Your Estate …with James Ward – When the time comes, how will you pay for a long nursing home stay?

Published in the November 1-14, 2017 issue of Gilroy Life

Most people hope they never go to a nursing home. That shouldn’t be surprising news to anyone. Most people want to die at home too, but the latest government statistics show that only 27 percent actually die at home.

If you do go to a nursing home (a skilled nursing facility), will you pay for it out of your own pocket? How will you pay, how much will you pay, and for how long?

The going rate in many nursing homes in the area is $11,500 a month for private pay. Medi-Cal benefits are available to pay if you plan ahead. Most people are unaware of this, but Medi-Cal planning is legal and accepted under both federal and California law.

If you have long-term care insurance, will it pay up to $383 per day? Will it cover enough if you stay for two years? Four? Eight? I have one client who has been in a nursing home for more than 14 years.

A month ago, one of my clients began sobbing when she realized I could have arranged for Medi-Cal to pay for her mother’s nursing home bill. Between my client’s money and her mother’s money, they spent more than $1 million on nursing home care — all of which could have been paid by Medi-Cal if they had come to me years earlier. At the tax rate of my client and her husband, that after-tax amount of $1 million that went to the nursing home was equivalent to about $2 million of their earnings. She had good reason to sob.

What about your home? Is Your Home Protected Against Medi-Cal Estate Recovery?

You can own a home and it doesn’t stop you from getting Medi-Cal. There is no special planning needed for this. (A rental home or vacation home or commercial property is almost guaranteed to stop you from getting Medi-Cal unless you do specialized planning.)

It was more difficult to protect a residence from estate recovery in prior years, but a law change made it easier to protect the residence for people who die after Jan. 1, 2017. Some form of planning is almost always required to protect a home if the ill person has no spouse, and that’s also true if you want the home protected after the death of a second spouse.

The state wants to get repaid for the amount it spent on your nursing home care, but they can’t get repaid if you take the proper steps before death. Repayment to the state is what’s known as estate recovery. The government will pay your nursing home bill if you qualify, but then they want to get repaid if you have assets in your name when you die.

If you want those assets to remain in the family, you have to take action.

Jim Ward is a longtime South Valley resident who lives in Morgan Hill. He went to law school in New England and obtained a post-graduate law degree in Estate Planning at the University of Miami. He maintains an office in South Valley and another in Willow Glen.