Sending a loved one to a nursing home for care is never an easy decision. Families often feel guilty because they cannot provide the level of care that their loved one needs at home. During such a difficult time of transition, financial or planning issues may be the last thing on your mind.
But the fact is that nursing home care is expensive—somewhere in the range of $6,000 per month—and financial concerns must be addressed. I hope to give you some idea of what to do if you are faced with this scenario.
1. See an Elder Law Attorney
It is not uncommon for a nursing home stay to devastate a family’s finances. Neither your private health insurance plan nor Medicare will cover the cost of a long-term nursing home stay, so many patients must pay out of pocket until they run out of money, then apply for Medicaid benefits.
The Medicaid qualification rules are complex. This is one time in your life where a good attorney can save your family a great deal of money. Look for an attorney who practices Elder Law. Many of the Elder Law Attorneys in Alabama are members of the Elder Law Section of the Alabama State Bar, or the National Academy of Elder Law Attorneys (NAELA).
2. Update the Estate Plan
Mr. and Mrs. Smith are in their 80’s and have been married for 50 years. Mr. Smith enters a nursing home, while Mrs. Smith is healthy enough to continue living in their home. When Mr. Smith enters the nursing home, Mrs. Smith should update her will to disinherit Mr. Smith to the greatest extent allowed by law.
Sound harsh? Perhaps. But consider this. Mr. Smith must spend down his half of their assets below $2,000 before he can qualify for Medicaid to cover his stay. Mrs. Smith can protect up to half of their assets for herself. But, if Mrs. Smith dies first, and her will leaves everything to Mr. Smith, the result is that Mr. Smith loses his Medicaid eligibility, and will have to spend down the other half of their marital assets before he could qualify again.
If Mrs. Smith had updated her will, she could have left Mr. Smith only the minimal amount required by law, and passed the rest on the their children. And, the minimal amount left to Mr. Smith could have been protected in a supplemental needs trust, to be used for paying for things to improve his quality of life. Even better, their children could have inherited what was left in the trust after his death. Because they did not plan, Mr. Smith died penniless, and their children inherited nothing.
3. Make Funeral Arrangements
Just because someone enters a nursing home doesn’t mean you’re just waiting on them to die. But this is the time to consider making funeral arrangements.
Medicaid rules allow a nursing home resident to purchase up to $5,000 in prepaid funeral services (or deposit $5,000 into a designated burial fund) without penalty. The choice is a no-brainer. An applicant has the option of spending $5,000 on the cost of their care, or pre-paying for an expense that all of us will eventually have.
In addition to the $5,000 in prepaid services, the applicant may actually spend additional funds for other items or merchandise that are part of those prepaid services as well. For example they may purchase a burial plot, headstone, casket, and a pay for the opening and closing of the grave. While funeral shopping is probably not anyone’s idea of a fun way to spend a Sunday afternoon, it is absolutely something that should be done while there is money left to do it.
4. Do Your Homework
There is great deal of misinformation out there about nursing homes and Medicaid. You should be very careful about taking advice from your friend at the coffee shop or Sunday School. Every case is different, and just because a planning strategy may have worked for someone else, doesn’t mean it will work in your case.
Do your homework, and get some good legal advice. The stakes are high, and it’s important to get it right.