At an average cost of $70,000 a year, many seniors struggle to pay for good nursing-home care. Here are five tips.
No one relishes the idea of winding up in a nursing home. But that doesn't mean you (or your aging parents, if you're an adult child) shouldn't think ahead about how to pay for one.
The fact is, the need arises more often than people like to think. People aged 65 or older face a 43% chance of entering a nursing home, according to the government's Agency for Healthcare Research and Quality. Of those who do enter a nursing home, 21% will remain there for at least five years.
And the care doesn't come cheap. According to a recent Metlife survey, the average cost of a private room in a nursing home now tops $70,000 a year, or $192 a day. Facilities in urban areas, such as New York and Boston, easily exceed $100,000 annually.
Given the hefty financial and emotional burden associated with entering a nursing home, families need to create a contingency plan -- particularly if an aging parent is beginning to show signs of frailty or if there's a family history of a degenerative disease such as Alzheimer's. Younger retirees may want to consider long-term-care insurance. But that's not an option for older seniors.
Should a nursing home seem to be a real possibility for you, a spouse or a parent in the next few years, now's the time to start touring facilities in your community and speaking with local experts, such as an elder-care attorney or a geriatric-care manager.
You also need to get a grip on nursing-home financing. We'll warn you: It isn't pretty. But understanding ahead of time the costs involved can help reduce stress further down the line. Here are five things you need to know.
1. Don't Count on Medicare
A big surprise for many families is the realization that Medicare doesn't cover long-term care. According to the Centers for Medicare and Medicaid Services, the only time Medicare pays is when a patient needs skilled nursing to recover from an acute ailment or injury like a broken hip. All other patients must pay privately or, if they qualify, through Medicaid benefits, the government's welfare program for impoverished seniors.
2. Money Talks
We won't sugarcoat this: While many nursing-home residents rely on Medicaid, you'll most likely have a much easier time finding an available bed in the nursing home of your choice if your loved one can at least pay for the first six months or year out-of-pocket. (The length will vary depending upon the region and facility.)
Facilities that receive public funds are required to maintain a certain percentage of Medicaid beds. Most, however, already have far more patients on public assistance than is required. And thanks to dismally low reimbursement rates, facilities actually lose money on every one of those patients. To stay afloat, administrators do their best to find at least some seniors who can pay privately -- even if it's only for a relatively short period of time.
Of course, at $70,000 a year, paying even for six months could be a stretch for many seniors -- particularly if it's an unanticipated cost. So while we'd never recommend placing a family member in a nursing home before it's necessary, it might make sense to set aside the necessary funds, known in the industry as "key money," in a separate savings account rather than spending every last dime on alternative care, such as pricey home health care.
3. Be Prepared to Offer a "Donation" for Mom
If you decide to wait until Mom spends all her assets, your choice of facilities may be limited. But here's something you might not know: In certain parts of the country, some nonprofit nursing homes have been known to ask the families of Medicaid patients for "donations" that could easily equal at least a couple of months' worth of expenses.
Technically, it's illegal for a nursing home to demand a donation, says Bernard Krooks, a New York-based elder-law attorney. But if you really want to get Mom into a particular facility, it might make sense for you to pay it. "Is your goal to report them to the attorney general or to get (your loved one) into the nursing home," asks Krooks. And if you refuse, you very well might find that the available bed is suddenly filled by someone else.
4. Once You're In, You Can Let Medicaid Pick Up the Tab
Not all facilities accept public funding. So unless Mom or Dad is very wealthy, make sure you select a nursing home that takes both Medicare and Medicaid patients, recommends Maryann Higgins, a Venice, Fla.-based geriatric-care manager. Here's why: Once a Medicaid-certified nursing home admits a patient, it can't evict someone once private funds run out and he or she qualifies for government assistance. (This explains why nursing homes have so many Medicaid patients.)
5. If Things Get Ugly, Get a Lawyer
A small percentage of nursing homes have also been known to ask families to foot the bill once their loved one's assets dry up. This is strictly illegal and, fortunately, one area where a family can fight back, says Stuart Zimring, president of the National Academy of Elder Law Attorneys.
The good news: A facility isn't likely to spring this on you at the last minute. The request will turn up in the initial contract the family must sign during the admittance process. So make sure you have an elder-law attorney review the document. If you see a paragraph requesting "third-party guaranteed payment," just cross it out and initial it, says Zimring. And even if you do sign the contract, you're still probably off the hook. Zimring says this clause would never stand up in a court of law.