Using Personal or Family Resources to Pay for Nursing Home Care

The financial burden of a nursing home or nursing care can be extraordinary. Failure to adequately provide for the financial needs of an older person who requires nursing home care can cause serious financial hardship for the family. While most people choose some form of insurance or government assistance to pay for nursing homes or end-of-life care, there is still the option to use one's own financial resources.

Known as "self-insuring", the use of personal wealth to provide for long-term care is possible, but it requires both financial planning and above-average personal financial resources, so the option is not available to everyone.

The federal government has organized some points to consider when planning for long-term or end-of-life care. These points are both positive opportunities that might present themselves when choosing self-insurance, and negative aspects that might occur if the plan doesn't address the realities of the situation.

First, when saving for eventual long-term care, a significant amount of money is set aside. If it turns out that you don't need that sort of care, then the money is still available to you and to your family. If, on the other hand, you need more care than you have budgeted for, you may find yourself suddenly impoverished with the financial burden falling to your family or the government.

One positive aspect of saving for care is that because the money is yours and not the government's or an insurance company's, you are in total control of where and how you spend it. You can determine the type of facility, the type of care, and many other things that might otherwise be determined by a third party. On the other hand, if you have invested your money and you require long-term care earlier than expected, you may be required to pay penalties on your investments.

Finally, you should consider that if you use your own funds, and if the duration of care is longer than expected, it could use up money that you had planned to leave to your family or friends.

Protecting the Spouse's Assets and Income

Another consideration to keep in mind when it comes to paying for nursing home care is that government programs like Medicaid require the patient to use almost all his or her income, cash, and investments before he or she can qualify for aid. The only assets not deemed to be a resource available to pay for care are the patient's home, household goods, an automobile, and burial funds. To protect a spouse who is still able to live at home, however, the government makes a portion of the couple's assets and joint income exempt from this requirement.

The "Spousal Impoverishment Provisions" are federal guidelines specifying the minimum and maximum amounts that states can allow the "community spouse" -- that is, the spouse still living at home -- to keep. Each state is allowed to set their own limits as long as they are within the guidelines. Note that the community spouse is allowed to keep all of his or her earned income.

Also note that simply giving away one's assets to a family member or putting it into a trust will not necessarily prevent the state from considering those assets when determining eligibility for assistance in paying for nursing home care.

The decision to self-insure or to provide for your own long-term care is one that needs to be made very early in life because of the quantity of money required. Many people don't think about this sort of investment until their later years when it may be too late. If it is an option for you, however, consider the impact it will have on your family, the positives and potential negatives, and base your decision on informed planning and research.

Additionally, in preparing for a loved on to enter a nursing home facility, it is vital to inform yourself and them about nursing home abuse and nursing home neglect to insure their protection. Unfortunately nursing home abuse is common in our country. One of the best ways to combat it is to know the signs of nursing home abuse and contact a nursing home abuse lawyer if you suspect abuse or neglect.

References:

"Medicare.gov -- Self Insurance." August 5, 2009.http://www.medicare.gov/longTermCare/static/SelfInsurance.asp (accessed Febuary 18, 2010).

"Medicare.gov -- Medicaid." August 5, 2009.http://www.medicare.gov/LongTermCare/Static/Medicaid.asp (accessed Febuary 19, 2010).

"Spousal Impoverishment." October 2, 2009.http://www.cms.hhs.gov/MedicaidEligibility/09_SpousalImpoverishment.asp (accessed Febuary 18, 2010).

"Treatment of Trusts." December 14, 2005.http://www.cms.hhs.gov/MedicaidEligibility/11_TreatmentofTrusts.asp (accessed Febuary 17, 2010).