Nursing Homes, Assisted Living, and Home Care — Things You Need to Know

There are a number of things that you need to know about elder care in the US, because someday you may have to be a care-giver, and some day, especially after Covid, you may need that care.

I mention Covid because it is linked to mental impairment. As many as 15% or more of hospitalized Covid patients can’t return to work after 6 months, and some may never work again. Further, as the virus bounces around in the brain, the incidence of impairment is likely to increase, both among those who were hospitalized and those who had no symptoms at all. As mentioned in a prior post, the virus can pass directly from the nose to the brain without ever reaching the lungs among those with allergies and nasal congestion.

  1. The average cost of nursing home care in the US is $8,400 per month. This is expected to increase substantially with inflation. In some parts of the country, quality nursing home are is up to $14,000 per month or more. Do you want your loved one to get three meals per day?
  2. Medicare doesn’t pay for custodial care, only for care that is linked to patient treatment and improvement. That’s true for people on Social Security Disability as well as the elderly.
  3. Medicaid is the largest single payer for nursing home care in the US. Most of Medicaid funds go to elder care, even though the elderly represent only 1/4 of Medicaid enrollees.
    1. However, to qualify for Medicaid, you have to spend down what you have, assign your income over, and they will place a lien on your assets including your home to recover what they spend. The rules vary by state, with wealthier states in the Northeast offering more generous provisions than most others.
    2. There are also some exceptions based on the situation of the spouse or the presence of a disabled child in the home.
    3. Medicaid also has a 60-month look-back, to see if a recipient has transferred assets at below market value to qualify for Medicaid, and can seize those assets or delay eligibility until the patient has spent what those assets are worth on care. There have also been efforts to criminalize the hiding of assets. Some financial arrangements such as almost any form of revocable trust will trigger an investigation by the state.
    4. Medicaid patients are sent wherever there is a Medicaid bed available. If both a husband and wife require beds, they may be (and have been) sent to different facilities hours apart with no chance of ever holding hands again.
  4. If you have to become a full time care-giver for someone, a few states will provide you with an income and “respite care” — that is providing a care-giver to give you a break from the burden. New Jersey has an excellent program.
    1. There were Federal grants announced for 10 states In July of this year to strengthen this program: Alabama, Arkansas, Colorado, Illinois, Montana, New York, North Dakota, Oklahoma, South Dakota and Virginia.(1)
    2. However, the amount of these grants is the proverbial “drop in the bucket.” There are an estimated 53 million Americans who act today as care-givers, and each of these faces an estimated lifetime income loss of more than $320,000 in wages and benefits by care-giving as well as acute mental and physical stress. There is also an out-of-pocket cost to care-giving that averages $7,400 per year, according to a 2016 study by AARP.(2,3)
    3. Governments have a financial incentive to support home care. Family care-giving is less than half the cost of anything else.
    4. Care-giving is a source of stress and discord among siblings. Few things can break up a close family faster.
  5. Quality control in nursing homes, as we saw during the earlier days of Covid, leaves a lot to be desired.
    1. A new article today flags abuse of antipsychotic drugs as “chemical straightjackets” to limit the amount of time nursing home staff have to spend on restless or needy patients.(4) Is that what you want to happen to someone you love?
    2. The patient needs a close family member or friend who can serve as an advocate and observe and complain about care when needed — someone who is a fighter and willing to make noise. That’s harder to do when Medicaid ships patients across the state.

So what do you do about this mess?

  1. There are a number of options to obtain money for care when its needed without resorting to Medicaid:
    1. Long-term care (LTC) insurance, most cost effective if secured before age 50, including an inflation protection rider. Some of these policies also have provisions for unused funds to go to heirs in the form of tax-free life insurance payments.
    2. Life insurance with accelerated benefits (the ability to borrow against the death benefit to meet financial needs before one dies — there are limitations but many insurance carriers offer some form of this)
    3. Reverse mortgage
    4. Annuity with living benefits, provided you’ve accumulated some money over your work life
    5. Savings and investments (which requires budgeting and controlling spending). People do waste a lot of money. If it doesn’t meet a need or make you happier, why do it?
  2. All of this involves planning.
    1. Obviously, financial planning — allocating resources and understanding how much you really need to save
    2. Care-giving planning — work it out with siblings in advance, you so know how it’s going to happen, on whom you can count and what they can do. Frantic, last-minute preparation just makes things more stressful and difficult.
    3. Don’t be afraid to involve a professional if you need one to mediate discussions and facilitate preparations. You need to make care-giving happen, and not kill yourself or your siblings in the process.

Honesty within a family is critical. You need to know who will help and what they can and can’t do. I’ve seen situations in my work involving parents hiding inconvenient facts from children:

  • Medical diagnoses that they don’t want kids to know
  • Reverse mortgages (the kids think they’re getting the family home when it’s already gone), etc.

Hiding facts means the people involved don’t know what they’re facing or what resources are really available. They’ll find out eventually, usually when they have few options.

I’m going to be adding to this post as I have time and as new information becomes available.



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