Long-Term Care Costs (Nursing Homes) in Cary, North Carolina
Why Can the Nursing Home Take Everything I Own?
We all know health care costs are still rising. As we age our need for health care increases. Oftentimes it includes the need to live in a nursing home. Nursing homes costs can rob your heirs of inheritance. While we have all paid into a social security system, it no longer pays for long-term care. This means you have to private pay. Few people have long-term care insurance, so most folks must privately pay for nursing home care. The costs vary. It can cost around $80,000 a year, or more, for the average nursing home. And if you need a memory care unit for Alzheimer's or dementia, it'll cost $100,000 a year or more. Most people do not have long-term care insurance, so you will private pay and spend down all you own until you qualify for Long Term Medicaid. Eligibility for Medicaid is pretty much at the poverty level. The threshold often changes, usually adding requirements so you keep less. What happens is all your hard-earned estate assets are sold and used to pay the Nursing Home which essentially robs your child or family of an inheritance. Medicaid is not Medicare. Medicare does not pay for long-term care. In some instances, Medicare may pay for up to 100 days in a nursing home, but no more.
Some people lose everything but their house. So, they think, "at least my kids will get the house". Well, not so fast. Medicaid has a right to recovery. This means NC Medicaid takes the house after you die as reimbursement for the amount they paid for your Nursing Homecare. These are the saddest phone calls I get. It doesn't have to go this way.
How to Prevent the Nursing Home from Leaving Me Broke?
There are specific strategies and approaches available to reduce the amount that must be spent before qualifying for Medicaid. Using these strategies can save thousands and protect your assets from being spent down and from the NC's "Right of Recovery" from your estate after you pass away.
Every situation varies slightly. Here is a look into a few things to consider and put in place. What you should do often depends on how much time you have until you'll need the nursing home. So, your age and health is a part of the primary consideration. If the writing is on the wall, as they say, time is of the essence. In order to get full protection, right now, you need 5 years at home. If you don't have 5 years, your strategy will change to a strategic spend down and delaying facility care and staying at home as long as possible. If you have 5 years, you can use an Irrevocable Trust. Medicaid allows you to fund an Irrevocable Trust for 5 years or more before needing the Nursing Home. This trust allows you to keep some control, benefit from trust income, decide who ultimately receives the assets and who is in control, and protect those assets from being taken by the Nursing Home. In order to get protection, you have to give up some access.
Because people are living longer and healthcare costs are on the rise, most people cannot afford to pay for around-the-clock care for very long. The average Nursing Home charges about $7,000 a month. Many studies report that the average long-term care stay in a nursing home is 3 to 5 years. That's $252,000 to $420,000! If you need a memory care unit for Alzheimer's it's going to cost more.
In order to avoid paying out of pocket for the nursing home, you can do one, or a combination, of the following. The strategies are not listed in any particular order.
You can buy long-term care insurance. Health insurance, whether through your employer, BlueCross and BlueShield, or Medicare, does not pay for long-term care. You have to buy additional insurance that will pay the nursing home costs. These policies vary in their coverage. So pay a specific day rate and cap the annual cost or lifetime benefit. Be aware of what those limits are so you know what exposure you're subject to paying out of your pocket. Few people these days are buying traditional long-term care insurance because the premiums feel expensive and you don't want to have to use it but if you don't all those premiums are gone with no benefit. For that reason, some financial institutions offer some financial accounts that include a "long-term care rider". For example, some life insurance companies will sell you a life insurance policy that includes a provision that takes the death benefit and turns it into long-term care payments. I know many people who like this option because it results in a win-win for the policyholder and beneficiaries. These may become more scarce as companies fail to accurately predict the actuarial tables of long-term costs and usage.
You can be self-insured. The simplest form of being self-insured is acquiring sufficient assets such that you private pay for nursing home services and still leave an amount for your spouse and family. This means you're knowing going to spend approximately $250,000 to $400,000 of your estate assets on your end-of-life care, per person (as you may need to multiply those figures by 2 for married couples). If you are okay with your children (estate beneficiaries) getting that much less, then you should not worry.
Build your family support. I have only met a hand full of people who wanted to go into nursing. Overwhelmingly, most people tell me that want to stay at home. Staying at home has become a more viable and common option. The need for nursing home care can be fulfilled at home. But you have to be prepared to make it work. It is difficult to put the support in place that is needed under crisis conditions. You need to have at least one person, but it is better to have several, who can coordinate the health care coming into your home. They will schedule CNAs, Nurses, and other home visits from health care professionals. They will oversee food preparation, cleaning, and maintenance of the home. You also need someone to pay bills, manage financial accounts, and other personal affairs. I believe that it not only "takes a village" to raise a child but also to help an adult during his/her final years. These services are not free. When other people help you they are working. Many times family members, particularly a spouse or child(ren), are performing these functions. It takes a toll on them and they often need help. So, you should plan to pay professionals for some things. Review your insurance and Medicare coverage to find out what "home care" options exist near you. Whatever is not covered will have to come out of your pocket. You can plan for these expenses. Using family, friends, church members, and neighbors can greatly reduce your estate costs for long-term care, but it typically doesn't completely avoid it.
If none of the above strategies are options for you, the next strategy is to do what is commonly called "Medicaid Planning". Medicaid Planning means you are preparing yourself to qualify for Medicaid to pay for the nursing home. More and more people are doing this because the system failed them and they don't want to lose their hard-earned assets. This option requires knowing how Medicaid works and how to become eligible. Medicaid is for the poor, or people without financial resources. Eligibility is always changing and is starkly different for married and single people. For example, a single person only qualifies when they only have $2,000 to their name. And a married person qualifies if, jointly with a spouse, he/she owns a home where the spouse lives, a car, and about $126,000. In other words, anything a person owns over those amounts and assets is taken before qualifying for Medicaid. So, those people lose everything else to the nursing home. But once they qualify for Medicaid they will no longer lose more assets while alive, because there's a catch. The catch is Medicaid's right to recovery. This means if Medicaid paid for your nursing home but didn't take your private personal home before you die, they will take it after death from your children so that they get reimbursed for the amount they paid on your behalf. This is the saddest phone calls I get. Medicaid is much more complicated, but this gives you a beginning insight into it. The way to protect assets and qualify for Medicaid is to plan ahead and use an Irrevocable Trust. Specifically, I use Family Asset Protection Irrevocable Trusts. This type of trust is approved by North Carolina to hold assets out of your name and keep them from being counted against your Medicaid eligibility so that they are protected from being taken and preserved for your spouse and children. To work, this trust has to own your assets before you go into a nursing home. To get full protection your Irrevocable Assets Protection Trust must own your assets 5 years before you go into a nursing home due to the Medicaid "5 Year Look Back" rule. This trust can still provide some benefits to you, but you have to give up some control. For example, you can protect your house by putting it into your Irrevocable Trust and you continue to live there just like you always have. You can put your rental home in this Trust and continue to get the rental payments. But what you can't do is sell either home and use the money to pay for your personal vacation or use it to pay rent for you at an assisted living apartment. Because if you can use the trust assets for anything for you, then Medicaid says you have to use it in the nursing home. It is more complicated than this, but I hope you're beginning to get the picture AND you need to seek advice and assistance from an Estate Planning attorney before proceeding. This is not a difficult or hard option IF you have the right legal representation.
A final strategy, that I believe is more comical than real, are some people tell me they have their own personal plans of avoiding long-term care altogether. They never tell me the details, so I do not know for sure if they work or if they worth investigating. But they commonly mention moving to Oregon, another country, or going on a long walk in an isolated forest far from anyone else. I don't condone or endorse such plans, but I do understand that dying with dignity is important and not always easy to achieve.