Paying for nursing homes. Is this true?

[BaileyCatts]

I overheard a conversation today that I hope I heard wrong. Hey, I was eating by myself, the two ladies next to me were talking very lloouuddllyy, I could not help but overhear what they said.

The gist is this .... woman's mother has lived with her for several years, but mother's health has badly declined, she can no longer get up stairs at house, and needs far more care than woman can provide. So they looked at nursing home, but were told they must turn over ALL of mother's financial assets to nursing home immediately upon moving in, but then Medicare pays for rest of fees (or something like that). Mother has quite a nest egg from husbands investments (about $200K if I heard right). Mother is distraught at having to turn over her entire life's savings money to nursing home because she wanted to leave to her grandkids to pay for college educations.

So long story short, when you have to go to a nursing home to live, do you really have to turn over ALL your financial assets, meaning you save your whole life but cannot leave anything to your children? Maybe I misunderstood.

[bardtoob]

It depends on the structure of the assets and the cost structure of the nursing home. It sounds like a bad deal.

However, I have heard that lack of financial planning prior to old age can be detrimental.

[PDilemma]

My grandfather was in a nursing home. No assets had to be turned over. My uncle, with power of attorney, paid what Medicare did not cover on a monthly basis from grandpa's accounts.

I'd look for a different nursing home!

[milanessa]

Medicare doesn't cover long-term nursing homes at all.

[woodstock]

Get a lawyer that specializes in elder law. They know a lot of legal ways to move the money from an elderly relatives "back pocket" (and therefore easily pick-able by nursing home charges) to their "front pocket" (such as putting the money in a trust in an inheritors name, makes it harder for nursing homes to go after it).

Also beware, you lose a lot of options once your private money runs out and you end up a financial liability. They techinically can't kick you out until you leave the facility in what is considered a "discharge", but they can deny your return. You can be years in a quality nursing home, your accounts run dry because of their charges, you've gotten to stay because they can't kick you out, but then you go to the hospital for more than 24 hours. Voila! Discharged. That's when you find out you can't return to that home because they don't take medicaid or just don't accept you back because your insurance won't fully cover your bills and you don't have private money to pay the difference, return denied. And you end up getting sent to a crap home.

It's all about the $$$.

[Aceon6]

Woodstock, I agree. Anyone over the age of 60 with substantial assets without a trust plan or long term care insurance is playing with fire. It's morbid to think about, but planning ahead is the only way to go.

[PRlady]

And do it before it's too late. My mom broke her hip last month and is in a nursing home now, in two weeks she will exhaust what Medicare will pay for since she no longer will be "making progress" in rehab. For a few weeks she'll have to pay the exhorbitant private cost until she can move to an independent living apartment in the same complex with my stepdad. Since she already will not qualify for a life contract, if she has to go back into the nursing home (which is pretty foreseeable) she'll have to spend down her assets to zero, only partially assisted by a long-term care insurance policy. So it will all go to the nursing home because nothing was protected beforehand.

The geriatric care system sucks.

[barbk]

I'm not sure what you heard, or if they knew what they were talking about.

There are two types of long term care arrangements where this could be involved:
1. Continuing Care Retirement Communities: You pay a huge (easily $200K) up front lump sum, and then pay a monthly fee to the community, and they promise to take care of you, at whatever level of care you need until you die. People often sell or gift their homes to get into one of these arrangements. I don't think the woman described would qualify; most of the ones (at least around here) require you to be in pretty decent health at the start.

2. Medicaid (not Medicare) spend down: If you go into a nursing home, Medicaid expects that you will spend down your assets first. At the point where you've spent down your assets (really, really down) then Medicaid pays the nursing home bill.

Nursing homes run $6-12K per month (varies wildly depending on where you live and the fanciness of the nursing home). Most people who go into nursing homes without expectation that it will be short term (ie, not as short term rehab after hospitalization) live less than 2 years. Two years of nursing home care could run $120K-$240K.

Why wouldn't you expect that her assets ought to be the first used to pay her expenses?

I would never turn over all the assets at once. In no case has a nursing home ever asked for more than one month's advance payment from us.

PS: Medicare does not ever pay for long term nursing home care; only for short-term stays immediately following a hospital admission (full admission, not just observation) that lasts at least 3 days.

[rfisher]

Moreover, there is a time limit on gifting assets if you have to enter a nursing home on the government's dime. I think it's 5 years now. They will look back and if money or property is given to a relative within that period, it will have to be paid back first.

If the woman had 200K in assets, it should go for her care not her grandchildren's education.

[skatemommy]

MediCARE does not pay for long term nursing home care. MediCAID (welfare) does pay for long term care for poor people. So it is correct that there can be very little assets before Medicaid will pay. It is a crime to hide assets from the government to falsely qualify for welfare. Long term care insurance is a must at age 60. Then you can stay in the nice facility, not the Medicaid home.

[numbers123]

Moreover, there is a time limit on gifting assets if you have to enter a nursing home on the government's dime. I think it's 5 years now. They will look back and if money or property is given to a relative within that period, it will have to be paid back first.

If the woman had 200K in assets, it should go for her care not her grandchildren's education.

Yes and Yes. My parents put everything in a trust just to avoid the unexpected need for long term nursing care facility. (My parents own their car outright, everything else is in trust). It used to be within 3 years, but they have extended it to 5 years.

And I totally agree about the woman's money going to her care and not to an inheritance or grandchildren education. I wish I could convince my parents that they should spend their money on themselves. While it is nice that they want us to inherit something - it is their money and they should do with it what they want. They said they have done all the traveling they want, bought the things they want, but still I wish they would spend it on themselves.

[Allskate]

What is the current law for spouses? If one spouse needs care that will essentially bankrupt the couple, is the other spouse left homeless and penniless?

[Aceon6]

What is the current law for spouses? If one spouse needs care that will essentially bankrupt the couple, is the other spouse left homeless and penniless?

Pretty much. The Medicaid rules are pretty strict. They consider 1/2 of the joint assets as available to pay for care. So, half of the nest egg goes away. Even if the couple has been careful, the balance may not be enough for the spouse to continue in the same lifestyle.

I've been told to get LTC insurance in your 60s when it's a bit cheaper (and when you're most likely to need care for shorter periods of time), and to start moving assets to trusts no later than age 70, earlier if you have a substantial amount. One financial planner who has a local radio show says that the only people who can afford to do nothing are those with $5 million or more.

[numbers123]

I've been told to get LTC insurance in your 60s when it's a bit cheaper (and when you're most likely to need care for shorter periods of time), and to start moving assets to trusts no later than age 70, earlier if you have a substantial amount. One financial planner who has a local radio show says that the only people who can afford to do nothing are those with $5 million or more.

And I imagine the $5 million gate will need to be higher in the coming years. Basically, no one can afford to do nothing. Planning is extremely important.

[BaileyCatts]

Thanks. Interesting discussion. Like I said, it was just from listening to these ladies talking very loudly at lunch. I was trying to read my book but I could not help but hear them, so I didn't hear everything they said.

Myself, I have no kids and no spouse, so never really cared about having money to leave for other people. I live a very frugal (i.e., cheap!) life just so I do have money when I get old since I won't have anyone to take care of me, so I never thought about things like that.

And I never knew about the Long Term Care insurance, so that is something I would have never known to do. So that is something you should buy once you turn 60, not something you should be paying for yet if you are in your 40's?

So you always learn something at FSU.

[PrincessLeppard]

My parents are paying $7000 a month for my grandmother in an Alzheimer's unit at a very nice facility. My grandmother had quite significant savings, but I don't think they are going to outlive her.

Some relatives are grumbling, but my mom took care of her as long as she could.

[redonthehead]

What is the current law for spouses? If one spouse needs care that will essentially bankrupt the couple, is the other spouse left homeless and penniless?

When we put my husband's grandfather in the nursing home, his grandmother was not going to be left homeless or penniless. Since her social security check wasn't enough for her to live on, she would still recieve 50% of his. What was left of their savings (which was very little by then) and the house would have to go back to the government when she died. As it was explained to us, they can't take everything because everything doesn't just belong to one spouse and the spouse has to be able to live.

We ended up not having anything to pay back because he died before Medicaid ended.

[skatemommy]

Baileycatts - no need to buy LTC in your 40's. You will be throwing $ away for 20 years. Better to invest in an IRA and have a cheap level term life insurance policy.

[numbers123]

My parents are paying $7000 a month for my grandmother in an Alzheimer's unit at a very nice facility. My grandmother had quite significant savings, but I don't think they are going to outlive her.

Some relatives are grumbling, but my mom took care of her as long as she could.

And your mother did her best to keep her in their home. And you are a wonderful granddaughter - I loved hearing your stories. I am sure those grumbling relatives never spent more than a day at a time with your grandmother.

[my little pony]

a lot of the people who collect LTC are not elderly, I can get the exact # tomorrow at work

i'm not advocating for or against it, but many people who use it are not old and need it due to car accidents and other unexpected things. for a younger person to buy LTC now, it really isnt for when they are old because the entire health care, eldercare and insurance system will be very different by then. but we all can get hit by a bus tomorrow.