If you or your parents are not yet 65 you’ll probably ignore what I have to say thinking this won’t apply to me. You’ll be making one of the biggest mistakes of your life.
If you or someone in your family has to go into a Skilled Nursing Facility (SNF) the current cost, in my home state, is about $72,000 yearly. I'm told it's double that in some other states. I’m going to focus on details surrounding folks who are 65 or older who qualify for Medicare. Anyone younger who needs a SNF, unless they have good Health Care Insurance that pays for some "rehab" time in a SNF, or has been smart enough to purchase Long Term Care (LTC) insurance is likely in deep financial trouble.
First, let me say I'm not an expert on this stuff...but experience is a good teacher of some basics.
Let’s assume Dad is 65+ and falls and breaks a hip. Medicare A will pay 80% of the Medicare approved charges. Medicare B (If your parent has it) will pay for the ambulance ride and so on...but the medical billing isn't my focus. Dad will likely be released to a SNF for physical and occupational therapy (rehab). If you read the Medicare documentation it says Medicare will pay 100% for the first 20 days in a Skilled Nursing Facility (only after a 3 day hospital stay) and then all but about $135/day for up to a total of 100 days. It might be that Dad has supplemental insurance that will cover the difference for those 80 days...and even all the costs for some additional period, and you might think... "We’re golden for xxx days."
Not so fast.....
Medicare only pays as long as the patient can be rehab’ed, and usually that’s a period of weeks. When the therapy folks say the patient is ready to go home, Medicare stops paying. You’re thinking...well, that seems OK....and it might be. But what if Dad has a stroke while he's in rehab...and is confined to a wheelchair....and can’t benefit from more than a few days of rehab and Mom isn’t capable of taking care of him at home?
Guess what....after those few days...Dad is yours...and the bills are yours if you keep Dad at the SNF. You’ll get some "Home Health" benefits if he comes home....but not 24/7 help and not for too long.
Aha, you say...I’ve heard Medicaid will pay if my parents can’t afford the SNF. True...but only after (unless you’ve done the proper prior planning with an "Elder Law" and Medicare/Medicaid knowledgeable attorney) taking 50% of everything your parents have (except their house and car) and limiting their income and having them sign over any life insurance in excess of $10K, annuities...and so on and so on...in great and complete detail requiring even such things as proof of citizenship, their parents death certificates ... you name it.
(If Mom has already passed on and Dad is the surviving spouse, there's no split of the assets. Medicaid will take everything excluding about $2000 and a burial policy and a few other things (if those things exist)...and even the house if it can't be shown he plans to return to the home. And Dad will get to keep to keep a generous $30 a month for spending money...like for hair cuts or a soda-pop.)
Aha...you say...I’ll have my parents title their home to me, give me their other assets and then they won’t have anything to give the Government. Wrong! There is a 3 to 5 year "look back" period (varies by state) and any assets transferred during that time will be counted...and your parent(s) will be disqualified from Medicaid-paid SNF for one month for every $5000 of transferred assets. They’ll want all the bank statements and other financial records.
(BTW...Assisted Living...a place offering things like help with medications and other fairly minimal support...and usually three meals a say...with an unfurnished studio apartment...will run anywhere from $2500 monthly upwards to whatever you can afford and is never covered by Medicare or Medicaid.)
There’s a lot more to this than I’ve said... I’m trying to SCARE you and your parents into doing something NOW before you HAVE to face the reality of these circumstances.
Do your planning NOW. It's worth the cost. Meet with an attorney who specializes in Elder Law and Medicaid Law who can help you and your parents avoid becoming impoverished. If you or your parents can afford it, buy a long term care insurance policy.
I'm not commenting on whether all of this is morally right or wrong or if the taxpayer should or should not be saddled with public financing of custodial care. I'm simply exposing you to some of the realities of things as they exist.
EDIT: Thank you for putting this on the Rec list so others will have a chance to see it. One last tip...all these financial things are sorta set in concrete the day one applies for medicaid...so be sure you don't apply until you have the facts.