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The time period in which an elderly loved one goes to a skilled nursing facility can be one of the most emotionally wrought and challenging experiences for a family. Unfortunately, one of the most stressful aspects of the ordeal is how the nursing home bills are going to be paid.

Here’s what you need to know:

  • (1) There is a difference between entering a skilled nursing facility from the hospital and entering from the “community.”
    If a patient has a three-day qualifying hospital stay, then Medicare will cover their first 100 days at the skilled nursing facility. If they do not enter the facility by way of the hospital, absent special waivers, they do not receive this coverage, and there will be an expectation for payment from Day 1.
  • (2) Medicare does not provide full coverage.
    During the first 20 days of the nursing home stay, Medicare covers the bills in full. For the subsequent 80 days, there is a required co-pay of $185.50 (adjusted regularly for inflation) per day. Supplemental health insurance will often pick up this co-pay. But if a patient does not have that, then out-of-pocket payment is expected. Further, the 100 days can be cut short if they are deemed medically unnecessary for rehabilitative purposes. If someone plateaus and fails to make any rehab progress, Medicare coverage can terminate earlier. This is an appealable decision, but it’s best to have a plan in place because there will inevitably be a point when Medicare coverage stops.
  • (3) Long Term Care Insurance can be useful, for those who have it.
    At the end of the Medicare period, alternative payment must be procured. Long term care insurance policies commonly have a waiting period for coverage of about 90 days before they kick in. This times out well with the Medicare coverage. If a nursing home patient has a long term care insurance policy that covers $250-$350 per day, these funds, when coupled with social security and other income, may or may not cover the nursing home bills entirely, but should be sufficient to require only a relatively modest dip into their assets.
  • (4) For Many, Qualifying for Medicaid is the next step
    If a patient does not have long term care insurance, the bills are going to add up very quickly once the Medicare coverage period has ended. Just a couple years in a skilled nursing facility
    could cost several hundred thousand dollars. For many people, it means losing their homes. The solution is to qualify for Medicaid.The difference between Medicare and Medicaid in the nursing home context is that all Americans over 65 years old qualify for Medicare, but it only covers 100 days of long term care. Chronic care Medicaid can cover an unlimited amount of care, but it is “means tested,” which is to say that there are maximum resource level requirements for eligibility. But owning a home or having some money does not mean that someone is out of luck. Elder law attorneys can provide strategies to get people qualified for Medicaid. When someone is admitted to a skilled nursing facility, making trusts and transferring assets are not on the table because of the five-year look-back period, but there are emergency tools to employ.First, we look for exemptions. Is there a caregiver child who has lived in the house for 2+ years prior to the patient’s institutionalization and took care of him/her? Or are any of the children on government disability benefits? These exemptions would allow for certain transfers to be made without penalty.
    Next, we look at a spend-down. Is there anything that the patient still needs? Money can be used to purchase clothes, bedding, blankets, personal assistance, transportation, etc. or to prepay a funeral.After that, we look to emergency asset protection strategies. For married patients with a heathy spouse in the community, we look at spousal refusal. Exemptions include the family house (up to $906,000 in equity), plus more than $100,000 in additional assets, and more than $3,000 in monthly income. If the community spouse has more resources and income, he or she can execute a spousal refusal, thereby declining to make them available to cover long-term care and nursing home costs. Then, Medicaid will pick up the costs.
    For widowed and unmarried nursing home patients, we often look at a “gift and loan” strategy. The formula to calculate the amounts of these transactions involves computing the private pay cost of the nursing home, the client’s net available monthly income (NAMI), the Medicaid regional rate for nursing care set by New York State, the total resources of the client, the amount the client has previously gifted in the last five years, the Medicaid Resource Allowance for the present year, and prevailing IRS interest rates for the present month. After these numbers are run through a formula there is a calculated gifted amount, which the family keeps as inheritance, and a calculated loaned amount, which the family uses and applies toward Medicaid’s “penalty” for having made the gift. Usually, this strategy can save roughly half of the assets.
  • (5) The time to act is at the very outset of the first 100 days.
    Medicaid applications can take months to put together. There is a retroactive element to them, in that they will start coverage three months back as long the individual is eligible. But for many situations, such as gift/loans, eligibility will not be achieved until all of the work is complete.Therefore, an attorney should be consulted as early as possible – while the patient is still in the hospital or immediately on their transfer to a nursing home facility. The 100 days of Medicare coverage provides valuable time to get the necessary work done for Medicaid eligibility.

This article appeared in the November 5, 2021 edition of the Senior Gazette.

This is not intended to be legal advice.  You should contact an attorney for advice regarding your specific situation.  


Michael Wagner is a Partner concentrating on elder law and estate planning, wills and trusts.  He conducts several Estate Planning Seminars and Webinars throughout the year.
He can be reached by phone at 845-764-9656 and by email.
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