Plan For Care Before Funds Run Low- the $50,000 Problem
Some dilemmas reoccur with such frequency, I give them a name. This is true of the “$50,000 problem.” For some families, $50,000 may be $75,000 or $20,000 or nothing but for many, it seems that, at about the $50,000 point in liquid assets, families with parents or spouses in assisted living or, for that matter, in private nursing homes that do not take Medicaid, begin to worry that some day they will not be able to pay the bill. This is a good thought but long in coming.
The goal should be to develop a contingency plan when assets are much higher. Frequently I hear people say that, once assets are lower, they will look for advice or then they will transfer their family member to another location or facility. What they do not realize is that even nursing homes that take Medicaid do not want most of their new residents to arrive without private funds. The $50,000 problem should have had at least a $100,000 or $200,000 solution when more options are available. Families should not want to arrange for an emergency move when assets have been spent down and are almost depleted. At that time it may be more difficult to locate a placement or at least to locate the one that is preferred.
In short, families should not wait until their parents are down to $50,000 in assets to plan unless that is all that their parents had to begin with.
Assisted living has filled a gap for people who are too frail to safely stay at home independently but also not so disabled as to need skilled nursing home care. Many assisted living communities are very attractive.
On the other hand, assisted living is not inexpensive. For families facing the $50,000 problem and asking “what happens when the money runs out?,” this is no idle inquiry. They need a plan.
Basic assisted living might cost in the range of $3,000 to $3,500 per month or more. With additional services because of added incapacity, the figure can mount much higher. While nursing home care is again much more costly than assisted living, running at $7,000 to $8,000 per month or more for care in a skilled nursing home, for those nursing homes that are Medicaid certified, Medicaid can eventually cover the cost. This is not true of assisted living at this time or of nursing homes that are not Medicaid certified.
For those who planned ahead, long term care insurance may pay for care in assisted living or private pay nursing homes based on inability to perform a given number of activities of daily living. Even there, if there is inadequate insurance, additional solutions may have to be considered. Here are some ideas.
- Investments and Savings. Families should pay particular attention to how funds being used to pay for assisted living are invested. Money needed for care must be secure but at the same time generate a decent return. With the market in upheaval, this is the time to take a hard look at investments and savings.
- Cost Containment. To contain costs so that funds will last longer in a desired community, families might consider moves to a smaller unit, such as moving to a one bedroom instead of a two bedroom apartment, or moving from a cottage to an apartment, or from a section where there is unneeded intensive care to a more independent area. Families considering this move should be persistent in making their wishes known since there could be competition for these less expensive alternatives.
- Additional Moves. Other alternatives include moving back to home, moving in with relatives or friends, or, if the resident’s condition has worsened, then moving to a skilled nursing facility that takes Medicaid. Often moving back home is not an option since this was explored before the transition to assisted living and found to be inadequate. However, it may be possible to develop a plan with a companion or using modifications for accessibility.
Especially if there is a move home or into the home of a relative or friend, a written family agreement should be considered to describe what is expected and who will pay what expenses. Otherwise payments, especially to family members, might be considered gifting and cause the person needing care to have their Medicaid denied or delayed at a later date.
All of these possibilities need to be considered and explored to avoid the $50,000 problem.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.