Paying for Nursing Home Care

In Massachusetts, nursing home care can cost as much as $15,000 a month and the average nursing home stay is two years.  Unfortunately, there are not very many options for covering nursing home costs.  There are typically four options for paying for nursing homes:

Private Payment

About half of all nursing home patients pay for long term care from their own savings.  Some may pay privately for care during their entire stay.  Others may enter the nursing home covered by the Medicare program and pay privately when that coverage ends.   Yet others pay out of their own pockets until they become eligible for Medicaid.

Medicare

Medicare is an entitlement-based government health insurance program.  Medicare will pay some nursing home costs for skilled nursing or rehabilitation services.  To be covered, you must receive the services from a Medicare certified skilled nursing home after a qualifying hospital stay.  This means that you must have been in a hospital for at least three days before entering the nursing home for rehabilitation.   Medicare does not pay for long term custodial care. 

Medicare covers 100% of the cost of rehabilitative care for up to the first 20 days.  After day 20 and up to day 100, Medicare will pay 80% of the rehabilitative care and you will be responsible for paying a copay.  However, Medicare Supplemental Insurance, such as Blue Cross Blue Shield, usually covers this copay.  It is often called Medigap because it helps pay for gaps in Medicare coverage such as deductibles and co-insurances.  Medicare Supplemental Insurance is a private insurance.  Most plans will help pay for skilled nursing care but only when that care is covered by Medicare. 

Medicare only pays a maximum of 100 days in each benefit period.   A benefit period begins the day one goes to a hospital or skilled nursing facility and ends when the resident has not received any hospital or skilled nursing facility for 60 consecutive days.    A person is not guaranteed the full 100 days of Medicare.  It will stop paying the day the person is no longer considered a rehabilitation patient. 

Medicaid

Medicaid is a state and federal program that will pay most nursing home costs for people with limited income and assets.  Eligibility varies by state.   In order to qualify for Medicaid coverage, a single individual cannot own more than $2,000 in “countable assets.” For a married couple, the applicant’s spouse living in the community is allowed to keep a total of $120,900.00 (2017 figure) in countable assets.  This amount is adjusted every year for inflation and may be increased in certain circumstances as a result of an appeal.

Medicaid does not pay the entire cost of a person’s nursing home expense.  The person must contribute an amount (“Patient Paid Amount”) based on his or her monthly income and then Medicaid pays the balance of the individual’s care costs.  For a single individual, Patient Paid Amount is the individual’s total gross income minus $72.80 for personal needs, and any applicable health insurance premiums.  For a married couple, the community spouse is allowed to keep all of his or her income and may also be allowed a portion of the institutionalized spouse’s income to help maintain his or her reasonable standard of living.    After the Medicaid recipient’s death, the State is entitled to recover any amounts paid for the recipients care from his or her probate estate. This is known as estate recovery.

Long Term Care Insurance

Long term care insurance (LTCI) is a private insurance policy.  The benefits and costs vary widely.  It is designed to pay for custodial long-term care services required due to a chronic illness or a condition lasting a prolonged period of time.  This type of insurance covers skilled care and, more importantly, custodial care or personal care – i.e., when a person needs assistance with certain daily activities such as bathing, dressing and eating.  LTCI is not designed to cover acute care services or to be a substitute for Medicare, Medigap or senior HMO plans.  Depending upon the policy, long-term care can be provided at home, in the community, in assisted living facilities or in nursing homes.  Many LTCI policies cover a certain dollar amount per day for a specified period of time.  For instance, a policy may provide a daily benefit level of $250 for three years of coverage.  Other policies may give a “bucket” of money and coverage lasts until it is gone.

Long term care insurance can often allow a person to remain in their home far longer than without the insurance.  It may help ensure that a spouse or other family member does not become impoverished by the cost of care.  In addition, LTCI can protect all of the careful financial and estate planning that has been done by insuring that assets will not be depleted on long term care and can pass on to the next generation.  The Medicaid regulations offer an incentive to those who purchase a LTCI policy.  If you purchase a policy that meets certain specific minimum requirements (covers nursing and custodial care with a daily available benefit of at least $125 per day for a term of two years with an elimination period of no longer than 1 year), Medicaid cannot place a lien on your home and cannot order you to sell your home in order to pay for nursing home costs.