Concerns about paying for assisted living.

Ok. Paula and Jeanne.....you are correct. No one "chooses" Medicaid. I think that is a well-established fact. In my lifetime, I do hope that someday, the government will find a way for MEDICARE to pay for Nursing Home care. Wouldn't that be nice? It probably won't happen, so we are back to planning our futures and trying to figure out what to do and which way to go.
Paula, I certainly admire you for your comprehensive research on these issues. Because you live in CA, you have access to multiple plans and have many choices for your parents as well as yourself. I still believe in private pay......at home if possible, with private staff and medical care. Don't forget, while you're still alive those S.S. checks keep coming in, as well as any Pension checks to which you may be entitled. Dementia, if added to the mix, is a very difficult addend. I personally, have ruled out LTC Insurance.....too costly for what you get. At ease.

N1K2R3, you're for private pay? Under the present setup, who wouldn't be? And if a person can afford private pay they have no choice but to be private pay. It is not optional depending on your philosophy of preferences. You have assets? You are private pay. The end.

If you have no assets to start with or you keep private paying until your assets run out, then what? Toss you out of the nursing home and let you fend for yourself on the streets? Remember, if you are in a nursing home it is highly unlikely you can get a job and start supporting yourself at age 86. So now what? Hope you survive being homeless, or that you don't suffer much while you die? Insist that your children must take you in (if you have children)? Medicaid is the safety net for the elderly or disabled who run out of assets before the end of their lives. It is not something anyone chooses.

Once upon a time it wasn't so outrageous to expect that over a 40 to 45 year working life a person could support a family and set aside enough money to pay for their own old age. That might have been another 5 or 10 or 15 years after they retired. Now a working person saves to put kids through college (at prices that have absolutely gone through the roof since I was in college) and then perhaps take in or help out their elderly parents, and while all this is going on set aside enough for their old age that will last 15 to 35 years past retirement and likely include an extremely expensive medical problem.

I don't think we can blame our parents' generation for not having foreseen this and prepared for it. In fact, even the generation that sees the picture clearly is hard-pressed to know how to prepare for it.

Yes, private pay is the best option around. But it is a huge social question about how that will be possible for the majority of people.

And finally ...

You asked how poor a person has to be to go on Medicaid. It varies by state. Most require that your monthly income be below a certain "cutoff." California has a number of different flavors of Medicaid programs (known here as "Medi-cal"). The two most likely to apply to an elderly person are "SSI" (Supplemental Security Income" and "A&D FPL" (Aged & Disabled Federal Poverty Level Program). Apart from personal assets that are exempt (i.e., "not counted" against the total), you may qualify for this assistance if you have $2,000 in assets as an individual, or $3,000 as a couple. Assets that do not count include your primary home, one vehicle, household goods and personal belongings, life insurance policies with a face value of $1,500 per person, and a prepaid burial plan (unlimited if irrevocable or up to $1,500 if revocable) and burial plot.

In California, apart from the assets described above, you are allowed to have monthly income of up to $830/month as an individual or $1407/month as a couple.

Needless to say, with qualification limits as low as these, a person may easily find himself in a position of making too much money to "qualify" for one of these programs (say, $3000/month), but not nearly enough to pay for long-term care in a dementia/memory care facility ($6000 - $9000/month). California, like many other states, also has a version of these programs that basically allows you to cover a "share of cost" (SOC) so that you are paying in what you have and the government picks up the rest.

I wanted to add a few thoughts about long-term care insurance -- this is another kettle of fish, with its own problems. The industry's gotten better in some ways (do a Web search, and you'll find countless horror stories of people having paid fortunes for early policies and then not getting cared for by them). The policies are (understandably) quite expensive and increasingly hard to get as you get older. Many of the companies that have offered them in the past have dropped them from their products lineup in the last year or two because they are costing more than the companies are earning in premiums (do Web searches for UNUM, Hancock, etc.).

My husband and I both carry policies (he's 50 and I'm 45), for which we're paying something like $600/month. I’m sure we’re overpaying, and signed up for more coverage than we’re likely to need ... but I am, of course, gun-shy based on what I’m seeing happen in my Dad’s life, so we’ve overbought. I encouraged my Dad to apply for a second LTC insurance policy last year, many months before his dementia diagnosis (he already has a policy, but it maxes out at $200K) -- but the insurance company denied his application based on his performance on a “delayed word recall” memory test.

LTC insurance companies do not want (again, entirely reasonably) to write long-term care policies for people who are likely to actually NEED long-term care ... so they work very hard to identify and deny applicants who show any signs of expensive long-term care needs (most specifically, dementia or mobility issues). If an applicant is below a certain age (and no “red flags” show up in the history part of the application), an application will likely be approved without an in-person examination or interview. But if the applicant is older, an in-personal examination/interview from a contracted, eagle-eyed nurse is a given. Tests will be administered that are designed to detect early signs of dementia. Use of a cane, walker, or wheelchair, or even a slow gait, will indicate potential future mobility issues. It is unlikely that any LTC insurance company would approve an application under these circumstances.

This means that to get a policy you have to apply early, long before any (even early) symptoms of a problem ... but this comes with its own drawbacks. The earlier you apply, the greater the risk that you will pay a lot more for a policy than you will ever get out of it ... or that you will pay a lot into it, then hit an economic crisis in your life that forces you to stop paying premiums and “lose” the value of everything you’ve paid in so far ... that the cost of your monthly premiums will rise to the point of being unaffordable ... or, more critically, that the insurance company will go under before you are ever in a position to make a claim. If that happens, it could be at a point where you will no longer qualify to buy a new policy from a different company.

The later you apply, the more likely you are to get denied ... and the more expensive the premiums will be if you are accepted.

Statistically, most of us will need only about two years of long-term care in our lives, so for most of us, the policies are not a better gamble than simply saving and planning to pay for that care ourselves when the time comes.

The policy my Mom and Dad bought (which maxes out at about $200K) should have been sufficient to cover the statistically probably number of years the “surviving spouse” might need to spend in a facility. The trouble is, those statistics fly out right out the window when dementia flies in ... because a person with dementia may need years and years of expensive long-term care.

Me, too, actually. Private pay is the best way to go for as long as you can -- all the way, even, if you're lucky/wealthy enough to be able to pay hefty bills indefinitely. Most people aren't. :-(

I can't speak from anyone else's experience, but my own has been that most elderly people don't generally "spend down" or trade away their dignity just to go on Medicaid. They pay for their own care until the money literally runs out. Going on Medicaid isn't the goal -- it's the only option left when you've got literally no other way to pay for the care you need.

I agree that it's vital to plan in advance for the possibility that you might need expensive medical care in your "golden years." Many people do. My parents certainly did. Both Mom and Dad worked hard their whole lives, and scrimped, saved, and sacrificed to create a retirement nest egg. They bought an extremely modest home and an inexpensive car, and had modest hopes of traveling in their retirement years. They even (thanks to my Mom) purchased a long-term care insurance policy in their late 50s/early 60s that should have been more than sufficient, statistically speaking, to cover the costs of any care they might need (studies show that most of us do not need more than two years of such care at the end of our lives).

Then my Mom got aggressive breast cancer (unrelated but simultaneous bilateral tumors). In the year and a half from her diagnosis to death, the medical costs that were not covered by insurance took a hefty bite out of my parents' savings. Even so, they'd saved enough that after Mom died, my Dad was still in sufficiently solid financial shape to be positioned to pay for a serious health crisis or two of his own in the unpredictable future.

Unfortunately (from a purely financial POV), Dad's "serious health crisis" didn't turn out to be a heart ailment or a cancer. At the relatively young age of 73, he has a progressive dementia that is gradually robbing him of his independence, his memories, his personality, and his ability to live safely on his own ... but with which he might live for another 20 years. His doctor tells me he will require 24-hour supervision and care in the not-too-distant future.

As I mentioned, my Dad actually DOES have an LTC insurance policy, thanks to my Mom insisting that they buy one some years back. Between that policy (which maxes out at about $200K), his pension, savings, and SS benefits, I calculate that he can likely afford to cover his own care expenses in a dementia/memory care facility for about five years (the money will stretch farther the longer he can stay at home with supervision from visiting caregivers, which -- so far, anyway -- costs less than facility care).

But when the money runs out -- and it will, if he lives as long as statistics for his condition suggest that he could -- what option is there OTHER than Medicaid?

It sure as heck won't be something he chose. But what else can he do? It’s not as if running out of the money to pay for it means he suddenly won't need the care anymore. By that time, he will be experiencing late-stage dementia, and will require constant skilled supervision and nursing care.

It’s frustrating to realize that you can do everything “right” your whole life – i.e., behave responsibly financially, live completely within your means, avoid debt, carry insurance, sacrifice to build up savings so you have a “cushion” against things going wrong ... and then watch all of that cushion just bleed away in (a relatively few) years of crippling catastrophic medical or long-term care expenses.

It’s frustrating to realize that in my Dad’s specific case, he will likely eventually be occupying a “Medicaid slot” in a dementia/memory care facility ... getting exactly the care as someone who never worked, never sacrificed, and never saved a dime in his or her life. The only difference between my Dad and that hypothetical other patient will be that Dad – who paid probably over a million dollars in taxes over his lifetime – will have flushed some half a million ADDITIONAL hard-earned and hard-saved dollars into the long-term care system before Medicaid pays a dime for his care, while his less-responsible counterpart will have had his or her tab picked up by Joe Q Taxpayer from Day One.

So I guess you’re right if you're suggesting some people DO “choose” Medicaid by failing to plan. My point is that you can plan and do everything right and still have no choice in the end but to apply for this assistance.

What do you plan to do if you need long-term care and run out of the money (either in terms of personal assets or long-term care insurance) to private-pay for it? It's the question we all need to ask ourselves.

I apologize, Paula. Perhaps you are correct. No one "chooses" Medicaid. I guess that it's a necessary plan if you are out of money....all money. ( Except house and car?) I find it very difficult to come to terms with the concept of when a person on Medicaid dies, " the assets must be sold and the state reimbursed for as much of the care it paid for as the proceeds will cover". Mathematically it doesn't make sense then to spend down all of one's assets simply to go on Medicaid. How poor do you have to be? Planning in advance, how 'bout LTC Insurance? It seems to me that Medicaid not only strips you of your money, but also of your dignity. But again, one doesn't "choose" Medicaid, right?.....ummm. The last time I looked, this is still the United States,
one nation under God with LIBERTY ( upper case, mine) and justice for all. I'm for private pay if one MUST enter a Nursing Home.

It sounds like Paula said it in a nut shell-it is complicated and you really need an elder lawyer to help with the application-medicaide has to make sure you did not hide or give away monies to avoid paying to medicaide-many whealthy people did do that in the past so the system guards against it now.

N1K2R3, I think you might be mixing up apples with oranges. :-) No one chooses Medicaid instead of Medicare/Medadvantage for ordinary health care like you're describing -- i.e., going to the doctor or paying for prescription drugs -- and I don't think anyone is suggesting that Medicaid is "better" than a regular Medicare or Medadvantage plan.

On this board, when people talk about applying for Medicaid, it is typically because they (or the person they are caretaking) has either already run out of the personal funds necessary to pay for the long-term care they require, or will likely do so within a forseeable period of time. Medicare/Medadvantage has nothing to do with this. Medicare/Medadvantage DOES NOT PAY for nursing home, assisted living, or dementia/memory care facilities. This type of long-term care is very expensive, and most people with dementia will need it -- many of them for many years. For most people in this position, their life savings will be depleted after a few months of years of such care, and then they will no longer be able to pay for it themselves, and will have to apply for government assistance (i.e., Medicaid).

It's not a matter of "choosing" Medicaid over Medicare or Medadvantage. It's a matter of running out of money to pay for the care you need and THEN having to apply for Medicaid for assistance.

For a person to qualify for Medicaid coverage of long-term care, the government basically requires that you have no assets, as (somewhat reasonably), the government doesn't want to pay for your care until you have used up all your money paying for it yourself. This is upsetting to a parent who wants to leave a money or house to his or her children ... or to a couple wherein one spouse requires expensive long-term care now, but the other spouse will need some of those same assets to continue to live on. For this reason, there is a continuing "arms race" between the government and people wanting to have their long-term care subsidized by Medicaid without having to blow through all of their assets first. The government now has a 5-year "lookback" policy where if you apply for Medicaid and appear on the surface to meet the needs qualifications, they can dig through your financial records for the last five years to satisfy themselves that you haven't simply given your money away (for example, to your children) over that period of time ... and penalize you if you have, by delaying the time they will start paying for your care according to a formula based on the average cost of facility care in your state. (For example, if you gave away $10K to your kid and long-term care in your state costs $5K a month, they will delay commencement of your Medicaid benefits for two months, and so on.)

The "house" issue raised by the original poster arises because when the government "needs-tests" a Medicaid applicant, most states will exempt the home and car from the list of assets that must be sold and "spent down" before a person can apply for Medicaid ... because arguably, the person may still need that home and car while alive. But the government want to ensure that this doesn't mean that people simply shield a large chunk of their assets by going and buying a house of the maximum allowable home-exemption value (which varies by state). So many states have solved this "problem" by dictating that the person for whom they are paying Medicaid benefits can keep the house as long as he or she is alive, but that when he or she dies, the asset must be sold and the state reimbursed for as much of the care it paid for as the proceeds will cover. Only the remainder (if anything is left) will go to the person's beneficiaries as inheritance.

N1 - Noreen, I think the thought behind MedicAID is that it is a needs based program and so in order to get any benefit you need to be at need. So when they are alive that is kinda limited to 2K each for both assets and income. Basically impoverished, but they can have a car and a house as an exempt asset. Those have been exempt assets since Medicaid was started. Once they die, that exemption dies with them and the house is non-exempt. So any proceeds from the sale of the house or value of the transfer of the house, has to be paid to the state to recover some of the states cost to provide for NH care via the Medicaid program in order for the Medicaid/MERP claim or lein on the house to be released.

Personally I think the house & car exempt rules will change for Medicaid within the next few years. Like the exemption will be good for 2 or 3 years as opposed to the NH residents lifetime. Medicaid came about when the most died in their 80's and now the % of nonagenarians has doubled? tripled? Also MERP came about in the early 2000's and about the same time real estate just boomed and you know the mindset was that real estate value would only go up & up. So MERP made perfect sense as grannies bought in 1960 for 25K house could be worth 300K and $$ for everybody from family members to the state Medicaid program when grannie died.
So much for that bubble bursting. I think qualifying for Medicaid is going to be lots more difficult in the next couple of years as more transfer penalty found out.

dberry - in order to be paid by your parents, you need to have a legally drawn up "personal services contract" in place in order for any $ paid from them to you NOT to be considered to be a possible "transfer penalty" if they apply for Medicaid. But by doing a contract, it needs to be done totally business like, with a 1099 to you and you include it as taxable income. Otherwise whatever you spend on them is considered normal love & concern care and expenses.If you spend enough on them, you might be able to have them as a dependent on your taxes though.

about the house, SS does NOT take the assets out of the house. If your parents apply for Medicaid to pay for their NH care and meet the criteria both financially and medically for Medicaid and they have a house.....then the state through MERP (Medicaid Estate Recovery Program) can place a claim or a lein on their home to recover the expenses the state paid for their care via Medicaid. MERP is required in order for a state to participate in Medicaid. Whether or not, MERP is done on your parents property depends on alot of things. If your state is a "level of claim" probate state, MERP rates are low. For example, for TX MERP is a class 7 claim in probate so there are 6 other classes ahead to get paid, so it's low in TX. OTher states have an equal claim probate system, so MERP rates are higher. Other states have it as an automatic lein on the property, so you have to deal with MERP in order to transfer ownership. State law is mucho importante when it comes to MERP. All states have MERP exclusions, like if you lived at the home for at least 2 years prior to the elders going into the NH and your care kept them from going into a NH and on Medicaid for those full 2 years. BUt you have to show you could have provided the care. If the house is empty, you or whomever pays the expenses on the empty home (taxes, insurance, yard work,etc) can let MERP know they will file a claim against the estate for those costs and those costs are deducted from the MERP tally. If you have a low value home and exemptions, then MERP may not view going through the probate court process as worthwhile so MERP does a release of claim on the property. MERP is really just kicking into gear maybe the past couple of years in most states, so it should be interesting to see how aggressive states do MERP.

Previously I had Medicare ( premiums taken out of the S.S. check every month).
Along with that, I had Supplemental Plan F ( the most expensive supplemental plan with premiums of $187.13 - $200.00 per month. I rarely went to the doctor, and finally decided upon Medicare Advantage. No monthly premiums, only the ordinary subtraction for belonging to Medicare taken out of my S.S. check each month. Yes, the co-pay is about $35.00 when you do go to the doctor, and who knows what the expense would be for hospitalization. Medicare Advantage also includes Part D. It's all that I need right now. How 'bout others out there? Why Medicaid ( a state/federal program that demands a payback) ?

Medadvantage does not come with no monthly premiums for everyone (or probably even most people). I don't pretend to know all the details of how this works, but I'd guess that if you are (or a parent or friend is) a member of a Medadvantage plan and NOT paying monthly premiums, it is possible you may either be receiving a form of Medicaid or perhaps be having your premium paid for you by a former employer as part of your retirement or pension agreement with that company? My Dad is on a Medadvantage plan, for which he paid about $80/month last year (along with $35 per-visit copays) ... and the plan was very overpriced at that, as we rapidly discovered that there were very few doctors in the plan's "network" that were actually willing to take new Medicare patients. I have done what I can to get him switched back to "traditional" Medicare with a supplement policy this next year ... we'll still have to deal with the fact that few doctors in rural sourthern Oregon want to take on Medicare patients, but at least we'll have a bigger pool to choose from.

And yes, the issue is that Medicare (whether Medadvantage or traditional Medicare + a supplemental insurance policy and part D plan) does not cover long-term care. A person with a dementia condition (such as Alzheimer's or FTD) can live 8 to 20 years after diagnosis, and will need continuing and increasing monitoring during that time ... eventually requiring facility care, which is extremely expensive for dementia/memory care patients ($6,000 - $9,000/month, depending on where you live in the country). Most people cannot sustain ongoing charges like that indefinitely without depleting their savings and having to go on government assistance (Medicaid). The situation gets even uglier when one member of a married couple needs the care, but the other will also need to "hang onto" some amount of their mutual nest egg to plan for his or her own eventual medical care (not to mention living costs). There are legal ways to plan for and manage this financial quagmire, but it's best to talk to an elder-law attorney experienced with Medicaid to make sure you don't inadvertently hurt yourself financially (for example, by applying for Medicaid too soon).

Medicare covers doctor visits, hospitalizations, drug. It covers some rehab, and some medical equipment such as wheelchairs. It does not cover in-home care on an ongoing basis. It does not cover residential care such as nursing homes.

Medicare is awesome and I am glad to have it. (I pay a monthly premium for it.) And I am sincerely thankful that it is all I need right now. But if I become incapacitated and need in-home care or a care center, then after I've used up all my own resources (which wouldn't take long) then I'd be grateful that Medicaid was available for me. I hope it never comes to that, but who knows what lies ahead?

Also, Medicare is only available to us old folks. But younger people who become disabled (as one of my brothers has) are often without any insurance or the ability to qualify for it and pay for it. Medicaid is available to them, too.

With Medicare Advantage, no monthly premiums/payments, why does one need Medicaid?

Do you have a contract promising reimbursement of your expenses upon sale of the house (or some other event)?

I think that you should see an attorney who specializes in Elder Law as soon as possible and find out what you can do to get the situation set up to be most advantageous to both your parent and you, before applying for Medicaid.

Hi, dberryjr ... I assume by "ss" you mean Medicaid? I am not a lawyer and have no (yet) personal experience dealing directly with Medicaid, but I've tried to research Medicaid requirements both in my state and the state where my father lives ... and my strong suspicion is that the answer to your question is "no." :-(

As I understand it, Medicaid does not "count" the house in determining whether a patient is asset-eligible for Medicaid ... as long as the patient "wants/intends" someday to move back into the house (even if you know this will never be possible) ... but as your question implies you already know, when the patient passes away, some state Medicaid programs can then take the house (or force its sale and take as much of the resulting proceeds as are needed to go toward the money the state has spent on the patient's behalf while alive).

Some Medicaid programs make a distinction if the house is being lived in (and has been lived in for some time) by a caregiver so that it is also arguably the caregiver's only residence ... or if an adult disabled child lives there ... or etc. I don't know if you live in the same state (or same house) as your parent, but you'd need to research the specific requirements in your state to find out if it would claim the house and reclaim monies spent after your parent passed away.

If the house is your parent's only "real" asset, he or she may already qualify for Medicaid assistance in your state. I would strongly suggest talking to a knowledgeable Mediaid attorney (by which, I mean an attorney expert in Medicaid, not a representative of Medicaid itself) about your situation and finding out what makes the most sense financially for you and your parent in the long run.

I'm guessing that one option would be to sell the house now and pay for your parent's care with the proceeds until they run out ... then apply for Medicaid for him or her, and use your personal funds to "supplement" the lifestyle of the Medicaid patient to be more comfortable than basic Medicaid can support. You'd still be paying out money from your own funds, but probably nowhere near what you're paying by picking up the entire bill for assisted living. This approach is not a "protect your parent's assets" approach so much as a "preserve your own assets" approach.

Again, I recommend talking to an attorney expert in Medicaid -- and again, I strongly suggest that you NOT rely on representatives from Medicaid to give you the information you need -- all state programs are, like everyone else in this economy, hurting financially, and they will not be inclined to show you the way to save your money.

Good luck, and stay tuned ... maybe someone on this board will have more direct experience/knowledge to answer your question definitively than I ... but if not, I really think it's worth spending a tiny bit of money (comparatively) to talk to someone knowledgeable in this area.