How Do I Pay for Nursing Home Care?

Although most people do not wish to place a loved one in a nursing home, it can become a necessity. Certain medical conditions and forms of dementia can make living at home a dangerous proposition for both the individual and his / her caregivers. Nursing homes can be very expensive, and there are limited options for payment. Ordinary health insurance does not pay for long term nursing home care. Medicare (the Federal health benefit we are entitled to at age 65) provides only limited coverage, generally for the first 100 days of a nursing home stay.

This leaves three options:

1. Long Term Care Insurance. This is a special kind of insurance which most people do not have because it is quite expensive.

2. Private Pay. This simply means paying for the nursing home out of your own pocket. As the bills can run $5,000 – $10,000 per month, private pay is not a long term solution for many people, who may run through their entire life savings.

3. Medicaid. This is a joint Federal / State benefit which is different from Medicare. Medicaid is technically a “welfare” program, carrying with it strict asset and income limits before benefits are granted.

To obtain Medicaid benefits for nursing home care, a lengthy application process is required. The applicant will need to provide a great deal of financial information to the State. The application will focus on both income (things like social security or pensions) as well as assets (things like real estate, stocks, bank accounts, and retirement accounts such as IRAs). To qualify, a single individual cannot have “countable” assets with a value greater than $2,500.

In the case of a married couple, there are certain protections available to the spouse who is not in the nursing home. The “healthy,” at-home spouse will be entitled to keep a portion of the couple’s assets and, in most cases, will be able to keep the family home. Cars and personal effects are not “countable” assets. There are income rules as well, with the result that some income will be paid to the nursing home, while some can be kept by the healthy, at home, spouse.

If a Medicaid applicant (or his/her spouse) has made gifts to others within five years of the Medicaid application (this is the so called “5 year lookback”), then the applicant may be disqualified from receiving Medicaid benefits for a period of time.

The rules regarding Medicaid eligibility are complex and change frequently. They are also very fact-specific. Clients are advised to review all of their financial information with an elder law attorney to determine what planning options may be available to best protect assets in the event of a nursing home stay.