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 yearly cost is now $70,128.
Before writing a check, it makes sense to talk with a knowledgeable
attorney or accountant so that your family does not overlook tax
deductions or available benefits. For example, if you pay more than
50% of the support for a relative who meets certain gross income
guidelines, then you may claim the relative as a dependent on your
own federal tax return. You might also qualify for the dependent
care credit which is available for a dependent parent who needs full
The I.R.S. also permits a tax deduction for qualified long term
care services. Many of the costs incurred in a nursing home can
qualify for the medical expense deduction under a proper plan as
long as it is set up by a licensed healthcare practitioner.
Medical expenses can be claimed as itemized deductions, so long
as they exceed 7.5% of adjusted gross income. Qualified health
insurance premiums, long term care service and other eligible
medical expenses can be added together to meet this cutoff. If you
pay nursing home costs for a parent or disabled family member, it is
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 U.S.
government. The first hurdle is that your family member must have a
medical reason to be in a nursing home. It is not a housing program.
The next hurdles are the income and asset guidelines. The single
person guidelines for Medicaid limit assets to $2,000 in the bank,
possibly a car, some personal property and a prepaid funeral
account. The rules are more generous for spouses. A spouse can keep
approximately $100,000 in assets and the family home. If any assets
were given away within five years prior to applying, those transfers
may block your family member from eligibility. The guidelines do
vary from state to state.
Considering that some government statistics predict that 50% of
U.S. population will spend at least some time in a nursing home, it
is 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 period,
inflation riders and benefit length limits. Two good starting points
are to be sure that any policy you purchase is tax qualified and
that the insurance company is sound. Since long term care insurance
is a new product and the companies have had limited claims losses,
it tends to be reasonably priced.
The United States Veterans Administration is another possible
source of nursing home care. The U.S. Veterans Administration
maintains about 115 nursing care facilities. That is a very small
number to house all of our veterans. They have about 300 beds each
and there is some availability for spouses of veterans, surviving
spouses and certain eligible parents, such as Gold Star mothers.
Medicare is another checkbook but its funds are very limited. It
doesn't come out until a patient spends three days in a hospital and
is prescribed to a nursing home by a doctor for "skilled nursing
care." After 21 days you have to write checks for a significant
co-pay of $128 per day. A medi-gap policy can cover this but your
own checkbook comes out again for full pay after 100 days.
It pays to plan and consult ahead and long term care insurance
may be a bargain in the long run.
Joseph M. Hoffmann, Esq. is an attorney in Newton, who helps
clients with trusts, estate planning, Wills and related