Erin L. Nunes, Esq., Managing Partner
The prospect of nursing home care can be financially daunting. With costs in Massachusetts often exceeding $15,000 per month, understanding the various payment methods and strategies is crucial for individuals and families facing this reality. This article outlines the primary avenues for covering nursing home expenses in the Commonwealth.
The High Cost of Long-Term Care:
Nursing home care is significantly more expensive than other forms of long-term care due to the round-the-clock skilled nursing and personal care required. Without proper planning, these costs can quickly deplete a lifetime of savings.
Primary Payment Options for Nursing Home Care:
- Private Pay (Out-of-Pocket):
Most people who enter nursing homes begin by paying for care directly from their personal savings, pensions, Social Security income, and other assets.
This provides the greatest flexibility in choosing a facility. However, due to the high costs, personal resources are often exhausted relatively quickly, leading to the need for other payment sources.
- Consider a Home Sale: Selling a primary residence is a common way to fund nursing home care once other liquid assets are depleted.
- Long-Term Care Insurance:
This specialized insurance policy is designed to cover the costs of long-term care, including nursing home stays, assisted living, and in-home care.
- Benefits: Can provide a daily or monthly benefit for a specified period, significantly reducing out-of-pocket expenses.
- Limitations: Policies vary widely in coverage, benefit amounts, and duration. It’s crucial to purchase long-term care insurance before the need for care arises, as health qualifications apply, and premiums increase with age.
- Review Your Policy: If you have an existing policy, understand its specific terms, coverage limits, and any waiting periods.
- Medicare:
Medicare is a federal health insurance program primarily for individuals aged 65 or older or with certain disabilities.
- Limited Coverage: Medicare provides very limited coverage for skilled nursing facility (SNF) care, typically for rehabilitation after a qualifying hospital stay (at least three consecutive inpatient days).
- Coverage Structure:
- Days 1-20: Medicare generally pays 100% of covered SNF costs.
- Days 21-100: Medicare pays a portion, and you are responsible for a daily co-payment (which changes annually).
- After Day 100: Medicare coverage stops.
- Important Note: Medicare does not cover long-term, custodial care (help with ADLs) in a nursing home. It’s a short-term benefit for skilled care. Medigap plans can help cover the co-pays for days 21-100.
- Medicaid (MassHealth in Massachusetts):
- MassHealth is a joint federal and state program that provides medical assistance to low-income individuals and families. For nursing home care, MassHealth is often the primary payer for long-term stays once personal resources are exhausted.
- Eligibility: To qualify for MassHealth long-term care benefits, individuals must meet strict financial and clinical eligibility criteria:
- Asset Limit: Typically, an individual can have no more than $2,000 in countable assets (excluding certain “exempt” assets like a primary residence, one car, and personal belongings).
- Income Limit: Most of an individual’s income, after a small personal needs allowance (currently $72.80 per month in Massachusetts), is contributed towards the cost of care. MassHealth pays the difference.
- Clinical Need: An individual must be assessed and determined to require the level of care provided in a nursing home.
- Look-Back Period: MassHealth has a 60-month (five-year) look-back period. All financial transfers made for less than fair market value during this period are scrutinized, and uncompensated transfers can result in a penalty period of MassHealth ineligibility.
- Spousal Impoverishment Rules: For married couples where one spouse needs nursing home care and the other remains in the community (the “community spouse”), special rules apply to protect a portion of the couple’s assets and income for the community spouse. These rules allow the community spouse to retain a certain amount of countable assets (the Community Spouse Resource Allowance, or CSRA) and a minimum monthly maintenance needs allowance (MMMNA) from combined income.
- Medicaid Estate Recovery: After a MassHealth recipient’s death, the state may seek to recover the costs of care from their estate, including from the value of their home, if it is still owned by the individual.
- Veterans Benefits:
The U.S. Department of Veterans Affairs (VA) offers programs, such as the “Aid and Attendance” benefit, that can help eligible veterans and their surviving spouses pay for long-term care, including nursing home costs.
Eligibility depends on service history, financial need, and clinical need.
Working with Professionals:
Navigating the complexities of nursing home payment, especially when considering MassHealth, is challenging. It is highly recommended to:
- Consult an Elder Law Attorney: An experienced elder law attorney can help you understand all payment options, develop a strategic plan for asset protection (if applicable), guide you through the MassHealth application process, and address potential issues like the look-back period or estate recovery.
- SHINE Counselor: For questions specifically about Medicare, Medigap, and other health insurance, a SHINE (Serving the Health Insurance Needs of Everyone) counselor in Massachusetts can provide free, unbiased guidance.
Planning for nursing home costs is a critical aspect of elder law and estate planning. By understanding your options and seeking professional advice, you can make informed decisions that protect your financial security and ensure access to the care you or your loved ones need.
©Surprenant & Beneski, P.C. 35 Arnold Street, New Bedford, MA 02740, 336 South Street, Hyannis MA 02601 and 45 Bristol Drive, Easton MA 02375. This article is for illustration purposes only. This article does not constitute legal advice. There is no attorney/client relationship created with Surprenant & Beneski, P.C. by this article. DO NOT make decisions based upon information in this article. Every family is unique and legal advice can only be given after an individual consultation with an elder law attorney. Any decisions made without proper legal advice may cause significant legal and financial problems.