Financial Aspects for Choosing a Nursing Home

August 27, 2007

One of the first prerequisites to choosing a nursing home is to consider the financial aspects. Nursing homes can be expected to cost at least $1,500 per month. The cost of the nursing home facility will be deter­mined in part by the level of care necessary for the patient. A physician orders the necessary services that determine the level of care needed.It is important to inquire regarding the level of care offered by the nursing home facilities being considered. Some nursing homes provide only intermediate levels of care, which require medical supervision and assistance in health maintenance for patients with stabilized long-term ill­nesses. Until the terminal stage of Alzheimer’s disease, when other medical problems such as pneumonia set in, intermediate care may be all that is needed.

There are nursing homes that provide only skilled levels of care, while others provide both intermediate and skilled care. The skilled level requires twenty-four-hour nursing, restorative therapies, or professional assistance, therefore, it is more expensive.

The care that nursing homes provide is basically paid for in three ways: private pay, Medicare and Medicaid. Private pay refers to the total financial responsibility being shouldered by the patient and/or the family. Most private insurance policies do not cover custodial care and thus will not pay the nursing home expenses for an Alzheimer’s patient. Some policies cover expenses accrued for hospice care when a patient is identified as having a terminal illness. The patient’s insurance policies should be carefully reviewed to determine what services can be reimbursed. Medicare, on the other hand, is a government assistance program through the Social Security System for short-term, skilled-level care following hospitalization, while Medicaid provides government assistance for patients who have exhausted their resources or have low income levels and limited resources. Not all nursing homes will accept Medicare or Medicaid patients, since the home’s participation in Medicare, Medicaid, or both programs is on a voluntary basis. Admission into a nursing home under the Medicaid program (Title XIX) is based on medical necessity, characterized by ongoing care, supervision, and client involvement with licensed nursing personnel. A primary diagnosis of Alzheimer’s disease neither precludes nor ensures eligibility. Veterans may also qualify for benefits.

Medicaid

Alzheimer’s disease has historically been considered a mental disorder rather than a physical illness and thus was not covered by Medicaid. There is currently a political movement to give official recognition to Alzheimer’s disease as a physical disease. For an Alzheimer’s patient to be determined eligible for Medicaid assistance with nursing facility (NF) expenses, medical eligibility must first be determined. The family’s state Department of Human Services (DHS) will have application forms for the patient’s physician to complete. The application form and medical record will be reviewed by a panel of physicians who determine medical necessity for NF care.Financial eligibility will also be determined. For example, in Texas, at this time the patient must not have income greater than $1,374 per month and personal resources (bank accounts, IRA, money market funds, personal property-other than a homestead, etc.) must not exceed $2,000. When one spouse is in an NF and the other spouse remains at home, half of the couple’s combined countable resources as of the month of nursing home entry (but a minimum of $14,964 and a maximum of $74,820) are protected for the spouse at home. This is called the protected resource amount (PRA). The institutionalized spouse becomes resource­eligible for Medicaid when the couple’s combined countable resources are spent down to $2,000 in excess of the PRA.

Homesteads are exempt if the spouse/dependent relative will continue to live in the home. If the patient is living alone but signs a form indicating an intention to return to his home at some future date, then his home is also considered exempt. A medicaid client in an NF, home and community-based waiver program, or demonstration project may place home property for sale without affecting eligibility. The value of the home property placed for sale (including life estates and remainder interests) is exempt until proceeds of the sale are received. If the client does not intend to return home, has no spouse/dependent relative living in the home, and the property has not been placed for sale, its equity value is a countable resource.

The community spouse’s income is not considered in determining medicaid eligibility. However, to the extent that the community spouse’s monthly income is less than the minimum monthly maintenance needs allowance (currently $1,870.50), an income diversion may be made in the post-eligibility budget (the budget to determine the client’s copayment toward the cost of NF care) from the institutionalized spouse to the community-based spouse to help supplement the latter’s income up to the $1,870.50 limit.

In Texas, the patient’s contribution toward the cost of NF care is calculated as follows the client’s total income less the $30 personal needs allowance, less the income diversion to the community-based spouse (if applicable), less the dependent allowance (if applicable), less deductions for incurred medical expenses (if applicable), less the home maintenance allowance (if applicable), less guardianship fees (if applicable), equals client’s contribution (the “applied income”).

Once eligibility is determined, the services provided include: hospitalization expenses, doctor’s visits, and unlimited prescription drugs. It is also important to note that any eligible Medicaid recipient may receive up to fifty visits per year from a nurse or aide from an approved agency. For home health care, a written recommendation from a physician and approval from the Department of Human Services (DHS) are necessary. In Texas, DHS also has the community-based alternatives (CBA) pro­gram, which allows persons with a medical need to be in a nursing facility to receive Medicaid and nursing services at home as an alternative to institutionalization. The eligibility criteria for the CBA program are essentially the same as for the NF program.

Applications for Medicaid approval can be expected to take up to 45 days if the patient is sixty-five years of age or older, and up to 90 days if the patient is under age sixty-five. However, Medicaid coverage may be retroactive to the third month prior to the month in which the application was filed, if all eligibility criteria were met at that time. Early financial planning can help ensure that eligibility criteria are met. It may prove helpful to consult a financial planner and/or an attorney before making major financial changes.

Medicare

Medicare is available to anyone over sixty-five who is entitled to social security benefits, or those under age sixty-five who have been entitled to social security disability benefits for twenty-four months. To be eligible for supplemental security income (SSI) benefits in 1995, the combined income of both spouses who are living together in the same household cannot exceed $707 per month. For an individual living alone, the income limit is $478 per month.

Medicare will pay for up to 90 days of inpatient hospital care in any participating hospital during each benefit period. The deductible is $716 for the first 60 days, and an additional $179 a day for days 61-90. Medicare will pay for up to 100 days in a skilled nursing facility during each benefit period. Most nursing homes, however, are not skilled nursing facilities and are not certified by Medicare. Medicare pays all covered services for the first 20 days and all but $89.50 a day for up to 80 more days. Covered services include semiprivate room, all meals, drugs, medical supplies, regular nursing services, and rehabilitation services.

Home health care may also be paid by Medicare if the patient is con­fined to the home. There is no limit to the number of covered visits from part-time skilled nursing care, home health aides, occupational therapy, medical social services, and medical supplies and equipment. Medicare does not provide for custodial care, such as help with bathing, eating, and taking medicines, and does not cover most nursing home care. Doctors’ services are provided for and include surgical services, diagnostic tests and X-rays, drugs that are presented as part of treatment and administered by a doctor or other health professional, and other benefits.

If questions arise regarding Medicare, call the local Social Security office. The phone number is listed in telephone directories under “Social Security Administration” or “U.S. Government.” Local Social Security Administration offices will assist in making applications, in filing claims, and will answer any questions. “Medicare Survey Reports,” which list homes that participate in the Medicare program, are also available at any local Social Security office .

Veterans Benefits

For current information on VA benefits and claims procedures contact a VA regional office. A call to 1-800-827-1000 from any location in the United States will connect you to a VA regional office. Counselors can answer questions about benefits eligibility and application procedures. They make referrals, when necessary, to other VA facilities, such as medical centers and national cemeteries.

VA medical center admissions offices are the immediate source for information regarding medical care eligibility and scheduling. They can provide information on all types of medical care, including nursing homes.

Veterans Nursing Home Care

Nursing care in VA or private nursing homes is provided for veterans who are not acutely ill and not in need of hospital care. The VA may, but is not mandated to, provide nursing home care if space and resources are avail­able in VA facilities. Veterans who have a service-connected disability are given first priority for nursing home care. Veterans who may be provided nursing home care without an income eligibility assessment are: veterans with service-connected disability, veterans who were exposed to herbicides while serving in Vietnam, veterans exposed to ionizing radiation during atmospheric testing or in the occupation of Hiroshima and Nagasaki, veterans with a condition related to service in the Persian Gulf, former prisoners of war, veterans on VA pensions, veterans of the Mexican Border period or World War I, and veterans eligible for Medicaid.

Nonservice-connected veterans must submit an income eligibility assessment form, VA Form 10-1 Of, to determine whether they will be billed for nursing home care. Income assessment procedures are the same as for hospital care. Nursing home care may be authorized for nonservice­connected veterans whose income exceeds the income limit for hospital care, if the veteran agrees to pay the applicable copayment.

Veterans who need nursing home care may be transferred at VA expense to private nursing homes from VA medical centers, nursing homes, or domiciliaries. VA-authorized care normally may not be provided in excess of six months, except for veterans whose need for nursing home care is for a service-connected disability or for veterans who were hospitalized primarily for treatment of a service-connected disability.

Direct admission to private nursing homes at VA expense is limited to -

(1) A veteran who requires nursing care for a service-connected disability after medical determination by VA

(2) A patient in an armed forces hospital who requires a protracted period of nursing care and who will become a veteran upon discharge from the armed forces

(3) A veteran who had been discharged from a VA medical center and is receiving home health services from a VA medical center.

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