Whether you are a senior or the adult children of a senior family member, this article is for you.
A client of ours, whose wife is in a nursing home, came to our office last week. He told us that his wife had recently moved from one nursing home to another for some care related issues. The new nursing home was a better fit, and they referred the couple to my law firm. This couple were spending about $150,000 a year privately, and depleting the couple’s life savings. When we met with the couple, we realized we could save money for them. My client said that the previous nursing home never advised him about Medicaid benefits. However, the nursing home was happy to take a check for $12,000 a month. He didn’t know that they could access Medicaid benefits to help them pay for the nursing home.
We’re going to be able to save this couple almost $200,000 over the next 18 months. This is money they would have otherwise paid to the nursing home. My client questioned why some of these nursing home facilities don’t help more, to save families money and protect their home. As it happens, we’re going to have this person eligible for Medicaid next month. There will still be a monthly check for Social Security, but the monthly bill is being reduced. Instead of paying $12,000 a month for the nursing home, they will pay $2,000 a month. This is because we know how Medicaid works, and it is perfectly legal to do. You will still be getting the same care, but for a lot less.
Not all Nursing Homes Are The Same
Some of the nursing home facilities are perfectly happy for you to get legal advice and protect your home. They know that people are going broke and they don’t want them to lose their homes. They are there to take care of people, and when they see a situation for a family to save money, they make the referral. The nursing home would recommend that the family should work with an elder law attorney and the family would be referred to us.
Sadly, there are some nursing homes that have a different business model, and are merely a provider. They are happy to take the family’s money until the family goes broke. In this case, the nursing home is not concerned about families saving money, when loved ones need care in a nursing home. I’ve seen nursing homes give terrible financial advice to the residents and their family.
In a married case, the spouse or wife could be in the nursing home, while the healthy spouse or husband is out in the community. The healthy spouse’s retirement accounts cannot be accessed by the nursing home, and he is able to keep the money in his own retirement account. However, my client was told by the nursing home billing office, that his retirement account was an available resource for Medicaid. This meant that he would need to spend it down before his wife would receive care, but this is not true. The nursing home is giving financial advice as if it were true, costing the family about $150,000 per year. The gentleman liquidated his IRA, to fund his wife’s care. However, he did not need to do this, as his wife was eligible for Medicaid without him doing so.
Why Admission to a Nursing Home is a Legal Problem
If you are, or you have a family member needing to be admitted to a nursing home, you must look at this like a legal problem. While it may be a medical problem, and a social problem, it is also a financial problem, and can only be resolved with proper legal action.
If a nursing home costs $180,000 a year, and your loved one is going into a nursing home, that’s a lot of money to write a check for. If anybody else was chasing you for $180,000, I’m sure you would call a lawyer to find out if there is anything he could do to reduce the amount. I don’t understand why when people go into the nursing home, and the billing office tells them to pay up, they just accept it.
I appreciate that some families have never needed a lawyer, so they don’t realise they need one for a nursing home admission. Having been in the Elder Law business for 10 years, I always tell people that when they go to the nursing home they need to get a lawyer, but they don’t. There are people in my community, who are paying $10,000 to $12,000 a month for a nursing home, but they shouldn’t be. Instead they should call us and we can have a strategy session to make decisions, and action certain things.
Unlike the case where the gentleman liquidated his IRA to fund his wife’s care in the nursing home, imagine that a family has $300,000 cash. We will disregard investments, life insurance and retirement accounts. The wife goes into a nursing home, while the healthy spouse or husband can keep less than half of $300,000, up to a maximum of $137,000. The balance of the money, amounting to just over $160,000, needs to be spent on the nursing home. This would need to happen before his wife is eligible for Medicaid.
Using a Medicaid Qualified Annuity
Medicaid treats assets such as cash, differently to the way they treat income. Money coming in every month, is income, but if it’s in an account, it’s cash. Traditional income includes Social Security, pension and wages. There’s a device called a Medicaid qualified annuity we can use, to transfer dollars between assets and income. This often yields a more favorable result for our clients.
An annuity is an insurance contract where you give your money to the insurance company. They will then give your money back over time, with some interest. Sometimes annuities are deferred, but they can also be immediate. An immediate annuity for $100,000, means you would receive an income the following month, and every month thereafter. At a cost of $180,000 a year for a nursing home, you need to protect assets. There’s a strategy where the assets you would lose to the nursing home, could be converted into income. This would apply to a married case. The healthy spouse might be able to keep the income because of Medicaid regulations regarding income vs assets.
It is important for the person in the nursing home to get the care they need, but we also need to protect money for the healthy spouse. Sometimes the healthy spouse may go on to live for another 20 years in the community. The healthy spouse should not go broke and should also be able to keep their house. They should also be able to have a decent retirement, and possibly leave a legacy for their grandchildren.
Let Sechler Law Firm Help You
If you know somebody who is in this situation please send them to us. Ask them to give us a call at 724 841 1393. We will have a free conversation with them to ascertain if we’re a good fit for them. If we can help, we most certainly will.
You can learn all about this on our website: sechlerlawfirm.com. Visit the workshops page and you will find a pre recorded Medicaid workshop. In the video, I delve into the real nitty gritty of Medicaid rules. Thereafter, schedule a free consultation with us.
We also have live workshops in the office and we will teach you all about these Medicaid rules. We will tell you about wills versus trusts versus Power of Attorney, and so much more. Register today for one of our upcoming workshops. sechlerlawfirm.com/workshops.