Are you sitting down? I think it’s best I just shoot you straight right from the beginning.  Here we go…deep breath:  If your parent goes into a nursing home, they will have to pay cash for their stay, month after month, until their money and assets are gone.  At that point, they can apply for Medicaid, which will then take over the payments.

Glad you were sitting down? It’s a hard pill to swallow but sadly, it is the painful truth that so many aging adults have to face.  This cost can scramble a nest egg, require the sale of beloved treasures, and erase a heart-felt inheritance planned for the next generation.

Are you and your parents ready for this expense?

Six reasons why Medicare doesn’t pay for a nursing home

One of the first places my mind goes is, “Why doesn’t Medicare pay for this?”  It’s for SENIORS who are on MEDICARE…so what’s the problem?  Here’s a few basic concepts you need to understand:

  1. A nursing home (aka: long-term care facility) provides what is called “custodial care.” Custodial care is not “medical care.”
  2. Custodial care refers to personal care given to individuals to help them with “activities of daily living” (ADL), which include bathing, dressing, toileting, and transferring themselves from seated to standing in and out of bed.
  3. Custodial is often provided by persons without professional medical training.
  4. The simplest test to determine whether Medicare will or will not pay for care is to consider whether the care being provided is custodial/personal care or medical/skilled care.
  5. Medicare WILL pay for a portion of SKILLED CARE, however this is not the same as a nursing home.
  6. A skilled nursing facility is a medical center that offers 24-hour care by licensed professionals. It’s generally after a hospital stay and it’s designed to prepare the patient to return to their home or back to their long-term care facility.  For more information on skilled nursing facilities, please see my post “When additional care is needed:  What’s the difference between skilled nursing facilities, rehabilitation hospitals, and long-term care facilities?

How much does it cost to stay in a nursing home?

So, how much money are we talking about?  An article published in June 2018 by Very Well Health lists some eye-opening information about the costs of care.  It states:

Nursing home care is not cheap. The average monthly cost in the United States for a shared room is $6,692 per month. For a private room, it is $7,604 per month. The average nursing home costs a resident $80,304 per year for a shared room and $91,248 for a private room.

 Those numbers can vary based on where you live. The five most expensive states are Alaska, Connecticut, Massachusetts, New York, and Hawaii, in that order, with some nursing homes in Alaska costing as much as $23,451 per month!

The least expensive states for nursing home care are Oklahoma, Missouri, Louisiana, Kansas, and Arkansas, with average monthly rates in the $5,000s.

To put this in perspective, the average payout for Social Security retirement benefits in December 2016 was $1,360.13 per month for a grand total of $16,321.56 per year.

Based on these numbers, it is not surprising that few people can pay for nursing home care on their own. Where can people turn to get coverage for nursing home care? What are your options?”

What is Medicaid for Seniors and how do you qualify?

Medicaid is run by the STATES, unlike Medicare, which is run by the federal government. Each state ultimately sets its own financial threshold for eligibility, but the federal government sets a minimal requirement for each state. You will need to look up requirements for your state to see if you qualify.

Since I live in Missouri, I looked up their requirements and found the following:

Any person who:

  • is 65 years of age or older;
  • lives in Missouri and intends to remain;
  • is a United States citizen or an eligible qualified non-citizen;
  • owns cash, securities or other total non-exempt resources with a value of less than the resource threshold for an individual, if single, or a couple, if married(see the Adult Standards Chart for current amounts).

NOTE: Exempt resources include the home in which the participant or the participant’s spouse or dependents live, one automobile, household goods and certain other property.

In terms of its financial requirements, Medicaid determines eligibility based on your monthly income and your assets. These assets include:

  • annuities
  • bank accounts
  • automobiles (excluding your primary vehicle)
  • bonds
  • cash amounts exceeding $2,000
  • the cash surrender value of life insurance policies (applies to “whole life” and “universal life” policies, not term life policies)
  • Keogh plans
  • IRAs
  • money market funds
  • mutual funds
  • pension funds
  • real estate (excludes your primary residence up to a certain value depending on the state)
  • stocks
  • stock options

Many seniors spend down their assets to qualify for Medicaid. Others try to protect their assets by transferring them to family and loved ones.

The 60-month “Look-Back”

Warning! Any transfer of assets within 60 months of your Medicaid application will be taken into consideration. Transfers that occur during this look-back period could result in penalties from Medicaid, potentially delaying your care coverage for months to years.

In other words, if your father tries to apply for Medicaid on January 1st, 2019 and he transferred $10,000 plus a vintage sports car to you on August 12th, 2017, he’ll get dinged for that!  It was less than 60 months ago when it happened and he was in possession of both at the time.  This could delay his coverage for months.

A lot will depend on how much money you transfer and in what state you live. It is best to speak with an elder law attorney to discuss your options before you arrange for any transfers.

Get your ducks in a row

By now, I hope the initial shock has worn off and you’re coming to terms with this costly truth.  Nursing homes are tremendously expensive and if you’ve done any saving throughout your life, you’re far from Medicaid eligible.

But with knowledge comes power.  Talk with your parents, meet with an elder law specialist, or visit a retirement planner.  There are experts and professionals who can take you by the hand and help you get a plan.  When the day comes your loved one needs a nursing home, they’ll be ready…and so will you!

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