About 7 out of 10 people over age 65 will need long-term care. The national average cost for a private room in a nursing home is $83,580 a year, according to the Department of Health and Human Services. The average nursing home stay is 2 ½ years and about 30% of people entering a nursing home will stay there for 5 years or more.
How can a family pay $83,580 a year for five years or more? These prices make financing high college tuitions look like a piece of cake. Often, an aging parent in a nursing home feels forced to spend all their life savings and sell their house to pay the bills. That means that children lose both their inheritance and their family home. Then, once the money runs out, the aging parent finally qualifies for Medicaid assistance. Medicaid starts paying the bills, and the parent receives the exact same care as before.
It doesn’t have to be this way- especially with a little advance planning- and now is the time to start.
Let me give you an example of why planning in advance can be of such great benefit. When an aging parent applies for Medicaid, if they have given a gift within the last five years they will be required to wait a penalty period before they can qualify for assistance. The length of the penalty period depends on the amount of the gift, and the exact calculation varies from state to state and sometimes within a state. For example, a gift of $30,000 in most areas of Virginia will make a penalty period of about 5 months. During the penalty period the parent will not be qualified for Medicaid assistance and will be forced to pay for nursing home care out-of-pocket.
This penalty period is important to understand as soon as possible, because if a parent is able to transfer their property or savings out of their name five years in advance of their needing nursing home care, that means they can qualify for Medicaid more quickly and whatever they gifted will be safe from the clutches of the nursing home.
But be careful! The rules of Medicaid qualification are very complex, unforgiving and often misunderstood, which is why every aging individual should consult with an elder law attorney about how they should approach giving gifts. There are many ways to be disqualified for Medicaid, and only an experienced elder law attorney will be able to assess what’s best for your situation.
The good news is that the earlier you start planning, the more you will be able to save. Visit our Medicaid Planning page to learn more about how we can help protect what’s yours from nursing home costs. We offer a free consultation to those who wish to begin planning today.