How Will You Pay for Nursing Home Costs?

How can a person pay for nursing home care without depleting all of their assets, or without the state taking their home after they die? Those are critical questions, and the lack of the right information could cost a family more than $1 million.

If you’re eligible for Social Security, you probably know it. If you’re eligible for Medicare, you probably know it. But what about Medi-Cal? How will you pay for the costs of nursing home expenses? Could you be eligible for Medi-Cal to pay those costs and not know how to qualify and protect your assets? Have you planned ahead to protect your family’s assets? Are you aware that nursing homes in the Bay Area charge $11,000 to $12,000 a month? Yes, it’s true, and how will you pay for it?

Many people have long term care insurance and think they’ll be okay, but they don’t realize that their insurance plan isn’t sufficient to cover all of the costs. Will your plan cover $350 or $400 per day? Most plans won’t, and most people don’t know how much their plan will pay.

One of the greatest failures I see as an Elder Law Attorney and Medi-Cal Planning Attorney is the general lack of awareness of what can be done to protect a family if you use proper planning. I recently read an article written by a nationally renowned estate planning attorney who said, “If the elder law attorney can advise clients early enough, . . . they can alleviate later problems.” But a lot of people don’t plan properly, and then I see the family disasters after it’s too late to correct.

The average length of stay in a nursing home is 30 months. That’s 2.5 years. That puts the total cost of an average stay at about $350,000, but what about all the people who end up staying much longer? Can you afford that? How will it affect your spouse and family? How can we protect your money?

70% of individuals are impoverished within one year of entering the nursing home. 50% of all couples are impoverished within one year of one spouse entering the nursing home. It’s expensive. What can be done to protect your assets and establish some level financial security?

Federal law permits Medi-Cal planning, and people who plan ahead can protect their assets for their families. What about the families who think that the parents’ home will go to the kids when both parents die, but the home later must be sold to satisfy the debt to the State of California? Why does this happen? Two reasons: (1) lack of knowledge, and (2) not having the proper legal documents put in place by a knowledgeable Elder Law Attorney who specializes in the financial side of Medi-Cal Planning and Eligibility for clients.

Lack of proper planning can cost a family hundreds of thousands of dollars.

A local woman came to me recently because her long-term friend had died six weeks earlier. He had gifted her 50% of his home four or five years ago, and the other 50% of the home was held in his trust to be distributed to her following the man’s death. The problem was that the attorney who prepared the trust wasn’t familiar with elder law rules and Medi-Cal, so now the State of California will seek repayment of his Medi-Cal bill. He had been in the nursing home for about five years prior to his death, so his debt back to Medi-Cal will be around $500,000 to $600,000. The woman who was to get the home will now have to pay the debt to the state if she wants to keep the home for herself. Neither the woman, nor the friend who died, were ever advised that there could be a problem with her getting the rest of the home upon the man’s death. Sad result.

Don’t leave your future to chance and hope. Take care of yourself and your loved ones. Make sure that you work with a qualified elder law attorney and have a quality estate plan in place.