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How to Pay for Nursing Home Care 

Planning for the future needs of yourself or a loved one can be a overwhelming, and
nursing home care is expensive! The average cost of one month in a nursing home, in Pennsylvania is currently around $8,000.00 per month, or just under $100,000.00 per year. Few people can continue to pay for very long, before they run out of money.

Whether you are planning ahead or are already in some type of long term care facility, you can still plan to protect your assets from the ongoing cost of care. Below are the five ways that you can pay for this care.

1. Medicare

If you are qualified for Medicare, it may pay for nursing facility care for a period of time. Medicare is designed for short term rehabilitation. You must have a three day hospital stay before entering a nursing facility. Medicare will only pay as long as you have a medical need for skilled care. Once you stop making progress, your Medicare benefits will be discontinued. If you have a continuing medical need for benefits, Medicare will pay one hundred percent of the first 20 days. Days 21-100 require a co-payment, currently $133.50 per day. Most supplemental health insurances are designed to pay this amount. You must check your policy to be certain that it has nursing home co-payments as part of the policy. Usually plan C, as well as some others will contain this coverage.

2. Long Term Care Insurance

Long Term Care Insurance is a way for some people to offset the cost of long term care. When choosing a policy you must decide from several options that best suit your needs. One thing to decide is the amount of years, usually from one year to your lifetime, that you wish for the coverage to continue. Another choice you must make is how many dollars per day of coverage you wish to have, usually $50 or $100 per day. You can also choose what is called an inflation rider, so that the daily coverage amount increases as the cost of nursing care increases. You must decide whether you wish your coverage to just be for nursing facility care, or whether it should extend to home care, personal care homes and/or assisted living facilites. Usually these are separate policies.

Some policies have elimination periods, which means that you would have to pay for care for a period of time until your coverage begins. Some companies offer lower premiums in return for 3-6 month elimination periods. This could mean a cost to you of $24,000-$48,000, with care costs averaging $8,000 per month.

3. Veterans’ Benefits

The VA is not permitted to pay for care in any facility that is Medicaid or Medicare qualified, even if the individual who is applying for benefits does not personally qualify under either of those programs. However, at this time, since assisted living facilities and personal care homes do not qualify for Medicaid and Medicare dollars, the VA may pay for care in such facilities. If a Veteran pays for care in such a facility, the VA considers this to be an un-reimbursed medical expense, which results in the veteran’s income being lowered. The VA has set a minimum level of income that a veteran and spouse should have to live on. When the income falls below this level, the VA will make monthly payments to raise the minimum income level. This is called an Improved Pension.

In addition, for those who need help from another person with their daily routines, there are Aid and Attendance benefits.

To see if you qualify for this, or for Aid and Attendance benefits, for married veterans, please see your county VA representative. It usually takes approximately 8 months to begin receiving benefits, but there will be a retroactive payment made, from the date of application.

4. Private Pay

This is the only option most people think that they have. It requires no explanation. An individual simply pays for benefits until his or her resources are gone.

5. Medicaid Planning

Medicaid Planning is a complex form of Estate Planning, designed to qualify an individual for Medicaid, also known as Medical Assistance in Pennsylvania. Medicaid is the only government benefit that will pay long term for nursing home care. The cost of nursing home care in Pennsylvania averages around $8,000 per month, and most people cannot afford to pay for this out of their pockets for very long. When an individual no longer has the money to pay, he or she applies to have his or her long term care costs covered under the Medicaid program. Medicaid is not an automatic entitlement like Medicare, but it is something an individual must qualify for medically and financially. Basically, you must have very few assets in your name before the government program will pick up the cost of your care. 

An individual currently with a fixed income of $1,822/month or less may have $8,000 in available assets in his or her name, and an individual with income currently in excess of $1,822/month may only keep $2,000 in available assets. In the case of spouses, the spouse who is staying at home and does not require assistance from the government, may keep half of the marital assets, up to $109,560. In addition, each individual may have an irrevocable prepaid burial of up to $8,000, and keep a small amount of life insurance. The house is exempted during the individual and the spouse’s lifetime, but may be subject to Medical Assistance Estate Recovery after the last of the two of them passes away. The spouse at home may also currently keep his or her IRA or other qualified retirement plan.

The Medical Assistance rules allow for transfers, or gifts, however the new rules, passed by the Federal government, and interpreted by Pennsylvania are quite harsh. Any cumulative gifts over $500.00 per month (per couple, if married) are subject to a transfer penalty for a 5 year period after the gift is made. What that means is that if you need care, and ask the government to pay the bill within 5 years after giving away the money, the government would require you to pay all of the money transferred within the 5 year period toward your care before the government would begin to pay. That means that if you gave money to your church or grandchildren, you would have to get all of that money back, since the government would not begin paying until it had all been paid back. If you do not need care within that 5 year period, then any gifts made prior to that would be considered un-reportable when applying for benefits.

Plan Ahead

You may be able to combine payments from more than one source listed above. However, because the rules are now so unforgiving, it is important to plan ahead. While there are still many planning techniques available, they are now often limited according to each individual set of circumstances.

The sooner you plan, the more assets you can protect. Even if you are already in a nursing facility, we can still assist you and your family. We can usually help our clients protect at least half of their life savings from long term care expenses (even after a nursing home admission.)

Contact Kron Law Firm for your free initial consultation.