In 1900, average life expectancy in the U.S. was about 47. Today, it’s nearly 80. As we are getting older, the chances of needing long-term or nursing home care has increased dramatically. In fact, one estimate projects that 70% of people turning 65 will need long-term care at some point. If that is you or a loved one, you may be wondering how to pay for nursing home care should it become necessary.
While no one wants to think about end of life, it is inevitable. So is the rising cost of nursing home care. Spending one’s last years in a nursing home facility translates to about $7,000 to $12,000 a month (that’s $84,000 to $144,000 a year). For most families, that cost can quickly deplete the spouse’s or extended family’s resources.
Long-term care insurance is highly recommended and can assist with both home care and nursing home care, but not everyone can afford the monthly premiums. Traditional health insurance and Medicare do not cover custodial, long-term nursing home care. Medicaid is the only government program that will pay for long-term nursing home care, but the nursing home resident must be financially eligible to qualify for coverage.
To be eligible, a single Medicaid applicant’s monthly income must be below certain income guidelines (in New Hampshire, this is tied to the Medicaid reimbursement rate for the particular facility involved), and the applicant may only have $2,500 in countable resources with certain physical assets (home, car, tangible property) at least partially excluded. The rules are much more complex for married couples since the community spouse is entitled to both an “income allowance” (currently at least $2,003/month up to a maximum of $3,023/month) and a “resource allowance” (currently up to a maximum of $120,900). Excess assets must be “spent down,” and the community spouse should review all available options. It also is important to mention that there is a financial transaction “look-back” period of five years further complicating the planning and application process.
So, when it comes to how to pay for a nursing homes, the vast majority of families find themselves between qualifying for Medicaid and the ability to comfortably self-fund the high cost. Often, these families spend down their assets to the Medicaid limits, and, while the nursing home resident may qualify for Medicaid, his/her spouse or loved ones could be left with a bleak financial future.
There is help. The rules governing Medicaid are complex and this is not a time to risk eligibility and assets by going it alone. Hiring an experienced elder law attorney is a critical first step. Elder law attorneys are experienced estate planners who are knowledgeable about Medicaid rules and can help you legally protect your assets. CELAs (Certified Elder Law Attorney) are elder law attorneys who have earned special certification through demonstrated knowledge and a stringent ethical and professional review.
While planning for end-of-life requires deliberate and long-term action, the circumstances that lead to the need for nursing home care are often sudden and unpredictable. The sooner families take action, the more options they will have to ensure their loved one will get the best care while protecting valuable assets.