The fear of having to go into a nursing home scares the bejeebers out of people – and it should! First of all, no one aspires to want to live out the remainder of their years in a nursing home. Second, the cost can be crippling. The average cost for a nursing home today is about $10,000 per month – that's right, almost $120,000 a year! Click here for the cost figures And that is without any add-ons or additional services you might need. Who has that kind of money and how does this get paid?
Long term custodial care is generally paid for in one of three ways:
- First is private pay. You simply keep writing out checks to the nursing home until you run out of money.
- Second is long term care insurance, but only a few of us have such insurance. And those that do have limited coverage.
- Third is Medicaid (not to be confused with Medicare which is a form of insurance that covers acute medical conditions and short-term rehabilitation). Medicaid is essentially a form of welfare that requires individuals to spend down their assets to about $2,000, or if you are married, down to about $120,000. Click here for the spousal impoverishment figures.
Realistically, if you do not already have long term care insurance by the time you need custodial care, then this is no longer a viable option since the cost is prohibitive, which leaves only options 1 and 3. However, paying privately seems particularly frightening since you need to be made a pauper before you are eligible for any government benefits. And for a couple where one spouse is still living in the community, this means using up most of your combined savings and assets, including retirement funds, before Medicaid kicks in. What to do?
The best thing I can tell you is that you need to plan well in advance for this scenario. Of course, you can die in your sleep one night and never have to confront any of these issues, but if that doesn't happen, then you are back facing the risk of becoming poor. Fortunately, if you plan sufficiently ahead of time, you can minimize the harsh effects of the Medicaid rules and keep more of the assets you and your family worked so hard to earn and save. Medicaid generally looks back 5-years in terms of reviewing your financial transactions which is why you need to begin planning well ahead of any impending nursing home stay.
None of us has a crystal ball, that's true, but we know we are not getting any younger and as we approach our golden years (or “rustic years” as my late mother-in-law used to say), it is likely we will eventually need care. So, consulting with an Elder Law attorney well ahead of time is the best thing you can do to help protect yourself, your parents and your grandparents from the ever increasing cost of long term care.
Here is a link to our website for more information on Medicaid planning.