As a loved one’s health declines, we are faced with a series of concerns including emotional fears and uncertainty, as well as the very real fear of the depletion of financial resources.
Especially for a spouse, the anguish of placing a spouse into a facility is compounded by the fear of being able to survive at home on limited resources.
It is no secret nursing home care is expensive. Residents easily can pay between $78,000 and $168,000 per year. Unfortunately, health insurance policies, including Medicare and Tricare, do not cover long-term care.
Although they may cover all or part of the rehab that often segues into long-term care, when the individual moves from rehab to long-term care, those insurance policies stop paying for the stay at the facility.
Because health insurance does not pay for nursing home care, the question remains as to how the cost of care is covered. There are five common ways residents pay for care.
Residents pay using personal funds. This can include income and assets such as bank accounts, investment accounts, the liquidation of real and personal property and even retirement proceeds.
Although some of these assets would be exempt under Medicaid requirements, if the individual is not aware of Medicaid exemptions, families often use every available resource to pay for care.
Without careful planning, even at the time of entering the facility, individuals as well as couples easily can deplete all resources within a matter of months.
Residents may use a Long-Term Care Insurance policy to pay for care. Long-Term Care Insurance is a tailor-made policy that pays a daily rate to help cover care at home, at an assisted living facility or in a nursing facility.
Policies vary significantly in their terms with the duration of payments ranging from a few years to unlimited stays. Long-Term Care Insurance can be a costly investment. However, if owned at the time of need, they can provide a period of protection for assets.
Residents who have served in the armed forces may qualify for one or more veterans’ benefits programs. Some programs provide full coverage for veterans in contracted facilities. Other programs provide enhanced pensions that, when added to existing income, may be enough to pay for the monthly cost of care.
Even if not quite enough to cover the full cost, the additional income may slow the necessity of using saved assets to pay for care.
Residents frequently use the government’s Medicaid program. Medicaid is a federal program that is administered by the states. For that reason, states often have varying rules and exemptions for Medicaid eligibility. Even when individuals begin by paying out of their own assets, upon depletion of those assets, residents can apply to the Medicaid program to cover their care.
With good planning, Medicaid can be used without the total loss of assets for an individual or a couple.
Residents may combine personal assets with gifts from children or other non-spouse loved ones. Tragically, many families are unaware of the option to apply for Medicaid or are afraid of losing a specific asset, such as a family farm. Family members also unintentionally may sign a personal guarantee for nursing home costs and feel obligated to scrape the money together each month. However, federal and state law is clear that third parties are not obligated for the cost of care.
Long-term care is expensive and the fear of the financial cost can be nearly as frightening as the medical reasons for going. Understand the options and engage in realistic planning to ensure care costs are met without losing a lifetime of savings.