Does Medicare pay for a stay in a nursing home?
Medicare will cover convalescent care after an injury or illness when recovery is expected, but it does not extend to the custodial care that nursing facilities provide.
What percentage of seniors actually need nursing home care?
Just over 50 percent will need paid living assistance of some kind. According to the U.S. Department of Health and Human Services, 35 percent of elders eventually reside in nursing homes.
What is the typical length of stay?
Overall, the average length of stay is one year, but 19 percent of seniors that require paid care are in the one-to-two-year range. Just over 20 percent receive the care for between two and five years, and 13 percent accumulate long-term care bills for more than five years.
How much does a stay in a nursing home cost?
Genworth Financial is a company that sells financial products for senior citizens, so they conduct research into the state of long-term care costs each year. The rates fluctuate as the years pass, but the median annual charge for a private room in a Memphis nursing home is about $90,000.
Can you buy long-term care insurance?
Yes, you can purchase long-term care insurance coverage from a handful of different providers, but its value is questionable. The premiums are quite high if you obtain the coverage when you are a senior citizen, and the rates can go up after you start carrying the insurance.
There is also a waiting period, so the coverage does not kick in as soon as you need long-term care. Depending on the policy, it will usually be 60 days or 90 days, so you have to pay out-of-pocket during this interim. Many people would say this defeats the purpose of the insurance.
Is there any other option?
Fortunately, there is a widely embraced solution in the form of Medicaid coverage. This jointly administered federal/state government health insurance program will pay for custodial care if you can gain eligibility.
You cannot qualify if you have resources, right?
Since it is a need-based program, there is an asset limit that stands at $2000 in most states.
Can you give away assets to your children after you find out that you have to move into a nursing home?
There is nothing stopping you from giving gifts at any time, but you will not be able to qualify for Medicaid as soon as you divest yourself of assets. You will be ineligible for a period of five years after you give large gifts.
Do all of your assets count toward the $2000 limit?
No, some assets are not considered to be countable for Medicaid eligibility purposes. You can maintain ownership of your wedding ring, engagement ring, and any heirloom jewelry that you may have in your possession. One motor vehicle is exempt as well.
Your furniture and other items that you have around your house are not counted, and your personal effects are not considered. An applicant can have unlimited term life insurance, $1500 of whole life insurance, and the same amount saved for burial or cremation expenses.
A home is not a countable asset, but there is an equity limit that is well above the median cost for a single-family residence in the Memphis area.
Can you use a trust to get assets out of your name?
This is the approach that is at the core in a nursing home asset protection strategy. You can convey countable assets into an irrevocable, income only Medicaid trust.
While you are still living in the community, you can accept distributions of the trust’s earnings, but the principal would be out of your reach. Five years after you fund the trust, the assets that are held by the trust would not be counted if you apply for Medicaid.
In addition to income-producing assets, you can convey your home into the trust. Medicaid is required to seek reimbursement from the estates of deceased beneficiaries. If the home is in the trust, they would not be able to attach it during the recovery phase.
