In our office, we help people in nursing homes to protect assets and not go broke, while also getting the care they need.
The Golden Years
When someone goes to a nursing home, and it’s going to be a long-term stay, the average cost is $15,000 per month in Pennsylvania, which most families cannot afford to pay for very long. When I work with a family, especially retirees, or soon-to-be retirees, I know they are thinking about their retirement, and how they can stretch their assets to give them the standard of living they’ve been dreaming about. They have worked hard, and deserve to enjoy their retirement years.
However, the one thing that could get in the way of them retiring comfortably, is if either spouse were to get sick, and need long term care. They would have to find $180,00 per year to pay for care in a nursing home which would have a serious financial impact on them.
What is Medicare?
Before seniors are 65 years of age, they will likely be contacted by people trying to enrol them on Medicare. Most seniors believe that if they have Medicare, their healthcare needs will be met. However, I urge caution in believing that Medicare covers all medical costs! Medicare does not pay for the single biggest healthcare expense that seniors face, which is long term care in a nursing home.
Medicare covers acute care, so if you were to have a heart attack and require hospital care you would be cared for, and this would be paid for by Medicare. It doesn’t seem fair that if a person had a stroke, while Medicare would pay for their care while in hospital, this patient would have to pay privately for long-term care in a nursing home, should this be necessary.
What does Medicaid pay for?
Medicaid is the only government program that will pay for care in a nursing home. Only after you have gone through your life savings, and are broke, are you eligible for Medicaid benefits to pay the nursing home bill. When you are on Medicaid, you still have to pay your monthly income, as well as social security and pension to the nursing home. Most people don’t realise that a nursing home admission is a legal problem, and you need the help of an elder law attorney for this. It is not because the owners and staff at the nursing home are bad people – it is not their fault that Medicaid won’t automatically pay for your care. The nursing home is providing your loved one with care, and they need to be compensated for that.
Don’t Make these Medicaid Mistakes
Not having a plan for your primary residence
Medicaid will grant you eligibility while you still own a house. However, all your monthly income needs to go towards your care if you go into a nursing home, so there won’t be any extra money. You are probably going to leave your house to your kids in your Will, but your kids may not be able to afford to pay the property taxes, utility bills and general house maintenance costs. Your kids might decide to sell the house, but this would be a mistake because you are not allowed to have the proceeds from the house sale. This could result in you losing your Medicaid benefits and the value of your house. This is because you will have to pay this money to the nursing home, before you are eligible for Medicaid benefits again.
If your kids keep the house and pay the bills, they could still lose the house when you pass away. Assuming you have been a Medicaid recipient, when you pass away Medicaid has a claim against your estate. If Medicaid have paid $300,000 for your care, due to the estate recovery program, the executor of your Will may have to sell your house. The proceeds will be used to pay back the State of Pennsylvania for every dollar spent on your care in the nursing home.
Don’t Cash out an Insurance Policy to pay the Nursing Home
The family of an elderly lady reached out to me, as their mom had a life insurance contract with a cash value. The death benefit value was $150,000 and the cash value was $70,000. She was in a nursing home and in her late 80’s, so when she passed away, the life insurance policy would have paid the family $150,000. As this lady needed money, she wanted to cash out the policy, to get $70,000. However, she was not allowed to have assets of that value, to be eligible for Medicaid benefits. She therefore had to pay that money over to the nursing home. The family lost out on getting the $80,000 death benefit, because the policy was cashed out and closed.
Instead of losing out on $80,000, one of the children could have purchased the policy from their mom. They could have written a check for $70,000, giving mom the money she needed. The value of the policy would have doubled over three years. When mom passes away, the death benefit of $150,000 would be paid out to the child.
Don’t Wait until it’s too Late
A family came to us, as their dad was in the nursing home, and they had Power of Attorney. When dad went into the nursing home, he had $400,000. After some time, dad was left with $200,00. This is when the family reached out to me, asking if I could protect dad’s remaining assets. As it happened, we were able to protect 60% of $200,000, which was $120,000. The family should have come to me when dad was admitted to the nursing home. We would have been able to protect 60% of the $400,000, amounting to a $240,000 saving. This means the family lost $120,000 to the nursing home. It is unfortunate they weren’t aware they could have contacted us sooner, to protect more assets.
We Can Help You!
Nobody wants to be in any of these situations, and this is why we use trusts to protect assets. We recommend that you attend one of our workshops to learn more about asset protection. When you work with us at Sechler Law Firm, we can help you to get Medicaid benefits without going broke. Medicaid’s financial limitations, and asset and income requirements are complex. This is not something a family can navigate without our help. It is not uncommon for us to save 50-60% of a single person’s assets, after admission to a nursing home. For married couples, we may be able to protect 60% or more of your assets.
Understandably, folks who have a loved one in a nursing home don’t like to talk about their situation. We completely understand and are mindful it is a sensitive topic for most people. People going through the long-term care crisis don’t know they have options to protect assets. As elder law attorneys, we are able to educate people on their options. We have information on our website which is not available anywhere else. You can find many great resources including free downloadable guides, videos and blog articles to help you.
If you have a loved one in or going to a nursing home, please reach out to us. We offer free consultations, to establish how we can help you and your family. You can click the link HERE which will give you the opportunity to schedule a consultation. We are fortunate to have a social worker in our team, Megan. She spent 10 years working in a nursing home so she is familiar with how the system works. Our goal is to get you the resources you need to make good healthcare decisions. We want to help you to protect your family and your assets. We hold regular in-person workshops where we tell you more about asset protection. Visit https://sechlerlawfirm.com/workshops to register now for one of our workshops. Call us at 724 546 4227 today, so we can help you.
Listen to the related podcast for this article HERE, or watch the YouTube video.