“I have Medicare, if I end up in the nursing home they have me covered … right?” A common misconception about Medicare is that it covers the cost of long-term skilled nursing care. It is true in certain circumstances Medicare will cover short-term nursing home rehab stays, generally after a three-day (or more) hospital visit. But such is limited to the first 20 days — with co-insurance from days 21-100.
What happens if Medicare coverage is exhausted? Absent long-term care insurance, the answer will likely be private pay. With a typical cost of around $8,000 per month (Michigan: $8,182-Private, $7,604-Shared & Wisconsin: $8,517-Private, $7,817-Shared), an extended nursing home stay can result in catastrophic expenses. The unfortunate reality is many will private pay until they qualify for Medicaid, because of misinformation – or lack thereof.
Nursing homes will sometimes assist with applying for Medicaid — once the individual (or couple) has exhausted most of their financial resources. However, they will not typically disclose the fact that Medicaid eligibility can come months or even years sooner — instead of writing an $8,000 check every month until there is nothing left. Why? Most likely because Medicaid reimbursement for nursing home care is typically far less than private pay rates.
Enough with the doom and gloom … so what can be done? Depending on whether single or married, there are several planning techniques to protect a significant portion of any given estate. It is worth mentioning the importance of having a healthcare and financial power of attorney. Medicaid planning where capacity is an issue requires special powers be granted to the agent – not always found in standard power of attorney documents. Without a power of attorney drafted with the necessary language, planning can become virtually impossible absent a costly probate court proceeding.
For those fortunate enough to be in good health, planning prospectively is always better. However, crisis planning is a viable option in many circumstances. If a spouse, parent, or loved one will likely require nursing home care (or is already admitted), an asset protection attorney should be consulted as soon as possible.
Attorney Joseph C. Jones advises clients on estate planning, asset protection, business law, and real estate law matters. Joe can be reached at (906) 914-4181 or [email protected] Jones Law PLC is a Michigan & Wisconsin based provider of legal services.