Concerned About How To Pay For Long Term Care in 2019? Start Here.
Are You Struggling To Figure Out How To Pay For Long Term Care For A Loved One In A Nursing Home?
We often think that Alabama Medicaid is the only way to pay for nursing home for our spouse or parent.
However, Medicaid is simply one solution among a number of solutions.
To properly determine how to pay for nursing home care, we have to look at the risk and then all of the options before we can adopt a strategy or a plan of action.
This is similar to using a GPS — first we have to figure out our “current location” and then put in our destination. Only then can we see the options of how to get there.
So let’s go on this journey. We have made this article long because if you are in this position of trying to figure out how to pay for nursing home care in Alabama, you will and should have lots of questions.
If you decide that you would like to call us to set up a consultation, you can do so by calling us at 205-879-2447 or fill out our contact form and we’ll get right back with you.
However, we do encourage you to finish reading this article if possible.
First, What Are The Chances My Loved One Will Need Nursing Home Care?
There are different statistics about the need for long term care in a nursing home.
But what is clear is that there is a high percentage chance that those 65 and older will need nursing home care for either short term or long term at some point.
How do we know if we will be one of those that need nursing home care?
We can start by looking at our family history.
Do we have other relatives who have been in a nursing home?
Does my family tend to live to older ages (90s or above) or do we tend to have a fatal disease in our 50s or 60s?
Do we have a lot of family who can provide care? What type of health are we in now?
If we have to go in a nursing home, what is the anticipated length of stay?
The often cited number is about 2.5 years or 30 months if we ignore the very short term rehabilitative stays.
But this data is old — from the 1990s — and with many diseases such as dementia our medical care can keep our bodies alive even when we lose our mental faculties.
Think of President Reagan who lived many years after the announcement of his Alzheimer diagnosis.
So while 30 months may be a good ball park figure, we have to understand that the nursing homes in your area are filled with people who have been in there for many years.
Even more than a decade.
Second, What Is The Cost Of Nursing Home Care In Alabama?
The number that is often used is $6,000 per month but this is generally below the actual cost.
For a semi private room — two people sharing a room — we are looking at least in the mid $6000s.
If we want our loved one to be in a private room, the cost goes up near $7,000.
I was speaking with a friend of mine whose father was just put in a private room at much higher than this number.
Some rooms are even more than $8,000.
So when we look at the annual cost, we need to be thinking about paying somewhere between $70,000 to $100,000 a year.
We are looking at spending well into six figures for an average stay.
Third, How Do We Pay For $200,000 Or More In Nursing Home Costs?
We need to know what the expenses will be for our loved one in addition to the cost of nursing home:
- Are there still bills to pay at home?
- Is there a spouse that is staying home while the other goes into long term care at a nursing home?
- What about children who are disabled or other family members who rely upon the financial support of the one in the nursing home?
Some people go into a nursing home and have virtually no other expenses.
For these folks, we need to look at all their sources of income because this will reduce (in effect) the cost of the nursing home.
For example, Bob is single and lives in an apartment.
He has income of $3,000 — $1400 from Social Security, $700 Rail Road Pension, and a $900 annuity payment every month.
Once he is done with his apartment lease, he has no other expenses. That is, we cancel the insurance, we sell his car, etc.
He is in a room at $6600 a month.
His “shortfall” or “deficit” is $3600 a month.
So if he stays 30 months, then we are looking about a $108,000 out of pocket nursing home stay.
Others will go into a nursing home but will have expenses and a spouse to support.
Let’s take the same example of Bob but he is married and his wife only receives $900 a month in Social Security.
And the household expenses total $2700 for his wife to continue to live as she was living.
The total family income is $3,900 a month.
The total expenses are $2700 not counting the nursing home.
This leaves us $1,200 to go towards the nursing home bill of $6,600 a month.
So we are left with a “shortfall” or “deficit” of around $5,400 a month.
If Bob stays 30 months, then the total cost is going to be $162,000 out of pocket.
OK, Regardless Of The Total Cost, What Are My Options To Pay For Nursing Home Care?
If we put aside short term stays (Medicare often pays for the first 20 days), then here are the options:
Let’s look at these four options. There is no “one size fits all” solution.
Instead, all of these options should be considered before making a decision on which route to take.
Privately Paying For Nursing Home Care Out Of The Family Resources
There are a few families that can afford to pay $70,000 to $100,000 a year for long term nursing home care for their loved one.
But not many.
For most families, to pay this type of money will completely wipe out and drain a family’s resources.
Resources that were accumulated over decades of work, savings, and investments.
Particularly if the spouse may also need nursing home care or if there is a disabled child who must be cared for.
So, unless there are significant resources, this is not an option that will last and most families are not eager to spend all of their money privately paying for a nursing home.
VA Benefits For Veterans
We have several veterans nursing homes in Alabama including one in Alexander City.
Traditionally these are very hard to get into as the need is so great, but the beds are limited.
If this is an option for your family member, it should be considered as this can solve the problem of how to pay for the nursing home care.
You can read in a comment below that there is concern about the level of care received.
Regardless, it is an option to look at and if you can qualify, that’s great as you may choose to use it or you may choose to not go into a veterans nursing home.
But for most veterans, this will not be an option.
This money can be added to other sources of income to pay for nursing home care which may allow the family resources to cover nursing home care.
Long Term Care Insurance
If your loved one was able to purchase the right type of long term care insurance, this can be a wonderful source of money to pay for the cost of a nursing home.
There was a lot of abuse in the industry so it is fairly regulated by the Alabama Department of Insurance.
The basic idea of long term care insurance is you pay now and the insurance company pays you if you become “cognitively impaired”. Or if you lose the ability to do “activities of daily living”.
Long Term Care Insurance — Activities of Daily Living:
- Transferring (mobility)
The cost can be quite high (thousands of dollars a year) but in the right circumstances these policies can help tremendously.
They normally will pay some portion of benefits if you are receiving in home care.
This may allow you to delay having to leave your home and go into a nursing home.
It is worth the effort to find out if your loved one has long term care insurance and then to study it to figure out when the benefits start, the amount of the benefits, and all restrictions.
You should also determine, or seek legal advice, if the policy terms and conditions comply with Alabama law.
We are seeing a growing number of Alabama seniors being denied their benefits in an illegal manner so any “turn down” of long term care benefits by an insurance company should be carefully examined. Sometimes we need to file suit against the insurance company for wrongfully denying benefits. Let us know if you have any questions about this.
The receipt of the benefits, which can in the thousands of dollars a month, can make all the difference in the world in getting the proper level of care and not destroying a family financially.
We have saved Alabama Medicaid for the last because it is the “last resort” for paying the astronomical costs of nursing home care. According to Alabama Medicaid, around 75% of Alabama residents in a nursing home receive Alabama Medicaid.
When you qualify for Alabama Medicaid, all or a portion of your income is used to pay for the nursing home and then Medicaid picks up the rest.
There are special rules for if your income is too high or if you are married, etc. but for this article we will just touch on the basics.
We have three types of eligibility that must be met:
- General eligibility
- Income eligibility
- Asset (resource) eligibility
Alabama Medicaid — General Eligibility
You must be US citizen (or qualified alien) who lives in Alabama and you must intend to stay in Alabama.
You must be 65 or older or suffer from a blindness or disability and you must need to be in a skilled nursing home.
Alabama Medicaid — Income Eligibility
This is the “gross” income which can cause many problems.
It is not the net amount after Medicare but is the gross amount.
If your loved one’s income is higher than this, there is a solution called a “Miller Trust” or “Qualified Income Trust” which takes care of the problem. Just understand there is a way to qualify if you make too much money. And if you are married, sometimes money from the spouse going into the nursing home can be used (in part) to help the spouse still living at home.
Alabama Medicaid — Asset/Resource Eligibility
Assets, or “resources” as Medicaid calls them, are divided into two categories. Exempt and non exempt. Or sometimes these are described as “countable assets” or “non countable resources.”
The amount of countable assets/resources is $2,000 for the person going in the nursing home.
For single folks, we normally can save half of their assets. For married folks, it is closer to about 80% or more of their assets can normally be saved for the family and still qualify for Alabama Medicaid.
Medicaid can be, and is for so many, a wonderful option.
Actually it is the only option for the vast majority of Alabama families.
There are all sorts of odd rules and pitfalls so if you are looking into this option, make sure you are getting good advice. So mistakes are not made.
Conclusion — What Do We Do Now?
You have taken a critical step — start to educate yourself on your options.
Going back to our GPS illustration, you have to figure out your “current location” right now to do any planning. Now you know about the four big options:
- Privately pay
- VA benefits
- Long term care insurance
- Alabama Medicaid
Which one is right for your family?
This can only be determined by looking at your unique situation. My suggestion is to get with an elder law lawyer in Alabama to sit down with your family and discuss the issues.
You are welcome to call us at 205-879-2447 or contact us through our website.
We know when these types of issues hit us, we want to get answers as quickly as possible. This will help to reduce the stress on the family. And get a good plan of action that everyone can follow.
So we will get you scheduled ASAP so you can figure out the best path for you to take.
We welcome your call and wish you the best.