I talk a lot on my show about the nursing home, and I feel it necessary to discuss the article from the Post Gazette on June 9th, which we should all be paying attention to. The title of the article is “Bankruptcies, closures rock senior care across Pennsylvania”. The introduction of the article is “The bankruptcies of 21 skilled nursing and personal care centers in Pennsylvania in 16 days are roiling long-term care for seniors and their families, while industry insiders warn the turmoil is far from over.”
In The News….
The article mentions that 12 Pittsburgh Personal Care homes and nursing homes combined, filed for bankruptcy in May. Two weeks later, they were joined by nine other senior care facilities across the state, seeking Chapter 11 Protection under the bankruptcy code. Two other nursing homes, Pittsburgh Skilled Nursing and Rehabilitation in Shadyside and Jefferson Hills Healthcare and Rehabilitation Center in Clairton, recently announced they were closing. They gave the reason as having financial issues for their closure.
We all know that when long term care facilities close, it is bad news. The baby boomer generation is the largest generation of seniors, who will likely need long term care in the next twenty years. Fifty years ago, family caregiving was more feasible as one spouse typically stayed home while the other worked. Families lived closer together and were able to help.
The Dynamic Has Changed
Dual-income households are now more common. The daughter who might have been the primary caregiver, often lives far away and works full-time. This means that professional in-home care or placement in personal care or skilled nursing facilities is necessary. We can’t have these nursing homes closing, or the owners of these facilities running out of money. What will happen if there are no care providers for the baby boomer population?
The healthcare system for seniors is broken. Most seniors rely on Medicare, with the expectation of coverage at age 65, after contributing to it throughout their working lives. Medicare was designed in the 1960s when people didn’t live as long. The prevalence of dementia was also lower. Medicare only covers acute care such as surgeries, hospitalizations, medication, and short-term rehabilitation, but not custodial long-term care.
Medicare’s exclusion of long-term care coverage is a problem, given that life expectancy has increased. Currently, one in three people is expected to develop dementia, and 60% of seniors needing long-term care. At least one in five seniors will need care for more than five years. Typically, people must pay for this care out of pocket until their resources are depleted. Only then do they become eligible for Medicaid benefits. This places a heavy financial burden on families.
The Different Types of Care
In Pennsylvania, there are various types of living facilities available for seniors:
- Independent Living Facilities: These are for seniors who live independently but may need some help with tasks like food preparation or laundry. These facilities are not considered long-term care.
- Personal Care Homes: These facilities provide assistance with daily activities such as eating, showering, dressing, and using the bathroom. They are similar to assisted living facilities but require a different license. Personal care homes are entirely private pay, costing $6,000 to $9,000 per month. This translates to $80,000 to $100,000 per year. This cost can be a significant financial burden for families, especially over several years.
- Skilled Nursing Facilities: These provide more intensive medical care, including nursing care, IV drugs, rehabilitation, and physical therapy. They are more expensive, costing $14,000 to $15,000 per month. Medicaid will cover the costs of skilled nursing facilities.
No Medicaid Wavier Program
Pennsylvania does not offer a Medicaid waiver program for assisted living facilities. This means that Pennsylvania residents cannot get Medicaid assistance for assisted living. When deciding between placing a parent in a personal care home or a skilled nursing facility, it can be confusing. Both facilities will accept your parent, but Medicaid only covers the costs for a skilled nursing facility. This makes it more affordable than having to pay privately for a personal care home.
However, people who could be cared for in personal care homes, end up in skilled nursing facilities. The state pays more for skilled care than for personal care which leads to unnecessary spending. Pennsylvania could save money while still providing necessary care for seniors who don’t require a higher level of medical care. This could also relieve financial pressure on families, and help prevent nursing homes from closing due to inadequate Medicaid reimbursements.
Medicaid Reimbursement Rates Are Too Low
This is why care providers are struggling financially because Medicaid reimbursement rates are too low. Private pay rates for skilled nursing facilities are $14,000 to $15,000 per month, but Medicaid reimbursements are $8,000 to $9,000. This means that facilities must raise private pay rates to compensate for the lower Medicaid payments. Essentially, private pay residents indirectly subsidize Medicaid residents.
Added to this, inflation and rising wages have increased operating costs for nursing homes. Many long-term care nurses suffered burnout during 2020, resulting in a shortage of care providers. The nurses who remain are demanding higher wages. Additionally, Medicare & Medicaid Services require nursing homes to hire more staff, further increasing expenses.
While increased staffing improves care quality, inadequate Medicaid reimbursements adds to the problem. Nursing homes need Medicaid, to avoid having non-paying residents, but the reimbursement rates do not cover the actual cost of care.
We Can Help You
If this resonates with you, it highlights the importance of working with elder law attorneys. We do more than just answer the question of who gets your stuff when you pass away. Being informed about current issues, especially in long-term care, we ensure you get the necessary care. We equip you with the knowledge of how to pay for care without going broke. Ensuring that you are able to protect assets from long term care costs is prioritised.
To learn more, come to one of our upcoming estate planning and elder law workshops. Register on sechlelawfirm.com/workshops
