Asset Protection: How Will You Pay for Nursing Home Care?

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Family Asset Protection: HOW WILL YOU PAY FOR NURSING HOME CARE?

One of the most difficult decisions a family can be faced with is the decision to place a loved one in a nursing home.

Adding to the difficulty is the question of how to handle the overwhelming financial burden of paying for the care. In the New York metropolitan area, a typical monthly nursing home or rehabilitation center charge is $17,000. That is a lot of money. 

There are really only three ways nursing home care is paid:

  • Out of Pocket. A person can pay from private funds.
  • Medicare. If you need skilled care and qualify for Medicare, it will pay for your first 20 days in a skilled nursing facility. From day 21 through 100, Medicare may pay 80% and the patient must pay the other 20%. However, very often Medicare will determine there is no longer a skilled need before that time period has elapsed and discontinue paying long before day 100. After day 100, there is no Medicare coverage no matter whether there is a skilled need. If you have a private supplemental insurance policy or “MediGap policy”, then it may cover the Medicare deductible for days 21 through 100.
  • Medicaid. Medicaid is a needs-based medical assistance program that pays medical costs for those individuals under the poverty level. Medicaid is the payer of last resort. This means that all other sources of payment must be exhausted before Medicaid is available.

Other than private pay, Medicaid is really the only form of insurance that pays for long term care. The exception to this is Long Term Care Insurance. This is insurance purchased specifically for the purpose of paying for nursing home care and/or home health aides. This must have been purchased at a time a person was young and healthy enough to qualify for and afford this type of coverage. Depending on the plan, this insurance may not be sufficient to cover the entire cost of long term care.

HOW IS MEDICAID ELIGIBILITY DETERMINED?

Eligibility for Medicaid is determined by whether your income and assets are low enough. Assets are divided into two categories: exempt and countable. Exempt assets are those that are not counted in determining your eligibility. Exempt assets include:

  • One home (as long as it is your primary residence), with equity up to $858,000
  • One personal vehicle
  • Personal and household belongings
  • A burial fund for you and your spouse with a total value of up to $1,500
  • A life insurance policy valued at less than $1,500

Most other assets are considered countable, including:

  • Cash, including checking, savings, and money market accounts
  • Stocks, bonds, and investment accounts
  • Real estate other than your primary residence
  • Vehicles other than your one exempt car or truck
  • Revocable prepaid funeral contracts
  • Certain trusts

In New York, a single person can qualify for Medicaid if he or she has no more than $15,150 in assets.

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