If you or your parents are not yet 65 you’ll probably ignore what I have to say thinking this won’t apply to me. You’ll be making one of the biggest mistakes of your life.
If you or one or someone in your family has to go into a Skilled Nursing Facility (SNF) the current cost, in North Carolina, is about $72,000 yearly. I’m going to focus on details surrounding folks who are 65 or older who qualify for Medicare. Anyone younger who needs a SNF, unless they have good Health Care Insurance that pays for some “rehab” time in a SNF, or has been smart enough to purchase Long Term Care (LTC) insurance is likely in deep financial trouble.
Let’s assume Dad falls and breaks a hip. Medicare A will pay 80% of the Medicare approved charges. Medicare B (If your parent has it) will pay for the ambulance ride and so on...but the medical bills is not my focus. The parent with the injury will likely be released to a SNF for physical and occupational therapy (rehab). If you read the Medicare documentation it says Medicare will pay 100% for the first 20 days (only after a 3 day hospital stay) and then all but about $135/day for up to a total of 100 days. If your parents have supplemental insurance that will cover the difference for those 80 days...and even all the costs for some additional period, you might think. “We’re golden for xxx days.” You’re not. Medicare only pays as long as the patient can be rehab’ed, and usually that’s a period of weeks. When the therapy folks say the patient is ready to go home, Medicare stops paying. You’re thinking...well, that seems OK....and it might be. But what if Dad has a stroke...and is confined to a wheelchair....and can’t benefit from more than a few days of rehab and Mom isn’t capable of taking care of him.
Guess what....after those few days...Dad is yours...and the bills are yours if you keep Dad at the SNF. You’ll get some “Home Health” benefits when he comes home....but not 24/7 help and not for too long. Aha, you say...I’ve heard Medicaid will pay if my parents can’t afford it. True...but only after (unless you’ve done the proper prior planning with an “Elder Law” and Medicare/Medicaid knowledgeable attorney) taking 50% of everything your parents have (except their house and car) and limiting their income and having them sign over any life insurance in excess of $10K, annuities...and so on and so on...in great and complete detail requiring even such things as proof of citizenship, their parents death certificates ... you name it. If there is no surviving spouse they will take everything excluding about $2000 and their burial policy and a few other things...if they have them. A Trust won’t protect these assets. And they’ll get to keep a generous $30 a month for spending money...like for hair cuts or a soda-pop.
Aha...you say...I’ll have my parents title their home to me, give me their other assets and then they won’t have anything to give the Government. Wrong! There is a 3 going to 5 year “look back” period and any assets transferred during that time will be counted...and your parent will be disqualified from Medicaid-paid SNF for one month for every $5000 of transferred assets. They’ll want all the bank statements and other financial records.
(BTW...Assisted Living...which means things like help with medications and other fairly minimal support...and usually three meals a say...with an unfurnished studio apartment...will run anywhere from $2500 monthly upwards to whatever you can afford and is never covered by Medicare or Medicaid.)
There’s a lot more to this than I’ve said...even in this long post. I’m trying to SCARE you and your parents into doing something NOW before you HAVE to face the reality of these circumstances.
Yep...my Dad fell and he’s in a SNF now. He’s gonna be OK and so are we. We did some planning years back...maybe not all that we should have done...but enough.
Do your planning NOW. It's worth the cost.