An important issue which should be considered in conjunction with financial planning and estate planning involves the economics of nursing care.
Family members seem to reluctant to have a loved one cared for in a private nursing facility. The alternative is in-home care or private nursing. In-home care can be provided by various local agencies which specialize in providing care ranging from day care for the disabled, to skilled nursing care. Any agency should reasonably be investigated with regard to obtaining references and determining if their charges include employment tax withholding and workmans’ compensation insurance coverage for the care professional, as he or she may suffer a back injury lifting a person. Also, checking whether the agency is covered by a surety bond is crucial to make sure there is protection against theft of cash or assets. Agencies are usually paid weekly, and in turn pay the aide or nurse, or, payment goes to the aide or nurse with the agency’s fee built in.
Nursing homes can provide quality care for senior citizens. Before placing a family member in a nursing facility, you should tour the home, check for references from family or friends about their experiences with the home, and verify how certain nursing care needs, such as diet, rehabilitation assistance in dressing, feeding, toileting, or bathing, are addressed.
Nursing home rates are usually computed on a daily basis, with accommodations ranging from 4-person semi-private to 2-person semi-private to private rooms. The cost can be from $100.00 to $125.00 or more per day–a cost of $3,000 to $4,000 per month. This is certainly cheaper than private care–but still expensive.
Medicare (government subsidized insurance) may help with some expenses, but only initially. Regular nursing care services are generally covered for up to the first 100 days, providing you are over 65 and eligible for Social Security. That 100 days may include post-hospital stays in Medicare certified skilled care facilities if the stay is based on Doctors orders for some type of rehabilitation purposes. After the initial coverage period expires, you are again on your own.
Simply put, the general rule for senior citizens residing at nursing homes is that anything you own–your income and your life savings–must be used to pay nursing home expenses. It is only when your assets run out that governmental Medicaid (federal) or Medical Assistance (state) financial help becomes available.
To qualify for Medicaid, one entering a nursing home must be at least 65, blind or disabled, need the care provided in a nursing home, meet income criteria and asset criteria. If these criteria are met, Medicaid will generally cover long term nursing home care.
The Medicaid or Medical Assistance application period is somewhat lengthy and application for benefits should be made approximately six months before assets are expected to run out.
Government regulations are very specific about not allowing transfers of the applicant’s funds or assets within a 5 year ( i.e., 60 month) period prior to payment of benefits (this “look-back” provision was recently expanded from 3 to 5 years). A financial resource assessment must be completed detailing all monies, accounts, securities and real estate.
Having assets of more than $2,000.00 makes one ineligible for these benefits, although there are certain exceptions. Your principal place of residence is not counted as an asset if you file a written notarized letter stating you intend to return to the home (regardless of medical prognosis), or if a spouse or dependent resides in the house. Also certain assets can be protected for the spouse not living in a nursing home.
One solution to the expense of nursing home care is to purchase nursing home or longterm care insurance. Such policies can be expensive, but may be less costly than nursing care in the long-run.
The bottom line is that when you plan for your future, you need to take into consideration–and plan for–the possibility that you or your spouse may require either in-home or nursing home care, either of which will certainly be a drain on your finances and markedly affect your standard of living.