As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Many people cannot afford to pay $6,800.00 per month or more for the cost of a nursing home in southeast Michigan, and those who can pay for a while may find their life savings wiped out in a matter of months, rather than years. Moreover, many people transition to a nursing home after having substantially spent down their funds paying for home care or assisted living care for months or years. The result is whatever money is left, needs to be protected.
Fortunately, the Medicaid Program is there to help. In fact, in our lifetime, Medicaid has become sort of like the long term care insurance of the middle class. However, obtaining eligibility to receive Medicaid benefits requires that you pass certain tests on the amount of income and assets that you have. The reasons for Medicaid planning are simple:
First, in order to qualify for Medicaid, the nursing home resident can only have $2,000 or less of money in a bank account. However, the nursing home resident will surely have more needs than can be met by this $2,000 amount. It is my belief that if it is clear that an individual needs to reside in a nursing home for the rest of their life or, at least an extended period of time and, due to the cost, will need to qualify for Medicaid, it is better to have a pool of resources set aside for the nursing home resident's needs instead of just relying on the $2,000 to cover their needs.
What needs might a nursing home resident have? If an individual is receiving care in a nursing home, typical needs and costs include guardianship fees, Guardian Ad Litem fees, hair care, podiatry, dentures, eye glasses, handicap or medically necessary transportation, additional attendant care, clothing, cable television, and items for the resident's use in their room. One of the most frequent needs is for a bed hold. If an extended hospitalization occurs, the nursing home resident may lose their space in the nursing home unless a fee is paid to hold their bed. The nursing home resident may be very likely to suffer a loss in capacity due to the trauma of the hospitalization. This can be compounded if they are discharged to an unfamiliar environment and unfamiliar caregivers in a new nursing home. It can also be very stressful on the family to search for another facility in a short period of time or face placement in an undesirable facility. This can be avoided by paying for a bed hold, but their needs to be a source of funds to pay for it.
Other common costs are related to the preservation and maintenance of the home, including real estate taxes and necessary repairs like roofing and window replacement, yard care, snow removal, etc.
As you can see, these needs would rapidly deplete the $2,000 account that the nursing home resident is allowed to have while qualifying for Medicaid. These needs would either then go unmet or the family would need to pay out of their own savings.
Second, you need to provide enough assets for the security of your loved ones; they too may have a similar crisis. The health of the nursing home resident's spouse (the community spouse) may deteriorate and they may have home health care or assisted living costs. How will the community spouse's needs be met if most of the couple's assets have already been spent on the nursing home resident's care?
Third, the Michigan Medicaid rules are extremely complicated and confusing. The result is that without planning and advice, many people spend more than they should and their family security is jeopardized.