Maybe you’re the adult child of an ailing parent. Maybe you’re a spouse whose husband or wife needs long-term care. Whatever your situation, learning what you need to know about paying for nursing home care is a tough task. Some people take the time to study up and plan in advance of actual need. Most likely you’re reading this now because you’re faced with the need to make some quick decisions about paying nursing home costs.
Beware of trying to make critical financial decisions too quickly. The combination of emotional and financial stress can bully you into a financial trap. And wrong decisions can cost you dearly. Texas nursing homes are expensive. Mistakes can be devastating costing tens or even hundreds of thousands of dollars. I’ve listed below some of the common pitfalls to help you avoid them. Other families had to learn these lessons the hard way but you don’t have to.
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Now let’s explore the top mistakes so you can avoid them.
Relying on Medicare or health insurance to pay for long-term care
Though Medicare may cover a portion of a stay in a nursing home, what they provide is limited to rehab – not long-term care. If your spouse or parent spends at least three days in the hospital for medically necessary care, Medicare may pay for certain types of rehabilitation in a Medicare-certified facility. Payments can last up to 100 days. The 100 days is not guaranteed. Continued coverage depends on the ability of your loved one to participate in and progress from the services.
Expecting a will or living trust to protect your assets
If you have set up a revocable living trust to protect your assets from nursing homes, you’ve made a costly mistake. A will describes how assets will be distributed after death. While residing in a nursing home you are still alive. The will is not yet effective. You see, a revocable trust is not so much an asset protection device as it is an asset management tool. The money in the trust can be used to pay nursing home expenses but will not help when you apply for government benefits to help pay the bills. To Medicaid the trust is transparent and all the assets are reachable to pay nursing home care.
Transferring your assets without solid advice
If you transfer your assets to others (or even into an irrevocable trust) within five years of needing nursing home care, you’ll be caught by the five-year “look back” rule. This rule puts a penalty on gifts or transfers of assets made within sixty months of the date you apply for Medicaid. The Medicaid agency determines the length of any delay based on the amounts transferred. The penalty could prevent ever getting help paying for care.
Selling your home
For most people their home is their largest assets. There is also a common myth Medicaid expects you to sell the home to qualify for financial support. In Texas you can keep your home. Selling the home is not necessary. In other words, selling your home can be an expensive mistake. You have other options including transferring the home to a spouse or creating a Lady Bird Deed (which works for both single and married applicants).
Expecting others in your family to help pay nursing home bills
Even if your relatives have deep pockets, the costs of nursing home care add up. Costs can balloon well beyond what anybody expects. The average daily rate for nursing home care in Texas keeps rising. Genworth, the giant insurance company, shows the average cost of a private room in the Houston area averages $83,038 per year. Annual cost for semi-private rooms is $54,933. Make no bones about it, rates this high can bankrupt you.
Going it alone
Medicaid rules are insanely complicated. Add to that complexity the limited training the state provides caseworkers and you have a recipe for financial disaster. Even if you think your situation is “simple” trying to figure out the best solutions on your own puts you at financial risk. Most elder law firms offer a free assessment of Medicaid eligibility. Some charge a modest fee for that meeting. The time you spend with an experienced elder law attorney can save you hours of future heart ache. If you have assets to protect, discover how you can get care while still protecting your assets.
