Paying for Nursing Home Costs
B.
Douglas Hayes
The average cost of nursing home care in Indiana is $44,165
per year. Many seniors of average means find that after applying their
Social Security and other income toward their nursing home cost that
a significant balance remains owing. The senior's assets are quickly
eaten into and it is not uncommon for a senior to spend his entire life
savings on nursing home costs.
Health insurance will rarely pay for an extending stay
in a nursing home. This raises the question of what other means of payment
are available for paying nursing home costs.
The first and perhaps best answer is long-term care insurance.
This, however, requires advance planning. A senior cannot obtain long-term
care insurance when he is ready to enter the nursing home, so he must
obtain the policy when his health makes him eligible for such a policy.
Further, long-term care insurance assumes that the senior
has sufficient income to allow him to be able to pay for a long-term
care insurance policy. Depending upon the age at which an individual
obtains the policy and his health at the time of purchase, many people
find the premiums to be relatively expensive. However, if a senior can
pay for a long-term care insurance policy, it is a good method of helping
to pay those costs when and if they come due.
If an individual does not have long-term care insurance,
government programs are another way of paying for nursing home costs.
The first program that may assist a person with nursing home costs is
the Medicare program. However, Medicare pays less than 10% of all national
nursing home costs.
Medicare pays for nursing home costs for up to 100 days,
but only for as long as the individual needs daily skilled care provided
by a licensed nurse or therapist. If at some point the stay in the nursing
home becomes merely caretaking, Medicare will discontinue paying benefits,
even before the 100 days are up.
Even if Medicare is paying nursing home costs, it only
pays the full cost for the first 20 days of the nursing home stay. During
the next 80 days, Medicare requires the recipient to pay a coinsurance
amount of $105 per day.
The final government program that pays nursing home costs
is the Medicaid program. Medicaid pays approximately half of all nursing
home costs throughout the United States.
Medicaid begins paying nursing home benefits when an
individual has less than $1,500 of countable assets on the first day
of a month. If both a husband and wife are residing in a nursing home,
Medicaid begins paying when they have less than $2,250 on the first
day of the month.
Special rules apply if one spouse is in the nursing home
and the other spouse is still living at home. These rules are known
as the "spousal impoverishment rules." The purpose of these
rules is to keep the spouse who is not in the nursing home from having
to become completely impoverished before Medicaid would begin paying
for nursing home costs.
Under the spousal impoverishment rules, the spouse who
is in the nursing home is still limited to $1,500 of countable assets,
but the spouse who is at home is permitted to keep up to $90,660 of
countable assets. This will increase to $92,760 effective January 1,
2004.
Not all assets are countable. The spouse who is at home
is allowed to have any amount of real estate, one vehicle of any value,
and household goods, furnishings, and personal effects that do not count
toward these limits.
How much a Medicaid applicant has in the way of resources
is determined on the first moment of the first day of each month. If
an individual has more than the permitted amounts at that time, Medicaid
will not pay nursing home benefits for that month.
For example, if a single individual has $1,600 of countable
assets on January 1, Medicaid will not allow him to pay $100 of those
assets toward nursing home costs and then pick up the balance. If the
individual is one cent over the limit on the first day of the month,
the state will pay nothing toward nursing home costs. This means an
individual needs to plan to make sure that his assets are under $1,500
on the first day of the month when he will need Medicaid to begin helping
with those expenditures.
Once it has been determined that a senior is eligible
for Medicaid, Medicaid requires that he pay all of his income toward
nursing home expenses except for $52 per month. This amount is to provide
for personal needs such as closing, haircuts, and personal items. Medicaid
will then pay the balance of the nursing home costs.
The amount paid to a nursing home by Medicaid is less
than the amount that a senior would privately pay for nursing home costs.
As a result, in some nursing homes, the level of care one receives may
be less when Medicaid pays for those expenditures. Medicaid will only
pay for a semi-private room. Some nursing home facilities may have a
higher staff to resident ratio for private pay residents than for the
Medicaid patients.
Seniors who may need Medicaid to pay for nursing home
costs should consider discussing their particular situation with an
attorney who practices in the Medicaid area. In addition to making sure
that his assets will be below the level that will make him eligible
for Medicaid when he needs it, an attorney practicing in the Medicaid
area can also make sure that the individual has not accidentally made
himself ineligible by gifts or other transfers that can result in Medicaid
ineligibility.
________________________
Doug Hayes is a partner in the law firm
of Yoder, Ainlay, Ulmer & Buckingham, LLP in Goshen, Indiana, practicing
in the areas of estate planning, probate, and elder law.
While information in this article is
believed to be accurate, it is educational and general in nature, and
should not be construed as legal advice. Please consult your attorney
for specific legal advice. Yoder, Ainlay, Ulmer & Buckingham, LLP
© 2003
Yoder,
Ainlay, Ulmer & Buckingham, LLP