Long Term Care: “When the Money Runs Out, What’s Next?”

by Maria

in Long Term Care Planning

A recent visitor named Joan sent me a question that I just know is on the tip of many of your tongues.

Here are the facts:

  • Mom is 85 years old.
  • She’s in good health despite having early dementia.
  • The only hands-on assistance she requires at this point is help in managing her money which Joan provides.

Here’s a bit about the financial picture…

  • Mom owns a condo in a 55+ community.
  • Her monthly income consists of a small savings account, an IRA and Social Security payments.
  • Joan and her siblings are unable to assist mom financially in a significant way (In other words, no one owns a money tree!)

So what’s Joan’s question?

“As mom’s money dwindles and her need for care increases over time, what are the options for care?”

In writing to me Joan indicates that she’s thought of selling mom’s condo one day and using the money to pay for an assisted living facility.  “But,” she asks, “what happens when that  money runs out?”

So here’s the unvarnished truth:

The only option when the money runs out is a nursing home. 

To pay for it, Joan’s mom will need to apply for Medicaid. But first she’ll have to qualify (eligibility can vary by state so it’s best to check find your state’s rules by visiting the federal site).

But something that doesn’t change based upon where you live is that APPLYING FOR MEDICAID WILL REQUIRE TIMING.

Continuing on with the truth-telling, Joan’s mom will have better choice with regard to nursing homes if mom becomes a resident before her money runs out (ideally she’d move into a nursing home with the ability to pay the costs out of her own pocket for 2-3 months).

One she’s approved for Medicaid, all costs will be paid for through a combination of state and federal funds through the end of her life.

*******

Does all this have you wishing for a money tree so that you could pay for all the care your aging parents need without worrying about when the money will run out?

Me too. Maybe we ought to start a club…

{ 5 comments… read them below or add one }

Steve October 17, 2011 at 8:08 AM

Thanks Maria, I will check it out.

Maria October 14, 2011 at 7:04 PM

Thanks for sharing your experience, Steve. These are really hard situations and absolutely made all the more hard by having them happen earlier in life. I’m not sure where you live or if a support group might be your thing or not, but there is an organization called Well Spouse that provides a range of supportive services to spouses. Have you heard of it? http://www.wellspouse.org

Steve October 14, 2011 at 2:52 PM

It can be even harder than that. It can be your spouse at a much younger age. Currently we are using a nicer dementia unit in Assisted Living. But those are not covered by Medicaid. So when I have used up my money and retirement, she would move to a MORE expensive and less good nursing home. The only thing I can think to do is to work as long as I can and live on as little as I can.

Maria October 9, 2011 at 9:24 PM

Hi Ashley,

You’re exactly right which is why I titled this post “When the Money Runs Out” Just to be clear though, Medicaid is the program that pays for long term care in a nursing home, not Medicare. But, in order to qualify for Medicaid you do need to “spend down” assets since it is a means-tested program.

You mentioned funeral expenses so I’ll make one additional point about that. Funeral expenses can count toward the total “spend down”. Here’s an example: Let’s say your aging parent has 100K in savings and in order to qualify for Medicaid he/she can only have 13K to his/her name. This means that your mom or dad would need to “spend down” 87K in order to qualify for Medicaid. Usually this is done by paying for home care or perhaps a year in an assisted living facility. An additional way to “spend down” is to pre-pay for a funeral. Many funeral homes today offer a “pre-plan” option where the entire cost of the funeral is paid upfront. The benefit to this is that you’re not left having to cover the cost of the funeral with the 13K Medicaid enabled your parent to keep; instead, that 13K can be left to the family. Although it’s not a lot of money, I think it is worth thinking about if your aging parent is in need of nursing home care. And believe me, I am not suggesting that any of this is easy.

Thanks so much for your comment.

Maria

Ashleigh Burroughs October 8, 2011 at 5:23 PM

IF the nursing home accepts medicaid/medicare as total payment. If not, Mom, who may have been living their for 4 or 5 years as she gradually outlived her money, Mom may have to move lower down the comfort scale.

This answer makes it seem as if it’s a simple proposition. But qualifying for medicare means “spending down” to that level, and that means NOTHING for heirs and only enough cash left for a semi-decent funeral, in most states.

It’s a horrifying scenario and one which rightly frightens most seniors… and the children who love them.
a/b

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