If one of your relatives has gone into a nursing home, you’re likely feeling a lot of relief. While many people dread going into a nursing home, most facilities nowadays provide our loved ones with not just the care they need, but more enrichment than they had at home. You no longer have to worry about what will happen to them when you’re not looking, and they get all the benefits of a purpose-built facility, around-the-clock care, and someone ensuring their days are joyful.
But once that relief has passed, there’s a new worry: how they (and thus you) are going to pay for it. Few people have a pension large enough to cover the cost and often families are left scrambling to seek Medicaid (known as MassHealth in Massachusetts) or sell assets to pay for their care. Like all other forms of medical care in the US, nursing homes walk a fine line between offering us essential services and care in times of need, and being cripplingly expensive.
If you’re behind on nursing home bills and are concerned about what action a nursing home may take to get their dues, or are looking forward to the future and trying to plan for your family, keep reading. We’ll explain what measures you can take to protect the family home.
According to PayingforSeniorCare.com, the average cost for nursing homes in MA are as follows:
- Assisted Living: $5,640 a month (rising to $6,442 in Boston)
- Nursing Home: $11,850 a month (ranging from $7,200 to $19,505 depending on the level of care and facilities)
Genworth Financial’s 2020 Cost of Care survey further broke down the cost into semi-private rooms (shared) and private rooms, reporting $12,623 and $13,535 as the monthly average, respectively.
As you can see, any form of care is not cheap, and Massachusetts is one of the more expensive states. These fees can deplete our resources quickly, so it’s important to get a plan in place as soon as possible to protect their assets and secure their long-term care.
Yes, but only if your loved one fits their criteria. The good news is that you can use some of the methods we outline below to ensure your loved one does meet their criteria.
To be eligible for MassHealth, your loved one must be:
- A Massachusetts resident
- A legal US resident
- In a financial situation that would be characterized as low income (though there is no income limit for individuals with disabilities, who may be able to pay a one-time deductible to qualify) – this is $18,075 a year for a 1-person household
- Has no more than $2,000 in assets ($4,000 for a couple)
There are a few ways to avoid selling assets to pay for nursing home care – note that they require the person going into the nursing home to still be in their right mind at the time of making these decisions. Here are your options:
- Irrevocable Trust
- Life Estate
Gifting is what it sounds like – simply giving your assets to your family members. There are still often tax implications when you do this (such as gift and capital gains taxes), but it will ensure a nursing home cannot claim your assets.
An Irrevocable Trust works similarly; your assets (including your home) can be put into a trust and you can name a trustee (typically a partner or adult child) who will then have ownership over everything in the trust. While you are no longer the owner of the assets in the trust, you can continue to use your property until you are unable to do so and it cannot be claimed by any of your creditors (such as a nursing home).
A Life Estate is another good option if you want to “hide” your property value from applying toward your MassHealth eligibility. A life estate is where you essentially give ownership to another person while ensuring you can be the tenant for the rest of your life.
If you’re considering creating an irrevocable trust or life estate, you need to know about the MassHealth 5-Year Look Back Policy. This policy is best to know about more than 5 years before nursing home care is needed since after that 5-year term your assets will still be considered when they look at your eligibility.
When you apply for MassHealth the government will look at your past five years of financial history to determine whether you are eligible for benefits. If your property is in an irrevocable trust and sold after five years, the proceeds will not affect your eligibility. However, any assets transferred within the last five years will have an impact. With a life estate, the proceeds from the sale of the property will affect your eligibility at any time during your lifetime.
If you are not sure how to proceed, it’s best to consult an elder law attorney for individual advice.
No, a nursing home cannot take your home and they cannot place a lien on your property. They can, however, pursue the estate or the resident’s children legally to try and recoup their losses.
MassHealth (Medicaid) will not be able to force the sale of a home (and will never force a remaining spouse out of the home), but they can place a lien on a property, meaning they would have a claim on the proceeds if/when the property is sold.
This lien can be thought of as a loan building up over time – instead of paying for your nursing home fees upfront each month, MassHealth pays it for you but adds it to your lien so they can recoup all or some of their money when the property is sold.
For this reason, it’s usually best to sell or transfer ownership of a home before nursing home care is required.
If you have time to plan ahead (meaning you or your loved one does not need to go into care imminently, and will likely not need to within the next five years), you should consider protecting your assets now through the methods we discussed above. Even if you don’t have that much time, it is worth speaking to an estate and/or elder law attorney to find out what you can do to protect your assets.
Unfortunately, in some cases, you may be forced to use your own assets to pay for your care, which usually means your assets must be liquidated.
If you are the caretaker of someone going into care, do not pay for their care personally – use their assets until it’s no longer possible to do so, at which point they will be eligible for MassHealth.
If your loved one has already gone into care and you need to find cash quickly to start paying for their nursing home fees, selling their home is often the most straightforward option.
If you can, look at a few nursing homes to find one you feel offers the best conditions for the cost. Often, our loved one goes into the most expensive care available at short notice, since they have plenty of space and may be close by, but moving your loved one to another facility may mean they can afford their care for years to come.
If you need to sell their home fast, we’re here to help. We buy homes in as-is condition for cash throughout Massachusetts, closing in as little as 2 weeks. To find out more about the process or to get a cash offer, click here.