Paying for Long-term Nursing Home Care

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Long-Term Care
Paying for Long-term Nursing Home Care

Paying for Long-term Nursing Home Care

Paying for Long-term Nursing Home Care
Health Care Self-Help Guide
AARP LEGAL SERVICES NETWORK
California Edition

Medi-Cal and Medicare pay for nursing home care. They are government programs but are not for everyone. Private insurance can also pay for nursing home care.

Nursing Home Care

Nursing homes can give you two kinds of care.

Skilled Care:

This type of care is when you need nurses, physical therapists, or other technical or professional workers every day.

Custodial Care:

This care is for when you just need help with things like getting in and out of bed, bathing, dressing, eating, or taking medicines. You don’t need nurses or physical therapists to help you.

The kind of care you need is important to determine whether either program can help pay for your nursing home care.


Medicare

Medicare is a federal health insurance program. If you are getting Social Security and are 65 or over, or are disabled, or are blind, you probably have Medicare coverage.

Medicare will pay for a nursing home only if certain things are true:

1. You were in the hospital for three or more days.

2. Your hospital stay was covered by Medicare.

3. You go into a nursing home for skilled care within 30 days after you get out of a hospital.

4. Your doctor must say that you need the help of a physical therapist or a nurse every day.

What Medicare will pay

Medicare will pay 100% for the first 20 days. For the next 80 days, you pay a "co-payment" of $95 per day (1998). Medicare will pay the rest of the cost for those 80 days. Once you get to 100 days, Medicare will not pay anything until you have been out of the nursing home or a hospital for 60 days.

If you have a Medicare "supplemental" policy, it will pay all or most of the co-payment. Supplemental policies pay nothing after 100 days.

REMEMBER, Medicare will only pay for skilled care. It will not pay for custodial care.


Medicaid (Medi-Cal in California)

Medicaid is a federal health care insurance program for people with low income and assets. In California , it is called "Medi-cal." It is run by the Department of Health Services (DHS).

Medi-cal is the only public program that pays in full for long-term skilled nursing home care.

Medi-Cal will NOT pay for custodial care. Only private insurance may pay for custodial care.

Getting Medi-Cal

Medi-Cal is not meant for everyone. It is meant only for people who do not own a lot and do not have a lot of money. To get it, you must meet Medi-Cal rules about income (money you get) and assets (what you own). If your assets are more than the limit, you must "spend down " the extra before you get Medi-Cal.

Medi-Cal looks at all income. It doesn’t matter whether the income is taxable.

As a general rule, you cannot sell or give away what you own to get Medi-Cal. Your spouse can’t either. But, your spouse will still have income and assets if you go into a nursing home.

Ownership

When you apply for Medi-Cal, you will list everything you (and your spouse, if you are married) have. This means income, assets and anything you own jointly, with your spouse, or anyone else.

For Medi-Cal purposes:

  • Income belongs to the person whose name is on the check.
  • Assets belong to the person whose name is on the title.

If more than one name is on the check or the title, for Medi-Cal, the income or the asset belongs to the joint owners in equal shares.

Medi-Cal and Assets

You can have $2,000 worth of assets and still qualify for Medi-Cal. Some assets are not counted.

Assets not counted or "EXEMPT ASSETS"

1. Your home, if you say that you intend to return to it OR if certain people live in it. These people could include:

  • your spouse
  • your dependent child (disabled or under age 18)

2. Household goods (such as furniture and appliances) and personal clothing. There is no limit on how much these can be worth.

3. One car for the family. There is no limit on what it can be worth.

4. Burial plots and headstones.

5. Life insurance policies, if the total amount payable at death is less than $1,500. If the value of all your policies total more than $1,500, the money you would get right now if you cashed in the life insurance would be figured. Any money over $1,500 will be counted as an asset. You may have to cash in the policy. If the insurance has no cash value (a "term" policy), it is not counted.

6. Burial savings or insurance for each spouse up to $1,500. You can save more than $1,500 if you buy into a burial trust account or a pre-paid funeral plan.

Unavailable Assets

Sometimes an asset cannot be sold for cash. The asset is "unavailable" to you. Then it will not be counted.

Examples:

1. Land you could not sell even after you tried to sell it.

2. An asset owned by you and a non-spouse joint owner, where the sale needs both joint owners to agree to sell and the other owner will not agree.

If the "unavailable" asset later becomes available, then Medi-Cal benefits can be stopped until the asset has been "spent down."

Getting Rid of Assets

You CANNOT:

1. Give away what you own so you can get benefits.

2. Sell an asset for less than it is worth,

3. Add someone else’s name (other than your spouse’s) to an asset.

If you do any of the above within 36 months BEFORE you apply for Medi-Cal, OR BEFORE the date you go into the nursing home (whichever is later) YOU WILL NOT be able to get benefits for a certain period of time referred to as a "penalty period."

This "penalty period" begins on the date you sold or gave away what you owned, not the date you apply for Medi-Cal or the date you enter a nursing home. If you have done this, DHS will help you figure the penalty period.

There is no penalty period for any transfer made more than three years (36 months) before:

  • applying for Medi-Cal OR
  • going into a nursing home, whichever is later.

A Special Note About Trusts

DHS will look to see it any trust has made any transfers to you or you have made transfer to a trust for five years (60 months), instead of the three years for gifts.

Getting Rid of Exempt (not-counted) Assets

You can give away exempt resources to certain people without a penalty. For example, you can give your home to your spouse; a dependent child; or an adult child who has lived with you for a least two years and provided care which helped you stay at home. It may also be possible to give the house to an adult brother or sister who has lived there for at least a year and has an "equity" interest in the home. An "equity" interest can mean different things, but a hardship for the brother or sister to leave the home, or the fact that the house is the old family homestead, are the kinds of situations which are "equity" interests.

You can give away other assets without penalty if ONE of the following three things is true:

  • you meant to get fair market value for the asset, OR
  • you gave the asset away not to qualify for Medi-Cal, but for some other reason OR
  • the state decides that a denial of Medi-Cal benefits would be a hardship for you.

If you gave away any asset, DHS’s policy is to impose a penalty. Plan to appeal if you want to prove one of the three exceptions above.

Remember, you can always sell an asset for fair market value. But, if you sell an exempt asset, like a home, the money you receive as payment will not be an exempt resource, and you will have to spend it before you can become eligible for Medi-Cal.

Unmarried People and Assets

If you are widowed, divorced, or never-married, and you are entering a nursing home, you must spend down your countable assets to the $2,000 limit.

You don’t need to spend all the money on nursing home bills.

Spend it on:

  • funeral and burial arrangements
  • mortgage payments
  • insurance payments
  • necessary home repairs
  • a better car, or
  • exempt resources (listed below)

BUT, you cannot just give the assets away.

A widowed, divorced, or never-married person may keep the same "exempt" or "unavailable" assets that a married person can.

Married People and Assets

Part of a couple’s assets and income are kept for the at-home spouse’s support.

The At-Home Spouse’s Assets

On the date one spouse enters the nursing home, special DHS forms are filled out. The forms list all assets owned by the couple on that date. These forms are NOT an application for benefits.

You can get the forms from the DHS. You also can get the forms, and maybe some help in filling them out, from someone at the hospital or nursing home. You can also call your local Area Agency on Aging for help.

All assets must be listed on these forms. It doesn’t matter whether the assets are owned by the husband only, the wife only, or both jointly.

Once this "snapshot" list is made, any exempt assets or income are taken out. What is left become the "resource pool." This "resource pool" is identified on the date you go into long-term care, not when you actually apply for Medi-Cal. The application date might be later - after the extra money in the resource pool is spent down.

California law allows the community (at-home) spouse to keep a certain amount of the non-exempt assets that are available to the couple at the time of application. This amount is called the community Spouse Resource Allowance (CSRA). The CSRA for 1998 is $79,020. Remember, the CSRA constitutes "NON-EXEMPT" assets only; the home, car and other EXEMPT assets are NOT COUNTED toward the CSRA. The CSRA can be retained in ADDITION to the $2,000 in non-exempt resources that the applicant is allowed to have. In certain situations, the CSRA may be raised through an administrative appeal or fair hearing.

Spouse’s Assets

The rule against selling or giving away assets is the same for both spouses. This rule stops couples from making the resource pool smaller.

So if an asset would have been counted as part of the resource pool and your at-home spouse gives it away, you will not be able to get Medi-Cal nursing home benefits for whatever the penalty period is.

The "Spend Down" Amount

That part of the resource pool that belongs to the spouse going into the nursing home must be "spent down" to the $2,000 Medi-Cal limit.

You don’t need to spend all the money on nursing home bills.

Spend it on:

  • funeral and burial arrangements
  • mortgage payments
  • insurance payments
  • necessary home repairs, or
  • to buy exempt resources (listed below)

BUT, you cannot just give the assets away.

At-Home Spouse, New Assets

Any assets the at-home spouse gets after the other spouse is eligible for Medi-Cal belong to the at-home spouse. This money need not be paid to the nursing home.

Nursing Home Spouse, New Assets

If the nursing home spouse gets new assets after the snapshot date, those assets will have to be spent down. Remember that the snapshot date is the date when that spouse enters the nursing home. The date of qualifying for Medi-Cal may be later.

Medi-Cal and Income

In addition to resources, California law also allows the community spouse to keep a Monthly Maintenance Need Allowance (MMNA). The MMNA is adjusted annually in regard to cost-of-living increases. The MMNA for 1998 is $1,996. Under the "name on the instrument rule," the community spouse may keep all income received in her name alone. As with the CSRA, an individual may seek a higher MMNA through an administrative appeal or a court hearing.

Example:

Hal lives in a nursing home and receives skilled care. His monthly income from Social Security and a pension is $1,035. Winnie, his wife, has a monthly income of $1000 from Social Security and interest income.

Once Hall gets Medi-Cal, the first $35 of his income will be given to him. This is for his personal needs allowance (PNA). $1000 is left.

Next, $976 of Hal’s income will go to Winnie. This is to bring her up to the MMNA of $1,976/month (her $1000 + his $976 = $1,976). Hal pays the remaining $24 of his money to the nursing home. Medi-Cal pays the rest of the monthly nursing home bill.

Know the Rules

Once you (the nursing-home spouse) get Medi-Cal, make sure that the DHS looks at both incomes. This will help your at-home spouse get as much of your income as the law allows.

Do not rely on DHS to do this on their own.

Before Going into a Nursing Home

1. Think about giving someone you trust a durable power of attorney and a health care power of attorney. You pick who will take care of your money and bills and make medical decisions for you, if you can’t.

2. If you are married, think about giving your share of your home - and any other exempt assets - to your spouse. Do not do this until you are sure you are entering the nursing home for long-term care.

Giving the home and other exempt assets to your spouse can keep you from inheriting these jointly-owned assets if your at-home spouse dies before you and names someone other than you as beneficiary in a will. If that happened, you would have to use those assets to pay for your nursing home care.

It is a good idea to get some up-to-date advice from an attorney before you sell or give away any asset.

At-Home Spouse Actions

If you are an at-home spouse, think about giving a durable power of attorney to someone you trust other than your spouse. Think about changing your will and life insurance policies, so your spouse in the nursing home will not inherit assets. The assets would have to be spent down to the $2,000 resource limit before Medi-Cal would start payments again.

Some Questions About Medi-Cal

1. If Medi-Cal pays for a nursing home, will the state put a lien on my home?

Yes, California can recover the amount of Medi-Cal benefits it paid to you under certain circumstances. California has a claim against your estate and will put a lien on your home. It will try to get this money back only after you have died and you have no living spouse or dependent children. If you own your home jointly with your spouse, and your spouse is still living at the time you die, the state will not collect on the claim at that time. A lien is a document filed with the court land records stating that the home cannot be sold until the person filing the lien has been paid.

Before California will place a lien on your home you must have been permanently institutionalized or be age 55 or older and receive Medi-Cal for:

  • public or private nursing home care
  • home and community-based services or
  • hospital care and prescription drugs you received while in a nursing home or receiving home and community-based services.
2. Can a nursing home require that a specific amount be paid to it before it will accept Medi-Cal payments?

No! A nursing home may not demand payments which would be more than it would get under Medi-Cal. This would be a serious crime. If it happens, report it right away. Your local Area Agency on Aging can help you do this.

3. Can a nursing home throw me out or change my care if I start getting Medi-Cal?

No! Nursing homes cannot act differently because you get Medi-Cal. They cannot change your care or move you somewhere else because you get Medi-Cal. If any of this happens, report it right away. Your local Area Agency on Aging can help you do this.


Private Insurance

You can buy private insurance for nursing home care. This is also called "long-term care insurance." There are too many different policies to be discussed in detail here. Keep the following tips in mind if you are thinking about buying this sort of insurance.

·       Buy it if you need to protect your savings.

If you have a lot of savings that you would have to spend to become eligible for Medi-Cal, you may want insurance to protect your savings.

The insurance may also be a good buy if it pays reasonable benefits for custodial care. Custodial care is NOT covered by Medicare or Medi-Cal.

·       Make sure it covers enough services.

Be sure to read the private insurance policy carefully to see just what it will pay for. Here are a few questions you need to have answered before you decide to buy:

1. Does it cover custodial care, rather than just skilled care? Custodial care is not covered by any public benefit program. So it is a big plus if the insurance company covers this type of care.

2. How much of your nursing home costs will the insurance pay per day or per month? Will you still have to pay a big part of the bill yourself?

3. Do you already have health problems? Look out for insurance policies that:

  • won’t pay for a "pre-existing condition";
  • have a long waiting period during which you must pay the bills yourself; or
  • won’t cover Alzheimer’s-like conditions.

4. Before dealing with any insurance company, call the Health Insurance Counseling and Advocacy Program (HICAP) 800-626-2200.

Ask them to help you go over long care policies to explain the coverage you would get for your money.


Other Questions?

Call your local Legal Services Network attorney or the National Eldercare Referral System.  To contact a Legal Services Network attorney, check your local Yellow Pages directory in the "Association," "Attorney," or "Lawyer" section, and look for the AARP logo.  For a complete list of LSN attorneys, call 800-424-3410, check AARP’s website at www.aarp.org/lsn, or write to LSN Fulfillment, P. O. Box 100084, Pittsburgh, PA 15290. To locate other local support resources for older persons, contact the Eldercare Locator at 800-677-1116 or visit their website at www.aoa.dhhs.gov .  For more information specifically about finding a nursing home, call CareScout at 800-571-1918, or check the website www.nursinghomereports.com.


Other Self-help Guides

You can request copies of these pamphlets from your Legal Services Network attorney. Check your local yellow pages directory in the "Association" "Attorney" or "Lawyer" section, and look for the AARP name and logo.

CONSUMER:

Before You Buy Anything, Stop and Think
A Credit Card is a Loan Card
A Mistake in Your Bill
What to do When You Can’t Pay Debts
Having Problems with a Loan?
How to Deal with Mail Order Problems
You Can Get Out of Home Improvement Contracts - Here’s How to Do It

ESTATES:

Financial Powers of Attorney
Personal Bank Accounts, What’s Best for You?
Support for Widows and Widowers
What is a Will?

FAMILY:

Financial Exploitation
The Older Couple and Divorce

HEALTH CARE:

Paying for Long-term Nursing Home Care
Is a Life Care Contract for You?

LANDLORD AND TENANT:

Renters, Know Your Security Deposit Facts
AARP Legal Services Network

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