Paying
for a Nursing Home
by
Herbert D. Hinkle, Esq.
Herbert D. Hinkle
Law Office
2651 Main Street
Lawrenceville, New Jersey 08648
(609) 896-4200 or (215) 860-2100
Chances are that
you or your spouse will spend a year or longer in a nursing home.
How will you pay for it? Four ways come to mind: (1) use your own
money; (2) use someone elseās money; (3) use insurance or (4) let
the government pay for it. The answer to this will have an impact
on the assets available to a child with a disability.
1. Pay for
it yourself. Care in a quality nursing facility can exceed $75,000
annually. This is feasible only for a small handful of people. If
you choose the approach, it is important to have a mechanism in place
to ensure that funds will be available to spend as you wish, if you
are not able to handle your affairs at the time. A power of attorney,
or even better, a trust can accomplish this.
2. Have someone
else pay for it. This is not as silly as this might seem. You
could transfer assets to a trusted family member who will later pay
for your care and obtain a medical deduction for income tax
purposes. This approach can significantly reduce the actual cost of
care, especially if the family member is in a higher tax bracket.
3. Long-term
care insurance. In the 25-plus years that I have been involved
with disability and elder law, such insurance has become not only
more popular but also more necessary for many. Medicaid rules concerning
the transfer of assets have become much tighter. The private cost
of care in a nursing facility is beyond the reach of many, especially
if a spouse or other dependent remains at home, and even if not, private
insurance may make sense economically. Also, it will give you the
freedom of choosing the facility you want.
4. Medicaid.
Do not confuse Medicaid with Medicare. Medicare will pay for only
very limited amounts of care in a nursing facility. Medicaid provides
unlimited coverage, but an applicant must meet income and resource
tests and there is a 36-month "look-back" period regarding
the transfer of assets. However, there is a major exception for parents
with disabled children. A transfer to the person with a disability
does not result in a transfer penalty; however, the transfer must
be to a special needs trust that also conforms with Medicaid
requirements or that disabled person outright. The transfer to the
disabled person outright will cause other problems, such as a loss
of benefits, and should be avoided.
Copyright 2000
H.D. Hinkle. All rights reserved.
Mr. Hinkle maintains
a multi-state law practice with offices in Lawrenceville, Florham
Park, and Marlton, NJ, and Yardley, Pa. Mr. Hinkle and his colleagues
Ira Fingles, and Paul Prior lecture and write frequently on topics
of law, aging, and disability, and are available
to speak to groups in New Jersey and Pennsylvania
at no charge. Call (609) 896-4200.
