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Paying for nursing homes. Is this true?

Discussion in 'Off The Beaten Track' started by BaileyCatts, Jan 27, 2011.

  1. BaileyCatts

    BaileyCatts Well-Known Member

    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. :p

    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.
  2. bardtoob

    bardtoob Former Choreographer for Anna Maria Tragikova

    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.
  3. PDilemma

    PDilemma Well-Known Member

    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!
  4. milanessa

    milanessa engaged to dupa

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

    woodstock Active Member

    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 $$$.
  6. Aceon6

    Aceon6 Hit ball, find ball, hit it again.

    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.
    bardtoob and (deleted member) like this.
  7. PRlady

    PRlady foot in both camps

    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.
  8. barbk

    barbk Well-Known Member

    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.
  9. rfisher

    rfisher Will you rise like a phoenix or be a burnt chicken

    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.
  10. skatemommy

    skatemommy Well-Known Member

    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.
  11. numbers123

    numbers123 Well-Known Member

    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.
  12. Allskate

    Allskate Well-Known Member

    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?
  13. Aceon6

    Aceon6 Hit ball, find ball, hit it again.

    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.
  14. numbers123

    numbers123 Well-Known Member

    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.
  15. BaileyCatts

    BaileyCatts Well-Known Member

    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. :)
  16. PrincessLeppard

    PrincessLeppard Holding Alex Johnson's Pineapple

    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.
  17. redonthehead

    redonthehead Well-Known Member

    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.
  18. skatemommy

    skatemommy Well-Known Member

    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.
  19. numbers123

    numbers123 Well-Known Member

    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.
  20. my little pony

    my little pony war crawling into canada

    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.
  21. barbk

    barbk Well-Known Member

    Why is it always those who weren't the caregivers who complain about expenses like these? I'm sure your mom gave your grandmother great care as long as she could -- but there comes a time when it may just not work to keep someone at home.
  22. skipaway

    skipaway Well-Known Member

    I actually bought LTC insurance in my 40's. It was offered at work for a 5% discount, no health assessment and the insurance company was A+ rated. I felt that LTC insurance will become like disability in that they'll deny you even if you have a hang nail and I've already been denied on disability insurance. So, I locked in early at a relatively low cost.
    But now, I'm hearing a lot of insurance companies are getting out of the LTC insurance business, (mine included, though they still have to honor my policy) b/c it's more expensive for them then they expected. So I don't know if this type of policy will be around for long.
  23. Aceon6

    Aceon6 Hit ball, find ball, hit it again.

    Smart, given your insurance status.

    The biggest 3 reasons folks need LTC are stroke, hip fracture, and dementia. If high blood pressure, osteoporosis or dementia are common in a family, locking in LTC insurance might be a good idea.
  24. skaternum

    skaternum Grooving!

    I disagree. I'm 46 and just got a LTC policy. I ran the numbers, using conservative assumptions about how much investments would earn, what age I'm likely to start using the benefits, etc. It is MUCH cheaper for me to get a policy with low premiums in my 40s and pay on it for a long time than to get a policy with HIGH premiums at age 60 and pay on it for a shorter time. The rates go up astronomically the older you are at the time the policy is initiated.
  25. FigureSpins

    FigureSpins Well-Known Member

    ITA. Try to find a lawyer who is also tax-law knowledgeable. A friend has a lawyer who's also a CPA and he did wonders with moving the money around from the parents' names to her name, allowing the parents to shelter a good deal of their hard-earned money for retirement and estate planning. While they had health coverage and didn't need a nursing home, the complicated process of moving themselves and their assets (in various names) from one state to another was made much easier with his guidance. In truth, neither of the parents would ever allow themselves to be "put into a Home." They would hire a live-in caregiver before that would happen. They had the assets, so use them wisely.

    A couple from church were driving on a street when a tractor-trailer wiped out and sent their car flying two lanes into a brick building. She was badly injured and took months to recover; he was in ICU for weeks and spent almost a year in a nursing home/rehab facility. They were in their late 50's when this happened and the LTC insurance from their jobs was a godsend because they would have lost all of their retirement savings otherwise.
    Last edited: Jan 28, 2011
  26. Cupid

    Cupid Well-Known Member

    There was actually a news article recently talking about this. A lot of companies were no longer offering LTC policies because of aging boomers cashing in, cutting into their profits obviously.

    Also, they interviewed people who HAD policies but had to forfeit them because premiums rose so much they could no longer afford the insurance. So there's money out the window.

    I don't know who can afford 7k a month for nursing home care or even a fraction of that! I would think even if you scrimped all your life, your savings would be wiped out in a heartbeat if you needed long-term care.

    Makes you think the lucky ones are the ones who are able to retire comfortably in their 60's and then just die peacefully in their sleep in their 70's before maladies and illness set in. :slinkaway
  27. barbk

    barbk Well-Known Member

    Lovely -- so these wonderful people "shelter" their "hard-earned" money so that the rest of us poor fools get the opportunity to pay the welfare costs necessary to support them in a nursing home? And my hugely pressured state uses even a higher percentage of tax revenues to pay for Medicaid nursing home costs?

    Because, of course, it is far more important for these gracious folks to leave an estate than to prepare to pay for the expenses they incur?

    And I would say that the vast, vast majority of people in nursing homes never thought that they'd end up there. Not too many of us sit here thinking, "oh well, when the time comes I'll just go into that nursing home." :rolleyes:
    Meredith and (deleted member) like this.
  28. LilJen

    LilJen Reaching out with my hand sensitively

    Unfortunately, if your grandmother wanted to set aside that $ for her grandkids' college educations, she should have used a 529 or Education IRA. Then the assets could not be used for her care.

    Long-term health care in the US is a disaster. Costs a ton and no one has the $$ for it. And other posters were right--this is an area in which it really makes a difference if you plan ahead. I keep trying to get my MIL to do this but she hasn't "gotten around to it" and probably never will. *She* also wants to give us $$ for granddaughter's education, but unless she puts it into a protected "for education only" account (eg, a 529) there's no guarantee it won't be taken to pay for her own medical care.
  29. cruisin

    cruisin Banned Member

    Yes, it is 5 years. And, yes, her money should go toward her care. Just not up front. I would imagine that if all money were given up front and the person passed away before the money was used up, it would be very hard to get back. I would never consider that.

    My husband and I have LTC insurance. His firm offered it several years ago. He was early 60's, I was still early 50's. The younger you get it the less it costs and the more you stand to accrue. Also, the chance of being denied for existing health issues is lower.

    How true.

    My father needed care. He was a brittle diabetic and no one could manage his meds. He liked to eat whatever he wanted, then give himself extra insulin to compensate. He needed to be in a place where food was not readily accessible and his insulin was controlled. We chose assisted living, there was a little more freedom and the cost was a bit less. But he was ambulatory and did not need nursing home level care. He lived there for 3 years, until he passed away.

    As to finances, we paid for it. There was no medicaid payment. We paid monthly, just like rent. Then we paid for optional services used, such as laundry, medication dispensing, etc. 3 meals a day and cleaning were included. There were also many "community" activities: bus trips to malls & grocery stores, holiday parties, weekly sing-a-longs, daily tees and book clubs. They provided bus service to doctors offices and there were doctors that came to the facility. There was a nutritionist and each resident was provided with a diet that fit with their health needs. It was actually very pleasant. My father initially resisted, but I think he lived an extra 2 years because of it.
  30. cruisin

    cruisin Banned Member

    My father wanted to contribute to his grandkid's education. But, he didn't will it to them. He started accounts, earmarked for their education, the day each of them were born (literally!). Over the years, he added to it. My kids were fortunate that most of the investments he made were long term and locked in, during the 80's, with high interest rates. He was in his 50's when he set the accounts up - he was all about education :)!