I have a relative who will probably be going into a nursing home in 2-3 years due to declining health.
Right now we are working on selling his possessions and giving away his money because the word is that when you enter a nursing home, they basically take all your money.
Is this true? If you go into a nursing home do they take all your money?
Is it true they will go back 5 years to see where you put your money?
If you are planning to use Medicaid (note: not talking about Medicare) funds to pay for long term care, You need to prove you have very few personal assets (some are allowed, some not). Medicaid will do a “look back” to see what your worth was 3 (could be five now, I’m not sure) years back. If you’re going to disburse your wealth, it needs to be done earlier than that or Medicaid will see it and will not help pay for a nursing home.
I cannot emphasize enough how important consulting with an elder lawyer of elder accountant is. The laws are complex and can have a huge financial impact.
It seems the look back period is now 5 years. Any assets transferred to others at below market rates during the five preceding years may reduce eligibility for Medicaid coverage. Some assets are exempt. States may have slightly different rules about exempted assets.
Be aware that Medicare does not pay for long term nursing home care. Medicare does pay for short term care in a skilled nursing facility after a qualifying hospital stay of at least three days. Benefits are very limited and most do not qualify.
Medicaid is a needs based program that does pay for long term nursing home care. Reimbursement rates are low so it may be difficult to find a nursing home with an available bed for a Medicaid patient.
So, the idea is, you use your funds to pay until they run out, then the state takes over your care.
And you want to hide the resources, and get the state paying from the start. Is that about it?
How is this different than welfare cheats? Isn’t it the same gaming of the system? (Not the specific you, I mean in general!)
And do folks feel the same about this game as they do the famed welfare cheats?
They don’t take your money, you are buying a service. After you can no longer afford the service, the taxpayers will pay. Since the taxpayers (government) don’t like to see their taxes go up so that somebody else can enjoy money that could have paid for the service, the government looks back (and I think it’s five years) to make sure a person didn’t give away money or goods that could have been used to pay.
I can understand both sides. My husband and I have worked hard to have something to pass on to our daughter, and if one or both of us need care, and we will, it will be gone. But there are so many people who are of the age to need a nursing home that if they didn’t look back, the taxpayers would be paying for everyone, and that’s expensive. I don’t know what the answer is.
I agree with IvoryTowerDenizen - you need a lawyer experienced in this stuff. Making a mistake can be a financial disaster , and the look-back period for transfers is now 5 years.
But I want to point out that “they basically take all your money” doesn’t give the right picture. I mean, under a specified set of conditions , you will spend all your money on nursing home care, but under other conditions you may not. No one comes and takes all your assets as soon as you enter the nursing home - you will simply have to pay for the nursing home yourself until your assets and income are low enough to make you Medicaid-eligible.
MY experience with nursing home care in the New York area, for a decent home - Assisted living, $4500/month; Dementia care, $7000/month, full bed Nursing home - $10,000/month. Then, everything else is extra - nurse to come in the room twice a day to give you meds, air mattress for bedsores… Does it really matter how much money you have? it will be gone pretty quick.
Then there’s a grey area if you make too much to qualify for Medicaid, but not $10,000/month.
“Pretty quick” is relative. In NYC, the cost of a nursing home is about $144K a year. My mother’s perfectly ordinary house in a not-trendy neighborhood is worth over $500K- that’s at least 3 years of nursing home costs. And that’s not counting any other assets. If she goes into a nursing home and dies a year later , she will have paid $144K and all her other assets will go to her heirs. My point is that Medicaid doesn’t take all your assets up front so that you lose your million dollars in assets if you live in a nursing home for 2 months.
Depends on your definition, I suppose. My dad was in assisted living for almost 3 years; he didn’t last a year in a nursing home, but with the air bed he was paying $600/day. My stepmother was in the Dementia ward for a year, then died. They were 1/3 the way through their house equity; when she was starting to go, she gave most of the savings to her granddaughters. A word of warning - sell the house before the dementia diagnosis. In some states, it’s almost impossible for a guardian of an incompetent (or the spouse) to sell the family home, even if nobody lives there.
My wife’s grandmother is 96, still living in assisted living for the last 10 years - but in her case, in Canada so she has more than enough money to keep going. for another decade if she needs to.
So no, they won’t “take all your money when you go into a home”, the system will do it on the installment plan. Depends on the value of your house too.
I should also add that my father and stepmother were being excessively generous to her granddaughters, some of which she had been helping raise. At the time the “look-back” was 3 years, so for a few years there was no chance Medicaid would help with home costs. However, my father’s pension put them in limbo - too much to qualify for Medicaid, but nowhere near enough for ongoing home care. He barely broke even on his own assisted living. Fortunately(?) my stepmother, who was by then at approximately a 3-second memory retention rate, died before she could be a major drain on finances. My father was in and out of hospital enough the last 6 months after he left assisted living that Medicare Rehab financed most of his time in the nursing home - he probably paid for 2 or 3 months out of 6.
So when Medicare also figures out it should claw away your life savings in return for medical care, old folks will go broke in the USA that much faster.
Here is how my stepfather dealt with this. When it became clear that my mother, suffering from Parkinson’s, would eventually need a nursing home, he carefull divided their bank accounts in half and put his share in separate accounts in his name only. It was arguable that he was unfair to himself since he had a substantial pension while she was getting only SS, but he didn’t want to go through the hassle of making that argument. Then when she did go into the nursing, he used “her” money to pay for it until it ran out (except for a couple thou that he could legally set aside for her funeral expenses) and then put her on medicaid. He had carefully documented everything and got no argument.
If you want to research, in 1989 at least, the term was “Spend Down” - exhaust the patient’s own resources until they were poor enough to get MedicAID.
With the death of the private pension (BIL was 6 months from qualifying (after 20 years) when they fired him), more and more people will need care that they cannot afford.
MediCARE would be the obvious place to cover this, but it is barely holding on as it is.
We Boomers are going to hit the “Homes” BIG TIME shortly.
Stay Tuned!
Talk to an attorney who specializes in elder care and disability issues.
Actually there was an effort to insure LTC under the Community Living Assistance Services and Supports Act (or CLASS Act), a part of the PPACA (aka Obamacare).
It was unworkable and dropped at the impetus of the Obama administration.
Or put another way, you want to take all of his/her money, have the rest of us pay for their care.
Your relative must be thrilled to have you in their corner.
Everyone has touched the main points. I vote for keeping his cash together for the ‘spend down’. He’ll get better treatment as a paying customer with enough cash for extras like getting his hair cut and his toenails trimmed. Investing in cookies or flowers for the staff also does not hurt. The biggest thing, though, is regular visits. Regular visits are life extenders.
Let me say that selling off or otherwise disposing of “possessions” ahead of time is a good thing. Distributing or selling anything that would otherwise go to a thrift shop or yard sale is not, to my mind, messing with the estate. Furniture, dishes, tools, old files - these things will need to be dealt with before his house can be sold. Now is a good time, if he wants to be involved.
And to repeat my pet peeve - sit him down and make sure that all of his family photos are labeled.
Yeah, my parents’ house was FULL of junk. It was sad that when they had to leave, there was basically nothing of significant value (Other than the wads of cash - about $4,000 - that my step-mother had withdrawn and stashed in various places). The other items are of questionable value; a grand piano is grand - but who wants one nowadays, and apparently just moving one and retuning it can be a major expense. I still wonder which granddaughter took the 1-foot high Inuit soapstone; The teak dining room table set was 40 years old and needed refinishing, the Wedgewood china was nice, but nobody wanted it and the neighbour’s daughter was given it; most of the other furniture was junk… IMHO - Every piece given away now is saving the expense a truckload from 1-800-GOT-JUNK.
Yes, by all means help empty the house.
Yes, yes, get the photos. The one piece I got and wanted, was photos, slides, and negatives going back to the late 1930’s which I was able to scan. My niece has threatened me with bodily harm if I distribute the picture of her with her brothers and (male) cousins all together in the bath in the altogether. 
I have scanned and sorted over 1000 photos. Consequently, for the last 2 years of his life my dad had a large photo book of his best memories, stuff that was mostly buried in the basement.
A place I worked at several years ago - one fellow had a large professional group photo (very sharp!) of a big family reunion from the 1950’s; he scanned it hi-rez and printed in on the giant HP plotter at 4x5 feet. He said some of the old-timers cried, they hadn’t seen a picture of departed loved ones for decades, and now they could see them in a picture large enough to make out the faces in detail.
I hate to hijack, but do you have scanning and sorting advice? I’m looking at three generation’s worth and the little hand scanner I started out with bit the dust and apparently can’t be replaced.
I bought a Canoscan 8800 a couple of years ago -expensive but worth it; it has a set of negative carriers -35mm, slide, and 120 film. All these film types I had, plus Brownie negatives. My dad’s negatives from the 1940’s were 35mm square. The driver is awkward, but with some help from Google for procedures, I found can scan anything in B&W or colour.
I basically organized things in folders according to the source, since I had only a vague idea of the dates - Can #1 roll A, Roll B, etc. and filed them in clear plastic negative holders so I could find them again. (B&H pack of 100 sheets for $17) He had several cans of 60-year old B&W 35mm each rolled together in one big roll. Most I scanned to about 2 to 4Mp - 1200dpi for 35mm negatives, depending on sharpness. (My own digital stuff, I have folders by year, event, date - ie. “2011 - AprilEgypt - 20160428”)
Some is lost in time. He had pictures of a Boy Scout jamboree in Scotland in the mid-40s or earlier, but could not tell me who the older guy was who appeared to be the VIP scout. He has pictures of Oxford life, and some folk dancing in some English village, and stuff like that which may never be identified. So yes, get the stories while they are fresh.
I have an incredibly sharp colour slide of me and my brother when I was 2, sitting on the lookout point looking over at el Capitan in Yosemite. (Plus, about 10 times as many photos of my older brother than of me…)
Among other treasures, for example, my nephew found it interesting that my stepmother had a newspaper clipping of his mother’s early career as a Montreal TV weathergirl.
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But just to stay on topic, my nephew and his wife, the only capable people in the local area, probably spent thousands of dollars of my parents’ money just to hire people to haul away junk after they were moved out. It wasn’t quite HGTV Hoarders level, but it was getting close. They were the generation that grew up poor and then had enough money to buy lots of good things, but never got rid of anything; and basic home maintenance was getting beyond them.
You could investigate establishing a trust and put your relative’s home in the trust. That way, the house can’t be considered a personal asset. Has to be done 5 years before entry into a nursing home.