105. Save $10,000s per year – 9 ways to save money on nursing homes and elderly care
There are many options available for elderly care, of which nursing home is the most expensive.
Here you find a listing of alternative options so you can save a lot of money:
1. Medi-Cal (Medicaid California) eligibility and nursing homes.
The cost of skilled nursing care is expensive. $200 per day for a skilled nursing facility is on the low side, with $240 per day being more the average. At $200 per day, the cost for a 30 day month would be $6,000. For 12 months, the cost would be $72,000.
We receive many calls from the children of elderly parents. The children tell us that one or both of their parents is in a skilled nursing facility, and that their parents are rapidly running out of assets to pay for their care. They also tell us that they don’t think their parents would be eligible for Medi-Cal, because they own a home and have too much in the way of assets, such as retirement accounts. In several instances, the parents have been taking money out of their homes, through second deeds of trust and lines of credit to pay for their nursing home costs.
The first thing we mention is that for Medi-Cal eligibility, the home of any value is still an exempt asset. We then look at available methods for protecting the home from a Medi-Cal lien after the passing of the nursing home patient. In addition, we let them know that retirement accounts, such as IRA’s in any amounts, are exempt from qualification for Medi-Cal, provided that minimum required distributions are being made. We also mention to them that for non- retirement liquid assets, a couple can retain up to $104,000 between them and still be eligible for Medi-Cal. An unmarried individual can retain up to $2,000.
As a result, it may be advisable for the children to seek the advise of an elder law attorney to help the parents qualify for Medi-Cal and to help them preserve perhaps $72,000 in one year in nursing home costs.
2. PACE — Program of All-Inclusive Care for the Elderly
“Seniors and others who have chronic health needs should not have to give up their homes and independence just to get the medical care and other attention they need to live safely and comfortably,” Cardinal Dolan said in a statement before he opened a 250-patient program at Saint Vincent de Paul Catholic Healthcare Center in the South Bronx.
These new adult day-care centers, known around the nation by the acronym PACE — Program of All-Inclusive Care for the Elderly — provide almost all the services a nursing home might, including periodic examinations by doctors and nurses, daytime social activities like sing-alongs and lectures, physical and occupational therapy and two or three daily meals. All the participants are considered eligible for nursing homes because they cannot perform two or more essential activities on their own like bathing, dressing and going to the toilet. But they get to sleep in their own beds at night, often with a home health care aide or relative nearby.
- A program called PACE provides concierge medicine for elderly and poor people. The government gives this program the money it would give to Medicaid, and PACE provides its patients all health services.
How PACE works
According to the National PACE Association, there are 16,000 patients in PACE nationwide. The average client is 80 and takes eight prescription medications. Participants have to be 55 or older, certified by their state to need nursing home care and be able to live safely in the community.
Each program receives a fixed amount per person from a patient's state Medicaid program — usually 85% to 90% of estimated nursing home costs. Medicare funds come through a risk-adjusted formula in which the program receives more for sicker enrollees.
PACE becomes both the patient's insurer and care provider and is obliged to pay for all of the patient's medical care from the point of enrollment forward.
"Before, I was paying almost $1,000 a month for prescriptions," Doherty says. She taps a finger on the table in front of her. "And now — nothing."
Medicaid provides help paying for nursing home care to low- or fixed-income seniors aged 65 and older. A main determinate for Medicaid coverage is your loved one's income and asset levels. To help you plan ways to afford rising nursing home fees, we've collected some pertinent information about qualifying for Medicaid based on your income and asset levels.
Medicaid is a federal and state-run program, so each state has different qualifying criteria, but generally, individuals may have no more than $2,000 of savings or liquid investments to be eligible. Also, those with a monthly income of less than $500 to $1,600 typically receive the most assistance paying for nursing home care. For more information about income and asset limits, see below.
As mentioned above, Medicaid was created for low-income seniors who suffer significant financial upset by mounting medical bills. If your loved one has enough income and/or assets to cover his own nursing home fees, you should consider saving tax payer money by helping him finance his long term care through private funds, Medicare and/or long term care insurance. But if your loved one has income or asset levels just over Medicaid's qualification level in your state, you can help him qualify by concentrating his assets on certain exempt belongings.
Medicaid determines a senior's income by adding up money received from the following sources:
- Social Security
- Interest and dividends from savings or investments
- Approximately half of a working spouse's income
Medicaid must get detailed information about an individual's assets in order to determine eligibility. Applicants with assets (savings, goods, effects, insurance policies, properties, etc.) exceeding $2,000 often do not qualify for Medicaid coverage of nursing home fees. However, the following assets are exempt from Medicaid's asset determination:
- Up to about $2,000 in savings or other liquid assets
- The value of a car up to $4,500
- Household and personal items (sometimes limited in value)
- One wedding and engagement ring of any value
- A burial plot worth up to $1,500
- A life insurance policy valued at $1,500
- Home equity of up to $500,000 or $750,000 depending on where you live
As you can see, your loved one's assets are severely limited if she wants help paying for nursing home care from Medicaid. However, she can make the most of her assets by investing more money into the exempt items listed above. For example, many seniors invest heavily in their homes and household goods as they age, preparing for Medicaid qualification. They also invest in wedding jewelry, an exempt asset that can be enjoyed, then passed on to future generations.
Lowering Your Assets to Qualify for Help with Nursing Home Fees:
4. The safety net – how to protect your assets from Medicaid.
Just a year after her husband died, in 1999, Mary Cruice suffered a cerebral hemorrhage that left her needing round-the-clock nursing-home care. Now 89, she’s in a chronic vegetative state. Her daughter, Maggie D’Alesio of Drexel Hill, Pa., drew down her mother’s $100,000 in savings (mostly from the sale of the family home) to pay the bills. It was gone in less than three years.
D’Alesio is an only child -- there are no siblings to share the burden. And she and her husband, Rudy, have five children of their own, with three still at home. She’s a nurse, Rudy is a police officer. There was little choice but to start filling out paperwork for Medicaid, the government program that provides health care for the poor. Now Cruice’s Social Security and her late husband’s pension pay about half of the $5,000-per-month cost; Medicaid covers the rest, with a tiny allowance ($10 per month) for personal expenses.
To get that help, D’Alesio spent three months navigating a bureaucratic maze to prove to the government that her mother was essentially impoverished. To qualify for Medicaid, nursing-home residents must usually show no more than $2,000 in assets. Aside from gathering checking- and savings-account statements and showing that investment accounts had been depleted, D’Alesio had to track down a 70-year-old life insurance policy to prove that it had been cashed in. "It was a nightmare of paperwork," she recalls. "Whatever my mother had in 2000, I had to show where it went in 2001 and where it was in 2003 when she went on to welfare."
Under the rules, a small slice of Cruice’s assets were protected: modest bank accounts for two grandchildren and one great-grandchild. Generally, the state can’t touch money you’ve given away more than three years before you enter a nursing home. But a misstep cost Cruice’s oldest granddaughter half of her $10,000 account. When the granddaughter turned 21, Cruice changed the account to joint ownership. That allowed the state to claim $5,000 of the money for nursing-home costs. "In hindsight, I should have gotten a lawyer who specializes in geriatrics," says D’Alesio.
If you do hire a lawyer to help with Medicaid eligibility, insist on an elder-care specialist. "Many times I have seen people who have not gone to an attorney experienced in elder care and Medicaid, and they have been given bad advice," says Renee Slifkin, a Medicaid-eligibility manager for Genesis HealthCare, which operates about 200 elder-care facilities in the eastern U.S.
What if Mom is in a nursing home and Dad still lives at home? In addition to the family home, he can keep up to about $93,000 in assets (rules and exact amounts vary by state). He’s also entitled to monthly income that ranges from about $1,500 to $2,300. Any income above that goes toward the cost of Mom’s care.
If Mom is the sole occupant of the house and moves to a nursing home, she might eventually be expected to sell and use the funds to foot nursing-home costs, if it’s clear she won’t be returning home. More often, the state will wait until she dies or the house is sold to exercise its right to tap proceeds of the sale for reimbursement of nursing-home costs.
In addition to one’s home, many states exclude IRA assets from the Medicaid-eligibility test if you are taking required minimum distributions each year. You will, however, be expected to use those withdrawals toward nursing-home expenses. In California, "it’s possible to have a million-dollar home and $800,000 in an IRA and still qualify for Medicaid," says Ruth Phelps, an elder-law attorney in Pasadena.
For that reason, elder-care experts recommend that you avoid spending every last penny on assisted living or home-based care before seeking out a facility that will accept Medicaid. (The vast majority do.) If a facility requires that you have a certain level of resources to be admitted, Marilyn Vocker, director of social services at the North Shore Senior Center, near Chicago, suggests that you look for -- or ask for -- language in the contract specifying that once you’ve paid privately for the agreed-upon amount of time, you can apply for public aid and stay in the facility. Although the law promises such protection, getting it in writing from the nursing home is a good idea.
Additional advice from lawyers and social workers:
- Apply for Medicaid before you run out of money. It can take a few months to be approved.
- Consider setting up an irrevocable burial fund. You can do this through a bank or a funeral home. Money in the fund doesn’t count in the financial-eligibility test.
- Pay off outstanding bills and debts before applying for Medicaid. The government’s eligibility formulas do not subtract them from assets.
- Be sure that your parents’ bank statements and other financial papers are in order. The state has the right to delve into the flow of income and assets going back three years (or five years, if your parents have set up any trusts).
5. Local home care agencies and private caregivers
Home care is expensive and often deters families from pursuing this desirable care option for a loved one. To make matters worse the bulk of home care services are not eligible for health insurance and Medicare reimbursement. Non-skilled custodial home care is paid for privately by the vast majority of families. Finding ways for families to reduce these out of pocket expenses are crucial to make homecare an affordable option.
Families need to understand that when daily 24 hr caregivers are not needed it's possible that homecare may be less costly then relocating a loved one to a long-term care facility.When an 8 hr in-home caregiver shift or less can accommodate the needs of a love one to remain at home the costs may be even less then that of assisted living and nursing homes. Keep in mind also that home care rates do vary even within same geographical areas so comparison shopping is critical. Contact agencies in your area directly for rates to identify most competitively priced ones. Applying some simple cost cutting strategies can help make home care rather then institutional care a more viable plan of care for an aging parent or relative.
Most families rely on local home care agencies to provide caregivers as opposed to hiring private caregivers. Hiring privately is usually less expensive then hiring caregivers through agencies but does have some serious drawbacks. Home care agencies manage general employer related duties relieving busy families of this responsibility. They have staff available along with backup caregivers eliminating demanding recruitment tasks on families. Staffing solely with private caregivers may leave big gaps in care that cause extra burdens on families. Many homecare agencies are willing to supply caregivers on an as needed backup basis or part-time schedule. Therefore although hiring private caregivers can help reduce costs it is still practical to arrange supplemental care with a local homecare agency.
Home care agencies often have minimum staffing time requirements such as 2 or 4 hr intervals. Research agencies in your area to determine best means of providing coverage for your loved one's care including awareness of any required minimum shifts. For example consider staffing a caregiver from 2 to 4 hrs in the am for personal care, errands and meals followed by an afternoon return visit from 2 to 4 hrs for exercises, walks, and bedtime care. In this manner by staffing a caregiver in two sessions the total time might only be 4 to 8 hrs in contrary to all day long which might exceed 12 hrs. If your loved one can stay safely alone at night then can save caregiver coverage for busier daytime hours. It is critical to find flexible agencies that are willing to accommodate your schedule for care of a loved one. Prioritize the crucial time when care is most needed throughout the day or on specific days of the week to cut down costs of excessive coverage.
Try to get all possible family members involved at some level with the care of an aging parent or loved one to maximize your resources. While some family members might be willing to stay with mom or dad others that live out of town can manage household bills and order supplies long-distance. Still other members can schedule time off to stay with a loved one in order to relieve full-time family caregivers whenever possible. Piecing home care together with family members, staffing agencies, and private caregivers is often a more cost-effective alternative. Utilize homecare agencies that offer complete rates and are willing to maximize staffing coverage around family availability and best suited to your loved one's needs. Tap in to any local county programs that offer home care assistance by contacting local health departments and social services agencies.Check whether your county offers family caregiver reimbursement programs as well. Using some creative cost cutting strategies to tackle this difficult endeavor will be rewarded by the satisfaction of enabling a loved one to remain safely and well cared for at home.
6. Choose alternative options rather than a nursing home - Costs of Senior Care
How much does elder care cost? The answer depends both on the type and extent of care required and one’s geographic location within the US. Follows is an overview of senior care services and residential living situations and their average costs.
Home Care Aides provide at-home, non-medical assistance to seniors such as helping with personal hygiene, laundry, cooking and transportation. Typically they visit a home several times a week for visits lasting from 2 – 8 hours. In 2011, the national average was $19 / hr with different state averages ranging from $13 - $29 / hr.
It should be noted these are average costs from home care agencies. Private individuals can be retained to provide some of the same services with fees 20-30% lower.
Home Health Aides offer skilled care such as checking patients’ pulse, temperature and respiration and assisting with medical equipment such as ventilators. They will visit the home as much as medically necessary but typically for shorter periods of time than Home Care Aide visits. In 2011, the national average was $21 / hr with different state averages ranging from $13 - $34 / hr.
Adult Day Care provides elders with supervision and social activities in a structured setting during daytime hours. In 2011, the national average was $70 / day with different state averages ranging from $29 - $148 / day.
Adult Day Medical Care provides the supervisory and social aspects of Adult Day Care and offers more intensive health and therapeutic services for individuals with severe medical problems and those at risk of requiring nursing home care. In 2011, the national average was $79 / day with different state averages ranging from $60 - $150 / day.
Assisted Living Residences provide help with activities of daily living including basic health services, recreational and social activities. Cost is usually made up of monthly rent with additional fees based on the level of attention the resident requires. In 2011, the national average amount paid was $3,477 / month and different state averages ranged from $2,156 to $5,757. Patients requiring Alzheimer’s or dementia care paid an additional $1,142 or approximately $4,619 / month.
Skilled Nursing Residences offer 24/7 care by licensed health professionals including all housekeeping, medical and social needs. In 2011, the average amount paid for a private room was $239 / day with different state averages ranging from $141 - $655 / day. A shared residence usually costs 80-90% of a private one.
Continuing Care Retirement Communities (CCRC) are residences that provide a continuum of care from independent living to assisted living to skilled nursing. These are designed to enable seniors to remain in a single residential location. This is particularly attractive for seniors with declining health conditions or couples in mixed health. While CCRCs offer much for seniors, they are the most expensive long-term-care solution available. There is a one-time entrance fee and monthly maintenance fees. Entrance fees range from $60,000 - $120,000 and monthly maintenance fees from $400 to $2500.
The location and size of the residence and the senior’s current health accounts for some the wide range in costs. There are also three types of care contracts that play a major role in fees:
1. Extensive or Life Care Contract is the most expensive option and covers all long term care costs at no additional fees. This option offers a predictable monthly fee regardless of the needs of the individual; therefore it allows one to build a payment plan the remainder of the senior’s lifetime.
2. Modified or Continuing Care Contract is less expensive than a Life Care Contract, but restricts the total number of days one can receive long term care. Should the senior require additional care, it can be purchased at the time for a discounted rate. Therefore, while less expensive, there may be unexpected future costs.
3. Fee-For-Service Contract is the least expensive monthly rate but residents will pay separately for all long-term care. If extensive care is required, this will be very expensive.
Geriatric Care Managers (or GCMs) are persons that manage the coordination of care for an individual in need. They bill in a variety of ways, but typically their hourly rates are between $50-$200 / hr. A typical engagement involves a needs assessment, care plan creation and implementation; this might require 20-40 hours of work. Therefore retaining a care manager might cost from $1000 - $8,000. Medicare, Medicaid and health insurance very rarely pay for these costs, long term care insurance might, but most often this is an out-of-pocket cost.
In addition to the convenience and security they provide, Care Managers can save families money because their needs assessments align an individual’s present condition with only those services that are necessary at that time. This prevents unnecessary fees from home care providers and assisted living residences.
7. Planning Long-Term Care Insurance Options
Thinking about long-term care insurance? According to some statistics, about 70 percent of over-65 years will need long-term care or services, such as help with feeding, bathing, and walking either in their homes or full-time care in a nursing facility. Thus planning for long-term care insurance is essential to cover the cost of care when you can no longer take care of yourself.
Here are some tips to help you decide long-term care insurance options:
Paying for long-term care
You can pay for long-term care either out of pocket or rely on Medicaid. You can, also, rely on an insurance policy. Remember, Medicare or health insurance covers only part of the skilled nursing care, not custodial care. Contrarily, Medicaid pays for custodial care, to qualify for which, you may be required to self-fund until your assets are below the eligibility amount. If you don’t have the cash to afford care insurance premiums, you may spend assets to qualify for Medicaid.
Buying a Long-Term Care Insurance Policy
You should consider buying a policy when you are in the late 50s or early 60s because initial premiums go up as you get older. Look at the available options and choose the best one that makes the most financial sense for you, because the choice will affect your premium. Make sure you understand exactly how many days are covered, and whether or not the policy “cycles” or offers more than one period of stay at a skilled nursing facility. This is important because some offer coverage for multiple short stays over the span of a few years.
Ensure that your policy offers full coverage for home health care. Find what you will have to do to make a claim when you are facing a health crisis.
Before making a final decision to purchase, ensure that your budget can handle potential premium increases. Don’t drop the policy if you find it hard to meet future increases, as this can be counterproductive, since your investment in the policy is generally higher than the value of not paying the premiums.
8. About home health agencies
Although home health agencies are privately owned, Medicare is the principle payer for their services. Home health services through Medicare are available under parts A and B. In order to qualify for Medicare homecare, a person must have a skilled need, must be home-bound and there must be a plan of care ordered by a Physician. Prior to 1997 Medicare typically paid for home care for as long as it was needed. Prior to 1997 annual Medicare costs were almost double the amount cited above. In order to save money Medicare has since gone to a prospective payment system where, according to the plan of care, a certain amount of money is allocated to resolve the skilled need for the patient. Monies are typically provided for a period of up to 60 days. If the patient recovers sooner then money may have to be reshuffled to other patients who are not responding as well. At the point where the patient does not respond or improve, no more Medicare money is forthcoming. After Medicare cuts off, a person continuing to need long-term care services must find sources other than Medicare.
9. Get LTCI - Long-Term Care Insurance
Types of Policies
There are three types of policies: comprehensive, facility-only, and home care-only. Some carriers only offer comprehensive policies, and no longer provide facility-only or home care-only.
Comprehensive LTCI policies offer benefit features for many types of care:
- Nursing Home Facilities
- Assisted Living Facilities (including Alzheimer facilities)
- Home care
- Adult day care
- Respite care
- Care coordination
Who’s a Good Fit for Long-Term Care Insurance?
There are no age requirements to purchase LTCI. However, age and health are the primary factors that impact insurability and the cost of the policy. The best time to buy long-term care insurance is between the ages of 45 to 55 before you have a medical condition that could impact premiums.
It is a common misconception that waiting to buy LTCI will save money on premiums. Unfortunately, LCTI premiums rise as you age much in the same way that life insurance premiums do.
Example: 50-Year-Old Male
Consider this scenario: a 50-year-old gentleman purchases a comprehensive LTCI policy that includes $150 daily benefit, four-year benefit period, 90-day elimination period, and inflation protection with a major carrier.
The policyholder is currently paying an annual premium of $1,338.75, or just over $111.00 per month. If he owned the policy until he was 85 years old, he would have paid in a total of $46,856.25 in premiums.
But, if he had waited five years to purchase the same policy, the annual premium would be $1,974.37. The increased premium takes into account that he’s now five years older and also reflects the increase in care costs. If he owned the policy until he was 85 years old he would have paid in a total of $59,231.10.
Waiting five years to purchase his LCTI policy would have cost him an extra $12,374.85 in premiums over his lifetime. It certainly didn’t save him any money, and he was also uninsured for five years!
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