Ways to pay for nursing home care

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 writing a check, it makes sense to speak with an experienced attorney or accountant so your family doesn’t miss out on tax breaks or available benefits. For example, if you pay more than 50% of the child support for a relative who meets certain gross income guidelines, then you can claim the relative as a dependent on your own federal tax return. You may also qualify for the Dependent Care Credit, which is available to a parent who needs to work full-time.

The IRS also allows a tax deduction for qualified long-term care services. Many of the expenses incurred in a nursing home may qualify for a medical expense deduction under an eligible plan as long as it is set up by a licensed medical professional.

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 services and other eligible medical expenses can be added together to meet this limit. If you’re paying nursing home expenses for a disabled parent or 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 in a nursing home. This is not a residential program. The next hurdles are revenue and asset guidelines. Single-person Medicaid guidelines limit assets to $2,000 in the bank, possibly a car, some personal property and a prepaid funeral bill. The rules are more generous for spouses. The spouse can keep approximately $100,000 in assets and the family home. If any assets were distributed within five years prior to application, these transfers may block your family member’s eligibility. Guidelines vary from country to country.

Considering that some government statistics predict that 50% of the US 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 policies have many different features, including daily benefits, elimination periods, inflation riders, and benefit duration limits. Two good starting points are to make sure that any policy you buy is tax qualified and that the insurance company is sound. Because long-term care insurance is a new product and companies have experienced limited claims losses, it is usually reasonably priced.

The United States Veterans Administration is another possible source of nursing home care. The US Veterans Administration maintains about 115 nursing facilities. This is a very small number for all of our veterans. Each has about 300 beds and has some availability for spouses of veterans, surviving spouses and some eligible parents, such as Gold Star mothers.

Medicare is another checkbook, but its funds are very limited. It doesn’t come out until the patient spends three days in the hospital and is referred to a nursing home by a doctor for “skilled nursing care.” After 21 days, you have to write checks for a substantial top-up of $128 per day. A Medi-gap policy may cover this, but your own checkbook comes out again for full payment after 100 days.

It pays to plan and consult in advance, and long-term care insurance can be beneficial in the long run.

Joseph M. Hoffman, Esq. is a Newton attorney who assists clients with trusts, estate planning, wills and related transactions.

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