Nursing home expenses can be like the stream that carves the deep canyon. Each bill isn’t catastrophic. But two or three years later you look back and wonder where all the money went.
There are four basic ways that people pay for in-home care, assisted living, or nursing home care:
- Private Pay. You can use the money you saved during your lifetime to pay for long term care. But really, how long is it going to last if you have to write checks for $6,000 to $10,000 each month?
- Long Term Care Insurance. The right policy can be a great safety net. But for many people looking at how to pay for long term care, the insurance ship has already sailed.
- Medicare. When ordered under a doctor’s care, Medicare will cover a short stay in a nursing home for rehabilitation. But it’s not a long term solution.
- Government Benefits Programs. Many people who can qualify for the VA Aid and Attendance Pension or Medicaid aren’t receiving these valuable benefits.
We never know if we will run into bad weather on our life journey. A storms might always be lurking unseen, just over the horizon. How we ride out that storm—or even avoid it entirely—depends upon our level of preparation.
The Coming Nursing Home Storm
Four out of ten seniors will spend time in a nursing home during their life. Those seniors relying on their own funds (private pay) will owe an average of $74,825 per year (or $6,235 per month) according to a 2010 study.
And that’s just the nursing home. The cost gets even bigger when medical treatment and prescription drugs are included.
At that rate, a nest egg saved over the course of a lifetime can be gone in just a few years.
However you’re going to pay for nursing home care if it becomes necessary, it’s clear that you need to plan for it.
Charting a Course with Medicaid
With the cost of long term care rising, Medicaid is increasingly becoming the go-to resource to pay for it. Medicaid is now the primary payor for more than 63% of all nursing home residents (in other words, about two-thirds).
Everyone—with large assets or small, with long term care insurance or without—should be thinking about where Medicaid fits into their long term care plan.
The requirements for Medicaid eligibility are pretty strict. There are some exceptions, but the general rule of thumb is that a single person will need to have less than $2,000 to their name to qualify. But buried within those Medicaid rules are the foundation for strategies to get qualified without becoming a pauper.
Careful Medicaid planning—right now—can help you protect your hard-earned assets. Keep it in the family, rather than giving every last penny you have to a nursing home.
