Ways to pay for nursing home care

The easiest way to pay for nursing home care for an elderly or disabled family member is also the hardest. You write the monthly check. It hurts because the average annual cost is now $70,128.

Before you write a check, it makes sense to talk to an expert attorney or accountant so your family doesn’t overlook any tax deductions or available benefits. For example, if you pay more than 50% of support for a family member who meets certain gross income guidelines, you can claim the family member as a dependent on your own federal tax return. You may also qualify for the care credit available to a dependent parent who needs full-time attention.

The IRS also allows a tax deduction for qualified long-term care services. Many of the expenses incurred in a nursing home can be eligible for a medical expense deduction under a proper plan, provided it is prepared by a licensed health care provider.

Medical expenses can be claimed as itemized deductions as long as they exceed 7.5% of adjusted gross income. Qualified health insurance premiums, long-term care, and other eligible medical expenses can be added together to meet this limit. If you’re paying nursing home expenses for an elderly or disabled family member, it’s important to consider this deduction.

Many people turn to Medicaid to write the check for nursing home care. The program is jointly funded by the states and the US government. The first hurdle is that your family member must have a medical reason to be admitted to a nursing home. It is not a housing program. The next hurdles are the guidelines for income and assets. The single person guidelines for Medicaid limit assets to $2,000 in the bank, possibly a car, some personal property and a prepaid funeral bill. For spouses, the rules are broader. A spouse can keep approximately $100,000 in assets and the family home. If any assets were given away within five years prior to application, those transfers may render your family member ineligible. The guidelines vary from state to state.

Given that some government statistics predict that 50% of the U.S. population will spend at least some time in a nursing home, it’s a good idea to consider long-term care insurance. Our average stay is 11 months. Long-term care insurance has many different features, including daily benefits, elimination period, inflation factors, and limits on the duration of benefits. Two good starting points are to make sure that any policy you buy is tax-qualified and that the insurance company is sound. Since long-term care insurance is a new product and the companies have had limited loss losses, it is usually reasonably priced.

See also  Colorado Medicaid Vision Care Benefits - 6 Things You Should Know About Your Eye Care

The United States Veterans Administration is another possible source of nursing home care. The U.S. Veterans Administration maintains approximately 115 nursing homes. That is a very small number to accommodate all of our veterans. They have about 300 beds each, and there is some availability for veteran spouses, surviving spouses, and certain eligible parents, such as Gold Star mothers.

Medicare is another checkbook, but the funds are very limited. It doesn’t come out until a patient spends three days in a hospital and is prescribed to a nursing home by a physician for “skilled nursing care.” After 21 days, you must write checks for a significant co-payment of $128 per day. A medi-gap policy can cover this, but your own checkbook will come back in full after 100 days.

It pays to plan ahead and consult and long term care insurance can be a bargain in the long run.

Joseph M. Hoffmann, Esq. is a Newton attorney, assisting clients with trusts, estate planning, wills and related transactions.