|
Myths and Realities of Long-Term Care Planning
Are these statements true or false?
Q. I will never end up in a nursing
home.
A. Maybe. Of those Americans reaching age 65 in any year, 24 percent
are expected to spend a year or more in a nursing home. Fifty-seven
percent will never enter a nursing home and 19 percent will spend less
than a year in a nursing home. Nine percent will spend more than five
years. Women live to about 80 and make up 72% of nursing home
residents. Men only live to about 75 and are less of the nursing home
population.
Q. An average nursing home costs $4;000
a month.
A. False. In Pennsylvania, the average nursing home cost is
($5,559.25/month in 2004) nearly $68,000 a year.
Q. Medicare will pay for any long-term
costs I may have.
A. False. It will pay for up to 100 days of skilled nursing facility
care if you meet certain requirements, including (1) you must have
moved to the nursing home within 30 days of a hospital discharge, the
hospital stay having lasted at least three days; and (2) you must
receive a skilled level of care. Medicare pays entirely for the first
20 days and everything above a co-payment of $95 a day for days
21-100. Most people have Medicare Supplemental Insurance that pays the
co-payment amount. The general rule of thumb if your coverage is
denied or terminated due to the lack of need for skilled care is to
ask for the bill to be submitted to the fiscal intermediary anyway.
This review costs nothing and may result in coverage.
Medicare pays for home health care on a
part-time or intermittent basis. Part time generally means up to 20
hours a week. You must require a skilled component to your care to get
this coverage.
Q. Medicaid is a program only for
"poor" people (not me).
A. In 1995, the total cost of nursing home care was approximately $78
billion. This amount was paid from the following sources:
47% Medicaid
37% Private pay
9% Medicare
3% Private insurance
4% Miscellaneous
Q. To qualify for Medicaid I will have
to give up my home.
A. False. You may keep your home as long as you intend to return to
live there, whether you really can or do. [May be different in some
states.] However, if the house is in your estate at your death, the
state will have the right to recover whatever it has spent on your
care.
Q. If my spouse enters a nursing home
all our joint savings will have to be spent on his/her care.
A. False. You are entitled to keep half of your combined liquid
savings up to $79,020 [different in some states]. In some
circumstances, you may be entitled to keep more than this amount.
Q. If I give money to my children, I
will be ineligible for Medicaid benefits for 36 months.
A. Maybe. You will be ineligible for one month for approximately every
$ 5,300.00 transferred up to a maximum of 36 months (60 months in the
case of a transfer to an irrevocable trust). There are some exceptions
to this transfer penalty.
Q. If I apply for Medicaid, the
Division of Medical Assistance and the nursing home staff will
reliably guide me through the process.
A. True, and in most cases their help will be sufficient. However,
they may not know the intricacies of spousal impoverishment and other
rules. They may not be able to advise you on when to appeal denial.
You should be aware that applications for Medicaid require extensive
documentation and can be quite time-consuming.
Q. Legally I can give away only $10,000
to each of my children each year.
A. You can give away any amount, but you have to report gifts in
excess of $11,000 per recipient per year ($22,000 if both husband and
wife make gift). The reporting requirement is not an issue for most
people because an estate must be greater than $1,000,000 to be
taxable.
Q. I can wait to do long-term care
planning until either my spouse or I get sick.
A. True and false. Usually there are things that can be done even if
no advance planning steps have been taken. However, you will be much
better off if you have planned in advance. Here are the steps that we
recommend that our clients at least consider.
CONCLUSION
You cannot predict whether you or a
family member will require long-term nursing home care. But if we
define "long term" as a year or longer, one in four of you will. That
means one in four will face costs of more than $70,000-more than one
in four couples will face such costs.
Medicare will not pay these costs,
which leaves you with three choices:
1. Long-term care insurance;
2. Out-of-pocket; or
3. Medicaid.
Long-term care insurance is great if
you can afford it. But follow these ground rules:
1. Buy an individual policy, not a
group policy;
2. Buy home care coverage;
3. Get an inflation rider;
4. Buy enough coverage;
5. Buy at least three years of coverage;
6. Tell the agent the complete truth about your current condition and
situation; and
7. Make sure you can afford the policy. This means you are paying for
it with 5 percent or less of your income or with money you would
otherwise add to your savings. Do not change your current standard of
living for the policy. Or get your kids to buy it.
Key Medicaid rules:
1. Only $2,400 in countable assets.
2. Countable assets are everything that you and your spouse own
(individually and jointly) other than your home and other
non-countable or inaccessible assets. You never need to give up your
home in order to qualify for Medicaid.
3. The at-home spouse is entitled to retain up to 50 percent of the
couple's total countable assets up to a maximum of $92,760.00*. There
is a guaranteed minimum of $18,552.00*. In some cases (like
Pennsylvania), the at-home spouse can appeal for a higher resource
allowance.
4. All income of a nursing home Medicaid beneficiary goes to the
nursing home, except for (1) $30 a month personal needs allowance, (2)
the cost of any health insurance premiums, and (3) any allowance for
the at-home spouse or minor children.
5. The community spouse is entitled to a share of the nursing home
spouse's income if the community spouse's own income does not meet a
minimum guarantee.
6. Transfers by the Medicaid applicant (in a nursing home) or his or
her spouse will cause one month of ineligibility for every $1.00
transferred beginning with the month in which the transfer occurred.
7. The state may recover whatever it pays for the Medicaid recipient's
care from his or her probate estate.
8. The Medicaid application process is long and cumbersome. Do not
expect to get sound advice from health care workers, friends, or
anyone but an experienced elder law attorney.
9. Plan ahead, especially with a durable financial power of attorney
and a health care power of attorney.
 Ralph L. Montgomery, Jr.
- Member American Academy of ElderLaw
Attorneys.
DALE WOODARD LAW FIRM
1030 Liberty St.
Franklin, PA 16323
Phone 814-432-2181
Fax 814-437-3212
www.dalewoodard.com
montgomerylaw@csonline.net
|
