You are sitting around the kitchen table with family and sometime between dinner and your dessert course of Blue Bell ice cream, the issue of paying for nursing homes comes up.
First, it is wonderful that you and your family are thinking about this before it becomes a crisis.
Second, a general discussion is nice but you will not be able to come up with a plan without looking at your specific facts and then applying the law.
Let’s look at the main questions to get you started.
Questions to Ask When Considering a Nursing Home
1. Are you married?
If so, then you need to do a deep dive into whether your property is:
- Separate
- Sole management community property
- Joint management community property
- Exempt or non-exempt.
Start with a list of assets and debts and go from there. This is a complicated analysis, so you may want to discuss it with an attorney. The goal is to determine what assets can be reached if you end up owing a nursing home money, before and after your death. Nursing home debt is considered a necessary obligation, and that means your spouse’s assets can be held liable to pay it. You and your spouse should be worried.
2. Do you have long-term care insurance?
If so, pull out the policy and look at what triggers payment and what will be covered. Remember that insurance companies are highly motivated – both to take your money and to find a reason not to pay it out. Their procedures to successfully file a claim can be onerous. You can start compiling information now so it will be easier when the time comes.
Medicaid as an Alternative
If you think you cannot afford to private pay for a nursing home, then you need to consider Medicaid. That is a state-federal program that provides government assistance to pay for nursing-home level care. You probably want to start looking at Medicaid planning. You do not want to take a misstep, such as gifting property or selling your homestead, that would delay your qualification. There is a five-year lookback for such transactions.
As for protecting your assets from a Medicaid claim after you die, you will want to meet with an estate planning attorney. In Texas, it is called a MERP claim and can only be asserted against your probate estate. You may be able to protect your home and other assets through careful planning.
3. Are you the beneficiary of an irrevocable trust?
If so, then pull out the trust document and consider if the trustee has the authority, and assets, to pay for your nursing home care.
4. Have you seen a nursing home contract?
If not, then contact a good nursing home and ask if you can review their contract. Be aware that nursing home contracts can be tricky. Although a nursing home is prohibited by law from requiring a guarantee on its nursing home contracts, it often has admission and billing policies that look like financial guarantees and allow the nursing home to hold a third party – friend, family member, or associate – financially responsible. There is CMS guidance, reference QSO-25-12-NH, prohibiting these types of provisions. It is slated to take effect on March 24, 2025, but that could change.
5. Do you have a revocable trust that you have funded with assets?
If so, then you should consider that the assets in the trust are not protected from your creditors during your lifetime.
Hammerle Finley is Here to Help With Adult Guardianship
Nursing homes are expensive. Don’t wait until a crisis to confront the issue. The ice cream can wait.
Ensuring you have the proper plans in place, like planning for a nursing home, is essential to estate planning. If you need assistance, schedule a consultation with our team of expert attorneys today.
Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship, and contested litigation. She may be reached at legaltalktexas@hammerle.com. This blog contains general information only and does not constitute legal advice.
