility is designed to provide intermediate (advanced custodial care) and skilled care to those whose needs rise above simple custodial care. While most people would prefer that their loved one remain in an assisted living facility due to the more pleasant external appearance, it is important to remember that it can be unsafe and inappropriate for that person to remain in an assisted living facility if more than general custodial care is needed. If you or your loved one cannot manage at home any longer, then the advisable route is to consider whether placement in an assisted living facility or a long-term nursing care facility is needed. To assist in this determination, it is often advisable to enlist the services of a qualified geriatric care manager.
B. PAYING FOR ASSISTED LIVING AND NURSING HOME CARE
Assisted living facilities generally do not accept Medicare, Medicare supplemental insurance, or Medicaid. Instead, the only sources of payment that will be accepted are long-term care insurance or private payment (which can include assistance from the VA for veterans and widows of veterans). Cost of assisted living care can vary greatly depending on the location and type of facility desired. Accordingly, on one hand you may be able to find adequate care for just $2,500 per month. On the other, it is possible for an assisted living facility bill to exceed $6,000 per month for residents with significant care needs. A final note about the cost of assisted living care – do not assume that a higher bill means better care. In reality, the best way to assure that proper care is provided is to visit your loved one openly and notoriously so that the facility is aware that you are paying attention
If your loved one requires placement in a long-term nursing care facility, there are four potential sources of payment (Medicare, Long-Term Care Insurance, Private Payment, and Medicaid). In order for Medicare to contribute to the cost of nursing home care, the placement must follow a hospitalization of at least three days and the resident must require skilled care (therapy, stomach tube, wound maintenance, etc.) in the nursing home. If these prerequisites are satisfied, Medicare will pay for just twenty days in full. Thereafter, Medicare will assist with another eighty days during which the resident owes a daily co-payment of $167.00 for calendar year 2017. It is possible that the resident’s supplemental insurance will cover these co-payments. If the skilled care drops to intermediate care during the hundred days of coverage (this is very common), Medicare assistance will cease. Due to the complicated and various prerequisites to Medicare assisting with nursing home care, as well as its limited duration, it is advisable to eliminate Medicare from the list of alternatives available to pay for long-term nursing care. As with assisted living care, it is possible that your loved one maintains long-term care insurance that will assist with the bill. If this is the case, be sure to confirm that the per diem rate is sufficient to cover the facility’s private rate ($200 to $300 per day). In addition, be sure to note whether the policy has a lifetime cap that dictates that coverage will be exhausted in a fixed period of time or after a fixed dollar amount is spent. If Medicare and long-term care insurance are unavailable, the resident must either pay privately or qualify for Medicaid. If paying privately, you can expect that total monthly expenditures for nursing care will fall within the range of $6500 to $9500 per month.
Because Medicare and long-term care insurance are typically not available to assist with long-term placement in a nursing home, and $100,000 per year is exorbitant for all but the wealthiest, Medicaid is often the only viable alternative for middle class families seeking to manage the cost of a loved one’s long-term care. Medicaid planning is a means of preserving savings for the benefit of those who will otherwise be economically devastated by the high cost of private nursing home care. It exists within the framework of all applicable state and federal law and is not a means of hiding assets beyond the reach of government authority. Moreover, it is not a means of preserving assets for the benefit of potential heirs. Rather, implementation of a Medicaid plan preserves savings so that the resident retains access to the things not otherwise covered by nursing home Medicaid such as a private room, therapy, glasses, dentures, hearing aids, beauty shop, cable television, telephone line, and all other personal belongings. For those wondering whether Medicaid planning would be appropriate for their family, a good rule of thumb is to query whether household income is sufficient to pay for nursing care privately. If income is sufficient, then implementation of a plan would most certainly be inappropriate. However, if there is a disparity between monthly income and expenses such that savings will be depleted rapidly, seeking assistance from Medicaid may be appropriate. Depending upon the plan implemented, eligibility for assistance can be achieved in as little as a few weeks. Due to Medicaid’s complicated rules and regulations, it advisable to seek the guidance of a qualified elder law attorney if you believe that implementation of a Medicaid plan would be appropriate.
D. INITIAL CONSULTATION
If you have any questions about the various items discussed herein, it is this firm’s policy to gladly answer general questions that you have over the telephone at no charge. Please feel free to call if you require further information or clarification of something found in this summary.