Nursing Home Payment
Strategies. It is common for an elderly person to be
legitimately concerned about his or her assets being depleted if it
becomes necessary in the future to enter a nursing home for medical
reasons. Careful planning with legal counsel can help to protect your
assets. When someone enters a nursing home, the daily charge imposed by
the facility is paid for in one of four ways:
-
Long term care insurance (unfortunately, not many people have the
foresight and the means to purchase such insurance);
-
Medicare (which may pay for a period of time not to exceed one
hundred (100) days if the person is transferred from a hospital);
-
"Private pay" from the resident's own resources (The cost is quite
significant. Although it varies from nursing home to nursing home, the
current average daily cost in Lackawanna County is approximately $200
per day.)
-
Medical Assistance from the Commonwealth of Pennsylvania (a program
jointly funded by the federal government and the states, known to the
federal government as "Medicaid", administered in Pennsylvania by the
Department of Public Welfare).
Medical Assistance is not an "entitlement" program. It is available
only to persons who meet the financial requirements for eligibility. The
rules are detailed. In the case of a married couple, Pennsylvania allows
a certain amount of their funds to be set aside for the "community
spouse", i.e., the member of a couple who is not in a nursing home.
Someone who owns a house still can be eligible to receive Medical
Assistance, if he or she is otherwise financially eligible. Even if the
Pennsylvania Department of Welfare is paying Medical Assistance to the
nursing home, the state does not force the house to be sold during the
resident's lifetime. However, if the state pays for nursing home care,
the state has the right to file a lien against the house after the
nursing home resident dies, if the house is part of his or her estate,
under the "Medicaid Recovery" program. In the case of a husband and
wife, Medicaid Recovery would occur if the second to die is in a nursing
home and if the title to the property remained in his or her name alone
at the time of death. For those reasons, transferring title to the house
is often worth considering. Medicaid Recovery might be avoidable by
creating joint ownership with a son and/or daughter, by transferring the
home but reserving a life estate, or by transferring the home to an
irrevocable trust.
Transfers of homes or other assets are reviewed by the Pennsylvania
Department of Welfare. When an individual applies for Medical Assistance
for nursing home care, there is a question on the application which asks
for disclosure of any assets given away during the previous three (3)
years.
The "look-back" period is being increased from 3 years to 5 years as
the result of a major change to the law that was passed in February
2006, known as the Deficit Reduction Act. Gifts of assets made after
February 8th, 2006 are subject to the new rules, which are intended to
make it more difficult to transfer assets away in order to qualify for
Medicaid.
Under the new rules, asset transfers should be made "sooner rather
than later", if you wish to be eligible for Medicaid for nursing home
care. There also are some exceptions that cover transfers of a home to a
"caregiver" son or daughter, or to one who has a disability, which have
not been affected by the change in the law.
At the same time, the transfer of assets to a son or daughter
involves taking into consideration matters such as whether or not the
son or daughter might have personal problems that would make the
transfer unwise (e.g., possible divorce, bankruptcy, lawsuits, etc.).
There are other legal and tax issues to be considered that might pertain
to certain situations.
Every client's case is different. We will be glad to review your
circumstances to help you to make the best possible decision in your
case.
