Finance Nursing Home Care

When we can no longer care for ourselves, help is needed but most people cannot afford long-term care. This guide explains the basics of how US residents can legally protect their savings while also qualifying for government assistance to pay for the best care possible.

Steps

 * 1)  Review the 3 main long-term care choices:  "Home Care" provides a home health aide to do light housekeeping, toileting, bathing, cooking, and other assistance in getting around or performing the activities of daily living (ADLs).  A home health aide is not legally authorized to administer medications or perform most other health care procedures. "Assisted Living Facilities" (ALFs) provide an apartment, common dining areas, custodial care and often an array of social activities and other perks. A "nursing home" provides 24-hour skilled nursing care with the ability to administer medications, rehabilitation and some medical procedures.
 * 2)  Understand the 3 methods of financing long-term care:  One choice is to privately pay for the care but at $4,000 to $15,000 per month in a nursing home, most people cannot afford to do that without getting wiped out.Another method is to access long-term care insurance benefits but most people lack adequate coverage. A third option, the only other way to pay for long-term care, is the Medicaid program.  Medicaid is based on financial need but there are legal methods of protecting your assets so that you may qualify for Medicaid without having to first spend your money or give it away.
 * 3)  DO NOT spend all of the money and then be solely reliant on government benefits.  Medicaid is the only government program that is available to most people to cover long-term care costs and it does not cover everything.  If you spend all of your money and then go on Medicaid, which is the case for most Medicaid recipients, you will have nothing left to pay for all of the services not covered by Medicaid.  Medicaid will cover the cost of long-term care but it sure helps to have money set aside to cover important extras.
 * 4)  DO NOT give away your assets:  This is a very common pitfall.  The government "looks back" 5 years (3 years for gifts made prior to February 8, 2006) to determine whether you gave away money.  If the government decides you made a gift during that time, you will be rendered ineligible for Medicaid for a period of time (and that period of time could be many years or just a few months depending upon how much was given away, your state's rules and laws and when the gift was made).  Gifting can sometimes make sense but you should do this only after consulting with an expert.
 * 5)  DO a new deed to help protect the home.  In some states, a lawyer can prepare a special kind of "life estate" deed that allows the property to automatically pass to your children or other heirs upon your death and without any Medicaid disqualification.  This is not done by simply adding people to your deed, another common mistake that almost always results in disqualification.
 * 6)  DO the Medicaid-friendly durable power of attorney:  Have an Elder Law Attorney create a Durable Power of Attorney that takes into account Medicaid and other aging issues.  A regular durable power of attorney may not be sufficient.  This is the single most important document you can have because it allows you to pick someone to step in and do for you if you cannot do for yourself.  The power of attorney has many built-in protections but a trusted person is still necessary and there is some risk of exploitation that must be discussed with your Elder Law Attorney.
 * 7)  Consider creating Medicaid Trust Agreements.  Trust agreements are artificial legal entities that can own assets and/or income.  Some trusts help you to convert countable assets to non-countable assets.  Read about special needs trusts and income-only trusts (aka qualified income trusts) and discuss with an Elder Law Attorney whether such a trust would help you.  For example, in some states, even if a person is over the Medicaid income cap, that person can still qualify if the income is going into an "Income-Only Trust" instead of into that person's name alone.
 * 8)  Transfer money to a child without it being counted as a disqualifying gift.  If the circumstances warrant, you can transfer money to a child or other trusted person in exchange for care services.  If the value of these services meets or exceeds the amount of money transferred, the government cannot count the transfer as a gift.  There could be tax consequences but the taxes would usually be a pittance compared to the savings.  The Florida court case of Thomas vs. Department of Children and Families forms a precedent on the use of personal service contracts in Medicaid planning.
 * 9)  Consider "Just Saying No" to spousal impoverishment:  If one spouse is going into a nursing home, it is very possible for the "well spouse" to be left destitute due to the other spouse's care costs.  Most states allow the "well spouse" to opt-out of having their assets counted against the other spouse's Medicaid eligibility.
 * 10)  Find a good lawyer:  You should not attempt to figure out this complex system on your own.  You want a lawyer who, ideally,  is certified as a specialist in Elder Law by your state's bar association.  Go to the state bar web sites or call the state bar association.  There are some very good lawyers who have just not gone through the certification process but you have a better chance with a board certified specialist.  While there are some national certification groups which members can pay for, many state Bars only honor their own certification and so should you.

Tips

 * Call more than one Elder Law Attorney and talk to them before going in for an appointment. Listen carefully to how the attorney talks to you.  Is this someone who has a comfortable teaching style with whom you can relate?
 * Talk about fees before hiring any lawyer. Expect to pay anywhere from $5,000 to $40,000 for this planning.  If that sounds like a lot of money, consider the savings which should be many times that fee.  The most highly sought-after attorneys sometimes charge more because their time is simply worth more.  A more highly-skilled attorney and staff can make a tremendous difference in results.
 * The best lawyers are those who are respected by their own peers. Find out who has been in leadership positions with their state bar association.  Who has led their State Bar Elder Law Section?  Who lectures and teaches the other lawyers about Medicaid Planning?  This is the one you want even if it means paying more.
 * Do not rely on free forms or advice from friends "at the pool." You get what you pay for and there is far too much at risk.
 * Search for information on the Internet by typing in your state's name and the word "Medicaid". There are 50 different Medicaid systems in the United States.

Warnings

 * Nothing in this article should be taken as legal advice for a particular person or issue. Laws change from time to time and vary from state to state.  So many variables affect a lawyer's advice and these variables may well mean that the above planning steps will not affect you or could even cause harm.  Prior to implementing any of the strategies discussed in this article, you should consult with an attorney who is certified as a specialist in Elder Law by your state's Bar association.  The selection of an attorney is an important decision that should be based on qualifications and expertise and certainly not on advertisements alone.
 * Be wary of advisers who are not attorneys. Throughout the country, there are people and companies who exploit the elderly and their caregivers by inducements of Medicaid qualification.  Sometimes these outfits are cleverly-packaged insurance agents who will try to sell you annuities, a sometimes legitimate planning tool but one with major (and often undisclosed) pitfalls.  A good lawyer will tell you all of your options.

Things You'll Need

 * Bring the following documents when you meet with the lawyer (whether or not he or she asks you to bring them): copies of deeds, wills, trusts and other estate planning documents including all codicils and amendments along with an informal list of all financial accounts, how they are titled and the approximate values.
 * Make sure your children or other trusted people know where you keep your legal documents and that they will have access when necessary.

Related Tips and Steps

 * How to Plan for a Disabled Heir
 * How to Be Friends With Your Parents
 * How to Get Information on Medicare Benefits
 * How to Do Your Own Financial Planning

Sources and Citations

 * Search Tool for State, Federal and Other Financial Resources for Long Term Care
 * Articles for lawyers and non-lawyers on how to qualify for Medicaid can be accessed on Solkoff.com and ElderLawAnswers.com
 * eHow to Prevent Elderly Abuse
 * eHow to Claim the Elderly or Disabled Credit
 * eHow to Identify a Victim of Elderly Abuse
 * The Senior Citizens' Law Office (Legal Services and Advice for New Mexico's Senior Citizens)