HOW WILL I EVER PAY FOR NURSING HOME CARE?

     Have you ever wondered how you will pay for a nursing home should the need arise?  All of us have thought about this subject briefly at some point.  Some people believe the government will pay.  Many people believe Medicare will pay the cost.  Other people believe their health insurance will pay.  And others believe they will pay for nursing home care from their own pocket.  I will summarize the options and the advantage and disadvantages of each.

      First, it is important to know that Medicare will not pay for custodial long term, nursing home care.  If you or a loved one is discharged from a hospital to a nursing home, Medicare will pay for up to 90 days of care as long as the nursing home is providing essential services and your condition is improving.  Once you cease to improve or the 90 day period expires, Medicare will no longer pay the bill.  As important as it is to have health insurance is, your health insurer will not pay for care at a nursing home.  Once your Medicare benefit has expired you must examine other options.

      One option is to pay for the nursing home yourself.  There are some advantages to this alternative.  Certain nursing homes do not accept residents whose stay is being paid by the government.  The government pays the nursing home much less than an individual pays the nursing home, so in some instances the nursing home does not want to accept a reduced payment and will not accept government pay residents.  This is legal as a nursing home is a private entity.  The advantage of being a private pay is an increased availability of nursing home placements.  In certain situations, a private pay resident might receive better care than a government pay resident.  The disadvantage is the cost.  It costs approximately $100.000.00 per year to be a nursing home resident.  For a married couple, the cost is approximately $200,000.00 per year.  Residents needing more than basic nursing home care can pay as much as $180,000.00 per year per person.  If your total estate is $3,000,000.00 or higher you will probably be a private pay unless you do some sophisticated planning at least 5 years before you are admitted to a nursing home.

    The second option is to have your long term care insurer pay.  Depending on the level of benefit you purchase your long term care insurer can pay a significant if not all of the cost of the nursing home.  The advantage of this option is that you keep your assets and you can pass them along to your hiers when you die.   Another advantage is that if you have long term care insurance at a certain minimum level, the government will not force you to sell your home in the event government benefits are provided.  Additionally, if you have long term care insurance the government will not try to collect from your probate estate any balance due for government benefits provided.  And finally, any long term care premiums you pay will be tax deductible.  The disadvantage of having long term care insurance is that it can be expensive. And of course, like any insurance product, you may never need it.

     The final option is to qualify for government benefits  In Massachusetts this joint federal state program is called Mass Health.  Mass Health provides medical care for low-income aged, blind and disabled persons.   If you own assets worth $2,000.00 or less you qualify.  Your social security or other income will be paid to the nursing home and you will be left with a very small needs allowance.  If the value of your assets total more than $2,000.00 your can gift them and/or put them in a trust, but you must do this at least 5 years before you enter a nursing home.  If you are close to needing nursing home care and your assets exceed $2,000.00 in value, you can convert them from countable assets to non-countable assets.  For example, you can take $10,000.00 in cash and put it into a burial plan or your spouses's home.  If you are married, your spouse can keep at least $115,920.00 of assets.  Excess assets can be put into a special private annuity.  Qualifying for Mass Health can be complicated so you should seek professional advice.  The rules are complicated, they change often and intrepration is not consistent among Mass Health employees.

      I hope my summary helps you or a loved one decide which option is best in his or her unique situation.