How to Pay For A Nursing Home?

A question we often hear from our estate planning clients,”  If I end up in a nursing home how do I pay for it? There are only three ways to pay for long-term care, and Medicare is not one of them. First,  you can pay out of your own pocket. Second, you can purchase long-term care insurance, if you're healthy enough and can afford the premiums. Third, you can qualify for Medicaid.

Let's take up the third option first.  To qualify for Medicaid, generally, you must demonstrate that you have no resources to pay for long-term care and if married, that your spouse has no available resources to be applied to your long-term care. Otherwise, you must use your assets and your spouse’s assets to pay the nursing home or the assisted living facility.  Now, for married couples, there are some exceptions.  The healthy spouse may keep their home if it's in name of the healthy spouse who is living in it.  The healthy spouse can also keep an automobile, prepaid funeral expenses for both, and half of their savings and investments up to a maximum of approximately $120,000.  Personal effects also are generally exempt.  Beyond that, everything must be spent on the care of the incapacitated spouse.  An experienced elder law attorney often can develop strategies to preserve assets.  One way would be to transfer assets to another family member or to an irrevocable trust.  Medicaid requires, however, that any gifts made within five years of a Medicaid application, will count as available resources. so unless you're healthy, and do not expect to be applying for Medicaid in the foreseeable future, gifting assets away may not be effective.  There are various other techniques employed to preserve certain assets; thus, if you anticipate applying for Medicaid in the foreseeable future, you need to sit down with a qualified elder law attorney and discuss your options.

The second option to protect yourself for long-term care would be to buy long-term care insurance.  Policies are available, but very few companies now offer them. Premiums are based upon the length of time you want benefits to be paid. Benefits for nursing home care are usually based on a daily rate. For example, under a $200 a day policy this amount is the maximum daily benefit that would be paid for the number of days you contract for.  Most policies provide for inflation to keep the benefit up with the rising cost of the nursing home. Provided you are insurable and you can afford the premium, Virginia Medicaid provides an attractive incentive to encourage people to purchase LTC insurance.

Finally, if you must bear the cost of long term care out of pocket, you need to talk with your financial advisor and determine whether you have sufficient resources to incur these costs for yourself and your spouse.