Placing a parent or other beloved relative in a nursing home is one of the most difficult and traumatic decisions a family can make. Although some nursing home placements may be sudden because of a drastic change in health conditions such as a debilitating stroke, most are planned moves that occur after long periods of discussion. Because of the overwhelming emotions involved in this decision, it’s a good idea to thoroughly examine all the important things that you need to know before putting someone in a nursing home.
One of the most important things to know is cost and how those costs are met. Unless your loved one is coming out of a hospital stay, Medicare will not pay for nursing home services. Even if a doctor has recommended a nursing home stay following a hospitalized illness, Medicare will only pay for the first 90 days. Afterward, it becomes the responsibility of the nursing home patient or spouse to pay the bills. Nursing homes typically cost around $70,000 per year. Medicaid will only begin to pay nursing home costs after the patient’s assets have been depleted. Sometimes this can occur at the beginning of a nursing home stay but note that Medicaid officials will research five years into the patient’s past to examine assets to determine whether the individual is truly eligible. Even if a patient’s assets have been transferred to another family member within that five-year period, the family will be held liable for payment. To be eligible for Medicaid for nursing home costs, the patient must be over 64 years of age and have a net income of less than $1,850 per month. Some individuals with higher incomes can qualify depending on their nursing home costs.
Another important thing to know before putting a family member in a nursing home is that asset spend down is a serious situation, particularly if the patient entering a nursing home has a healthy spouse. Because of the spend-down requirement, the spouse can be left with no money on which to live. One possible way to avoid asset spend down is to place that wealth in an irrevocable trust, which means the assets are transferred to an independent trustee. In the government’s eyes, the patient no longer owns the assets. Other possible ways to avoid asset spend down is through gifting family members and by establishing a private annuity to transfer assets.