Editor's Note: The following is part 2 of an online series for National Sandwich Generation Month, aimed at bringing support and awareness to those families sandwiched between raising their kids and caring for aging parents.
July is National Sandwich Generation Month. Meaning, if you are busy taking care of your family, but also being tasked with caring for aging parents, you are part of this growing demographic called the Sandwich Generation.
This national awareness campaign is aimed at helping you discuss important aspects of care with your parents, whether they need long-term care now or might need it in the future. One aspect of conversation can include paying for long-term care and nursing home stays.
Wait… Doesn't Medicare or Private Health Insurance Pay for Everything?
According to longtermcare.gov, the average cost of long-term care is $6,000 per month for a nursing home room (semiprivate) and $3,500 per month for assisted living. Care.com puts the cost of home health aides between $19-$30 per hour—and that's not counting additional medical equipment and services, which often cost families more than $30,000 per year!
The big elephant in the room when a family faces such excessive costs is usually the questions of, “Who in the world is going to pay for this care?” “Is Medicare or health insurance going to pick up the tab?”
Unfortunately, the answer is no.
What most people do not realize is Medicare, the federal insurance for senior citizens, only pays for the first 100 days in a nursing home for those needing skilled nursing care, (such as the type of medical care following a stroke or fall), and once the 100 days is up, the patient is then responsible for any further costs.
It's important to note that even with Medicare paying the tab in this situation, the care is not entirely free. There are co-pays that kick in on days 21-100 at $161 per day per spell of illness. Do the math—even with just co-pays to cover, the costs of care are often excessive and unaffordable for most families!
Medicare also does not pay for custodial care, which is help with the activities of daily living such as bathing, feeding, transferring, toileting, meal preparation or medication management. These are services that are oftentimes a necessity for elderly patients who can no longer care for themselves.
Again, if its assistance with daily living that your mom or dad needs, neither Medicare or private health insurance will not pay for the costs that you are about to incur. In the majority of cases, these costs would need to be paid out of pocket.
You may also be wondering about Medicaid (as opposed to Medicare) and whether or not these separate benefits can be used to pay for long-term care.
The answer is it depends. Let me explain…
Yes, Medicaid Benefits will cover the costs related to long-term and custodial care.
But, eligibility requirements for Medicaid are very strict and come with a significant look-back period for any asset transfers. At first glance, most seniors initially have too many assets and too much income to qualify for benefits. Even a modest pension or small nest-egg can push a senior well over Medicaid's asset and income limitations.
That is, unless they engage in Medicaid Planning with a qualified Elder Law Attorney.
Medicaid Planning Opens the Door to Medicaid Eligibility
What most people do not realize is that the state and the Federal Government allow a number of “workarounds” or ways to reallocate a senior's assets to qualify for Medicaid benefits without having to first spend all of their assets and pay out of pocket for care.
This type of planning is 100% legal, ethical, permitted by the government and a safe and secure way to protect a family's inheritance when done properly.
It's important to note that the options for Medicaid Planning depend heavily upon the state which the senior lives because it is both a State and Federal Program. Some states have very flexible Medicaid laws where the protection of assets is relatively simple and straightforward… even if the senior is already in a nursing home or receiving care.
Other states have very strict look-back periods and penalties where it can become “too late” to protect mom or dad's assets.
Of course, the key to avoiding the “too late” answer is to plan as early as possible, while you have as many options as possible! If you find yourself in the position of needing to pay for care today, the first place you should go is to a qualified elder attorney's office.
Elder law attorneys are skilled at designing irrevocable trusts and other tools that can shield assets, such as retirement accounts and homes, from nursing homes and other predators, while at the same time ensuring those assets can turn into a legacy for the beneficiaries. Again, advanced planning is needed to make sure those assets are protected correctly, in addition to avoiding penalties associated with Medicaid look-back periods.
Planning too early has never hurt anyone, but planning too late has cost many people their life savings. Even if mom or dad is not quite ready to move into a facility or doesn't quite yet need round-the-clock care, be sure to explore Medicaid Planning with a lawyer at your earliest opportunity for the best financial outcome.
Want to learn more about how Medicaid Planning might best serve your family?
Schedule a complimentary consultation!
In this meeting we'll learn more about your specific situation and work together to identify the best next steps we need to take to help you protect your loved ones.