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Financial Stewardship, Medicaid and Long-Term Care

Our children are our world, and we strive to love, nurture and provide for them throughout their lives. Eventually as they leave the nest, our wish for them is to grow up into caring, intelligent, resilient, successful adults. Furthermore, despite their own successes and achievements or their lack of, we will also want to leave them a legacy. Legacy comes in many forms, but in this case I am talking about a financial legacy. Big or small we want to leave something behind for them to invest, enjoy or simply supplement their needs. I believe it’s part of being a good parent, a way for us continue to give and support them even after we are gone.

With that said, as a parent ages and retires, the idea of a leaving a legacy starts to evolve a bit. Life gets in the way, like the cost of living, health problems, and unforeseen circumstances. However, if we are fortunate enough, we can make it through to the other side. Therefore, if we have been smart with our investments, retirement, and managing our money, hopefully there will be a sizable nest egg for us to live on and enjoy after retirement and subsequently pass on to our kids – right?

Here’s where all this build-up is leading to. I’m not a financial expert, so I’m not necessarily focusing on the size of that nest egg or how you amass it, but rather how prudent and accountable we will be with that money. Upon retirement – yes we’d like to travel, buy that RV, put that addition on the house, or as mentioned earlier leave an inheritance to family upon our demise. However, aside from having money to live on, pay bills, and the aforementioned “fun stuff,” there is a very vital piece missing from this spending plan. That is – we need to think about covering the costs of chronic health issues, subsequent medical care, and in many cases the need for long-term care, like nursing care or home care.

Costs and Statistics of Needing Care

Unfortunately, there are many misconceptions about the costs, payment, and need for long-term care. According to the 2015 Genworth Financial Cost of Care Survey, the national average cost of nursing care is $91,250/year and assisted living or personal care comes in at $43,200/year. Likewise, for those who have care come into their own home, at $22/hour nationally, you could end up paying $45,760/year for 40 hours/week of non-medical home care. Most of these costs will be paid out-of-pocket or indirectly out-of-pocket through privately purchased long-term care insurance. Many people mistakenly assume Medicare and Medigap insurances cover these needs long-term; however, we know they cover 100 days or less for nursing and do not cover assisted living or non-medical home care at all. Lastly, we are living longer than ever after retirement, thus requiring more money to live on and potentially to be used for extended care. Statistically, it is going to happen to the best of us. Estimates show that 70% of people turning age 65 can expect to use some form of long-term care during their lives.

Rethinking Retirement Allocation and Regulatory Issues

So what does this all mean? First, that big shiny nest egg may not be as big as you might’ve thought. Also, we need to change the conversation and our mindset on retirement funds as we get older. Many people are aware of this dilemma, and they are taking the proper steps to ensure that need, disposable income and legacy are balanced.

Once Medicare exhausts and private funds are depleted, nursing care is then covered by Medicaid (a.k.a. Medical Assistance) for those who financially qualify. For those who are trying to manipulate or work around the system, there are some regulatory checks and balances that the Centers for Medicare & Medicaid Services (CMS) have put in place. Most notably is the 5-year look back period required when someone applies for Medicaid, which was part of the Deficit Reduction Act of 2005 (DRA). This can track back 60 months of allocations to assure no large gifts were transferred or assets or properties were sold below market value, which if uncovered, could result in a period of Medicaid ineligibility for a period equal to the amount those assets could have covered in nursing care. Therefore, this could render someone who is unable to pay privately and ineligible for Medicaid, no way to pay for their care. This is not a good place to be in. However, typically in this situation the nursing home would have to “eat” the cost, because despite having the right to ask them to leave, most facilities would not. Other implications include the nursing home taking legal action to recoup those transferred assets or invocation the Filial Responsibility Law, though rarely used, gives the power to go after family members’ own assets to pay for overdue resident balances.

Allocation Ignorance and Sheltering

In many instances older adults just don’t understand the implications and impact of “illegitimate gifting or transfer.” Recently, an older gentleman told me that he sold his home to his daughter for $1 within the last year. It was clear to see his health was declining and not unfathomable that he might need nursing care in the near future. He is a prime example where Medicaid ineligibility and the 5-year look back may provide a harsh reality for him and his daughter. I explained possible outcomes and strongly urged him to talk with an eldercare attorney to get things squared away, although, there are some estate-planning techniques out there though legal are a bit shrewd. There’s a whole industry predicated on helping adult children “shelter” a parent’s assets to keep them from having to pay privately for a nursing home.

But let’s assume someone lawfully transfers assets outside the 5-year look back period or moves money into a living trust; there are two other problems that arise. One, we put the burden on other taxpayers and the already stressed Medicaid system that will pay fully for mom’s care, while the recipient revels in the “gift” free of any financial responsibility. Secondly, if an individual is deemed eligible day-one for medical assistance, it can really limit their choice of nursing homes. Many nursing homes cap their amount of Medicaid patients, making them difficult to get in to. So it simply limits the number of nursing homes for you to choose from, typically leaving homes that are often “less desirable” as their only options.

Beyond Medicaid

Along with state-funded medical assistance for nursing care, many facilities such as Messiah Village offer benevolent or charitable care in personal care and even in independent living. Quite often in non-profit communities, it’s a part of our mission to care for residents even if they have depleted all their assets. Our benevolent care is funded by the generosity of past and present residents, families, and staff, plus many other donor sources. Applying for benevolent care follows a similar process to the Medicaid application. So essentially, we need full disclosure of usable assets to prove a resident’s financial hardship. Over the years it has been a pretty elementary process. But as healthcare costs rise and consumers become savvier, the practice of sheltering, shielding or protecting assets is becoming more prevalent. Again while this practice is legal, it begins to put a strain on systems like Medicaid and our benevolent care fund. It forces the government and us to dig deeper for financial disclosure and could limit the amount of free care we can provide. Last year alone, Messiah Village provided approximately $2.3 million in charitable care. This includes the contractual loss we absorb from the low Medicaid per diem reimbursement as well as the direct benevolent care we provide. And while most have been good stewards with their money, spent down, and will deservedly benefit from our charitable care, there are others that will receive it too, despite having manipulated the system.

Real Need Versus Manufactured Need

Medicaid and charitable care programs were inspired to care for the truly needy. Otherwise, I believe those with the financial means have an obligation to pay for their care or protect wealth with long-term care insurance, and not by sheltering it or “fooling” the system to get early eligibility. As I stated in the very beginning, I love my kids and will care and provide for them for as long as I can, but I expect them to understand and appreciate that if I need to pay for care, it may potentially deplete their inheritance.

Finding the Right Place (Part 3- Nursing Care)

So far in this three-part series, we have examined finding the right personal care home [part 1] and assisted living residence [part 2] for a loved one. Now the focus turns to nursing care, which includes skilled or intermediate nursing care, as well as rehabilitation.

Of all three levels to research this may be the most challenging and angst-ridden choice of all. Let’s face it, most people do not want to go to a nursing home, and family members can feel a great deal of guilt and trepidation during this process. At least with personal care or assisted living your parent or spouse is likely healthier and fairly independent and can embrace and even enjoy making a move. But when it comes to the point of needing nursing care, often times you may be making the primary decisions for a loved one who may be too ill or incapable of choosing on their own.

Defining Nursing Care
First, let’s clearly define nursing care. Skilled nursing provides continual daily nursing care and rehabilitation under the supervision of a physician. Examples of skilled care include physical therapy, intravenous injections, and wound care. Medicare A will pay up to a maximum of 100 days per benefit period, as long as there continues to be a skilled need within that period. Otherwise, if custodial care, like assistance with bathing, tolieting, feeding, or medication monitoring, becomes the exclusive need, it is then considered intermediate nursing care, which Medicare does not pay for. Intermediate nursing care is either private pay or covered by privately purchased long-term care insurance or by Medicaid (aka Medical Assistance) for those who qualify. And just like personal care and assisted living, the healthcare professionals involved with their care should be able to recommend whether nursing care is necessary.

A Wild and Emotional Goose Chase
First off, health care has changed and time is typically of the essence, especially when choosing a nursing home. The entire process of picking a nursing home will differ from the other two options for several reasons. First, the pace will be much faster. Most of the time with personal or assisted care, you’re not dealing with an emergency or critical placement. But with nursing, if an injury or illness occurs in the blink of an eye, the ever-shrinking time someone spends in the hospital doesn’t give you much leeway to research and choose a facility before their discharged and deemed unsafe to return home. Another issue is that you may have to negotiate or settle on a choice because of no availability, or certain facilities may not be able to meet your loved one’s needs, and in some cases insurance may influence your options. For instance, does the facility take Medicare or Medicaid? Meanwhile as you’re on this goose chase you’re likely dealing with the physical, emotional and mental complexities that you and your loved one are enduring. This is not meant to send you into a panic, but rather to provide a dose of reality that many families face after a loved one is hospitalized and or is recommended for nursing care.

If you are comfortable using a computer, which I assume you are if you are reading this, then technology can help expedite this process much faster. Just as with choosing a personal care home or assisted living, there are online resources to obtain a clear concise list of nursing homes in your area. The PA Department of Health- Nursing Care Facility Locator link provides a list county by county. It details their contact information, and you can compare the following information: non-profit versus for-profit status, number of beds, payment options, and nursing hours per resident per day. As you peruse this link, please note that the state required nursing hours per resident per day is 2.7 hours. You can also key in on the patient care and building safety inspection surveys. Medicare.gov also offers a nursing facility locater by zip code and displays the national five-star rating-system for nursing homes in your area. You can also visit eldercare.gov or call 1-800-677-1116 for more information on long-term care choices nearby.

As you begin to whittle down those choices based on the information you’ve gathered online, you can start to apply some of the previous principles to narrow the choice even further. Again to streamline the search, be sure to call for availability and ask about admission criteria and financial guidelines. Recommendations from the doctor, clergy or a social worker can at times be helpful. However, remember to ultimately make your own judgment. Next comes the all-important tour. Once you arrive for your scheduled tour, don’t be afraid to ask questions. Now is the time to ask. Also if a resident or a resident’s family allows, talk to them about the care and their experience. Take notice of your surroundings using your eyes, ears and especially your nose. Inquire about amenities on-site for your loved to go to like an activity area, gift shop, restaurant or library. Ask to talk with the activity or enrichment staff, or request an activity calendar and menu. For further questions to ask and a nursing home checklist, go to medicare.gov/NHCompare.

Once you have toured your revised list, submitted an application, and the facility has accepted your loved one and offers a bed, you will then work with their admissions department and the hospital to coordinate the sign-in and the admission itself. Be sure that you have their insurance cards and other important documents like a power of attorney and living will available for copy. And remember, this quite often is a rapidly moving process.

Plan Ahead as Much as You Can
Despite that finding nursing care is the most challenging to plan ahead for and can be a sensitive subject to discuss, be as proactive as you can be. If you recognize that a parent’s or spouse’s health is declining, doing some preliminary research can be a great help. Planning ahead also gives them a bigger role in the decision-making process, which is important in making this difficult transition. It’s also good to have several options, in case the first option has no openings. The hospital won’t let mom hang out until her first choice opens up. However, you do have the right to move her from that nursing facility to her first choice once they have an opening. Lastly, you’ll find that most facilities require an application and typically don’t have an application fee. So, if you really want get a jump on planning, submit an application ahead of time for future need. Hopefully you or your loved may never need to make that move, but if you do, you’re that much ahead of the game.

For more tips and information about choosing the right nursing home for a loved one, please contact the Coach at 717.591.7225 or email coach@messiahlifeways.org.

Financial Legacy vs. Financial Prudency

Our children are our world. For my wife and me, our priorities for my son and daughter are to love, nurture and provide for them for a lifetime. Eventually as they leave the nest, our wish for them is to grow up into caring, intelligent, resilient, successful adults. However, despite their own successes and achievements or their lack of, we will also want to leave them a legacy. Legacy comes in many forms, but in this case I am talking about a financial legacy. Big or small we want to leave something behind for them to invest, enjoy or simply supplement their financial status. Most of us would agree, it’s part of being a good parent, a way for us continue to give and support them even after we are gone.

With that said, as a parent ages and retires that idea of a leaving a legacy starts to evolve a bit. Life gets in the way, like the cost of living, health problems, and crisis can arise. However, if we are fortunate enough, we can make it through to the other side. Therefore, if we have been smart with our investments, retirement, and managing our money, hopefully there will be a sizable nest egg to live on and enjoy after retirement and subsequently pass on to our kids – right?

Here’s where all this build up is leading to. I’m not a financial expert, so I’m not necessarily focusing on the size of that nest egg, but rather how prudent and accountable we will be with that money. Upon retirement – yes we’d like to travel, buy that RV, put that addition on the house, or as mentioned earlier leave an inheritance to family upon our demise. However, there is a very vital piece missing from this spending plan. And aside from having money to live on, pay bills, taxes, and other incidentals, we need to think about chronic health issues and the subsequent medical care and in many cases the need for long-term care, like nursing care or personal care. Unfortunately, there are many misconceptions about the costs, paying for and needing long-term care. According to a 2012 Metlife Mature Market Survey the national average cost of a nursing care is $90,520/year and assisted living or personal care comes in at $42,600 annually. Furthermore, for those who need care but don’t want to move from their own home, at $21/hour nationally you could end up paying $43,680 a year for 8 hours of care per day for 5 days a week for non-medical home care services. Next, most of these costs will be directly out-of-pocket or indirectly through privately purchased long-term care insurance coverage until you deplete all those assets. Lastly, to compound these continually inflating costs is the length of time people will need long-term care. It’s great that medicine and science are helping us live longer, but one of the consequences is that we will require more money to live on because we aren’t dying 5 or 10 years after retirement. It’s more like 15 or 20.

I digress – so what’s my point? First, that big shiny nest egg may not be as big as you might think. Also we need to change the conversation and our mindset on leaving that financial legacy to our descendants. Many people are aware of this dilemma, and they taking the right and legal steps to ensure all bases are covered. They realize their first priority is to cover their own healthcare and medical needs, and then what’s leftover can go to their loved ones. However, there are some estate-planning techniques out there that while legal are a bit unsavory. There’s a whole industry predicated on helping adult children “shelter” a parent’s assets, which could eventually put the burden on other taxpayers via Medicaid (a.k.a. Medical Assistance) to pay for nursing home care if they ever need it. Fortunately, there are some fail safes in place like the five year look back period required when someone applies for Medicaid. This can track back 60 months of spending to insure no large gifts or transfer of assets or properties were sold below market value which, if uncovered, could result in a period of ineligibility for Medicaid for a period equal to the amount those assets would have paid for nursing care. Therefore, this would render someone who is unable to pay privately and not yet eligible for Medicaid no way to pay for their care. Typically in this situation the nursing home would have to “eat” the cost. Additionally, even if someone lawfully transfers assets outside the 5 year look back period and are eligible day one for medical assistance, it can still create a precarious situation. As a Medicaid patient from day one, it really limits your choice of nursing home. Many nursing homes limit their amount of Medicaid patients. So it simply limits the number of nursing homes for you to pick from.

Along with state-funded medical assistance for nursing care, many facilities such as Messiah Village offer benevolent or charitable care in personal care and even in independent living. Quite often in non-profit communities, it’s a part of our mission to care for our residents even they have depleted all their assets. Our benevolent care is funded by the generosity of Messiah Village, its residents, families, staff (past and present), plus many other donor sources. Applying for benevolent care follows a similar process to the Medicaid application. So essentially, we need full disclosure of usable assets to prove a resident’s financial hardship. Over the years it has been a pretty elementary process. But as healthcare costs rise and consumers become savvier, the practice of sheltering, shielding or protecting assets is becoming more prevalent. Again while this practice is legal it begins to put a strain on systems like Medicaid and our benevolent care fund. It forces the government and us to dig deeper for financial disclosure and could limit the amount of free care we can provide. For our fiscal year ending June 30, Messiah Village will have paid out nearly $4 million in charitable care dollars. This includes the contractual loss we absorb from the low Medicaid per diem reimbursement as well as the direct benevolent care we provide. And while most have been good stewards with their money, spent down and will deservedly benefit from our charitable care, there are others that will receive it too, despite having manipulated the system.

Programs like Medicaid and our benevolent care program were created to care for the needy. Otherwise, we have an obligation to pay for our own care or to protect our wealth with private insurance and not by sheltering it to get early eligibility. As I stated in the very beginning, I love my kids and I will care and provide for them for as long as I can, but I expect my kids to understand and for myself to remain prudent if I need tap into and use part or all of my legacy to pay for my care.