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How will I pay for a nursing home?

If you or a loved-one is in need of nursing home care, it can be overwhelming for all involved and it is not uncommon to feel confused and lost in the process.  Both the nursing facility resident and family members will be struggling with the emotional strain of the decision and scrambling to find a suitable facility.  Add to that the harsh economic reality that a nursing facility can run more than $10,000 per month, and many families face the prospect that a lifetime’s earnings that were intended to be passed down will be quickly wiped out.

While it is not possible to relieve all of the stress surrounding this decision, with some advanced thought, the economic turmoil can be lessened.  Even if you have not planned in advance, understand that you have options, and it is almost never a good idea to simply start selling off assets. Let's go over the three major ways people pay for the nursing home:

1.  Long-Term Care Insurance

Long-Term Care insurance is well worth considering if you're young enough and can afford the payments.  Given the likelihood that people will continue to live longer and medical care will become more advanced, the chances of spending time in a nursing home or receiving nursing care in-home is increasing.  Understand, though, that if you are in a situation where you will likely need it soon, Long-Term care Insurance probably isn’t going to be available to you at any price.

2.  Pay Out-of-Pocket

If you don't have Long-Term Care insurance, you have the option to pay out-of-pocket for the nursing home. If you're rich, this isn't a problem. If you're not rich, this is a huge problem, because you'll have to sell off assets to pay the monthly bill, which can exceed $10,000 per month here in Massachusetts. 

3.  Qualify for Medicaid

The last way to pay for the nursing home is to get Medicaid (MassHealth in Massachusetts) to pay for it. Medicaid is a needs-based healthcare program, and therefore it comes with severe income and asset limits.  If your income and assets are too high (meaning you have more than $2,000 in assets in your name), you will be disqualified until you have paid out-of-pocket long enough to bring them within the limits.  But if you plan enough in advance, a qualified estate planning attorney can position you to qualify for Medicaid as soon as you need it, and protect most, if not all, of your assets for your loved ones.  Even if you are facing a current crisis, an estate planning attorney may be able to help you to protect many of your assets so that you qualify for Medicaid as soon as possible.

Planning for Medicaid qualification while protecting what it has taken a lifetime to earn is immensely complicated, and is not simply a matter of finding the right form online.  Without proper guidance and planning, countless thousands in Massachusetts will see the financial legacy they had hoped to leave to their children vanish in a matter of months.  The bottom line: speak to an estate planning attorney and plan early.

Martin Winstead