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November 12, 2009
WHO PAYS FOR NURSING HOME CARE?
A recent study says that 43% of seniors over age 65 will spend some time in a nursing home with about a quarter of them spending less than one year there. With nursing homes costing about $10,000 per month, how they get paid becomes an important issue.
Nursing homes get paid in one of three ways; Private pay, Medicare and MassHealth.
Most people enter a nursing home after a brief hospital stay. As long as you spend at least 3 nights in a hospital, Medicare is the initial payment source for the nursing home. Medicare will pay the nursing home for the 1st 20 days in full. The next 80 days is subject to a $133.50 per day co-payment. This co-payment is often covered by supplemental health insurance policies like Medex. This 100 days of Medicare coverage is subject to one additional rule that says, in order for Medicare to pay, the patient must be showing signs of improvement. A patient who is stable or declining can have their Medicare coverage stopped in a very abrupt manner.
Once Medicare stops paying, there are only 2 options left, private pay and MassHealth. With private pay costs exceeding $10,000 per month at many facilities, not many families are able to afford doing this for too long. This leaves MassHealth as the last option.
Financial eligibility for MassHealth depends on whether the patient is single or married. A single person must have less than $2,000 in assets to qualify for MassHealth while a married couple must have less than $109,560.
Determining whether an asset is countable, or not, is beyond the scope of this article. There are many rules and exceptions to the rules contained in the Code of Mass Regulations that must be considered. But here are some basic, very basic, guidelines:
THE HOME – The home is non-countable as long as one spouse continues to live there.
ASSETS – Include cash, stocks, IRA’s and cash surrender value of life insurance policies. Vacation homes are also countable, even if not located in Massachusetts.
Gifts and MassHealth Eligibility- Ever since February 8, 2006, the day Dick Cheney cast the tie breaking vote to pass the Deficit Reduction Act (DRA) -- Gifts made within the past five years make you ineligible for MassHealth!
The general rule is that if you made any gifts within 5 years of entering a nursing home, you are not eligible for MassHealth. The only way to fix this is to get the gift back, and pay it to the nursing home. Any large withdrawal from your bank account that you can’t explain is also treated as a gift!
OK. You say what about that rule that says you can give away $10,000 per year without a penalty? That is a tax rule that now allows up to $13,000 per person, per year and says that your estate will not pay estate taxes on these gifts after you die. For MassHealth purposes, the amount you are allowed to give away is zero.
Once a person is on MassHealth, their monthly income goes to the nursing home and MassHealth pays the difference. Currently, the patient is allowed to keep $72.80 per month out of their monthly income to pay for their personal needs. Governor Patrick has cut this to $60 per month and it will become effective when the regulations have been updated.
This has been a general overview of MassHealth rules and regulations. There are many other rules and exceptions to these rules that have not been discussed. If you are seeking coverage under MassHealth please seek professional guidance.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds Masters in accounting and a Masters in tax law. He currently serves on the board of directors of the Friends of the Saugus Senior Center and is a member of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions, please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org