Odds you will live out your last years in a SNF?

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More On Medicaid Elder Care

Rick Kahler MS CFP

By Rick Kahler MSFS CFP®

If you’ve ever visited someone in a nursing home, chances are you walked out afterward vowing, “I’m never going to end up in a place like this.” That vow is one most of us would make. Keeping it, however, is another matter.

Let’s consider some facts

What are the odds you will live the last years of your life in a skilled care facility (nursing or assisted living home)?

About 14 percent of all people over age 64 have two to three chronic conditions that negate their ability to live independently. According to the U.S. Bureau of the Census, 5 percent of people over age 65 live in nursing or assisted living homes and 25 percent of them will spend some time in one. The chance of a stay in a nursing home increases 1.4 percent a year from age 65 on. Almost 50 percent of those over age 95 live in nursing homes.

While staying in the comforting surroundings of our homes is what most of us would prefer, just saying so isn’t going to make it happen. Unless you have a written plan and the finances to carry out that plan, the chances are high you will not be able to afford living in your home once you need daily assistance of some type.

The problem is that spending your last years in a nursing home is expensive, too. At rates of around $7,000 to $12,000 a month, it is very easy to spend $250,000 or more during the last years of one’s life. While this is doable if you have the money, it becomes a financial disaster if you have a spouse and spend through your estate in your last years. In this case, the first one to die wins at the expense of the survivor.

More U.S. Census Bureau Data

According to the U.S. Census Bureau, 70 percent of Americans age 65 and over have a household net worth of just $344,870. If one spouse enters a skilled care facility there is a real threat that the other will run out of money to fund living expenses, relying only on Social Security.

Once someone’s assets are spent down, Medicaid will begin paying for nursing home costs. This may mean changes such as moving to a facility that accepts Medicaid and out of a private room into a shared room. It also may mean waiting for a bed to become available.

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The Short Version

The “short version” of the law is that Medicaid begins paying once assets are spent down to $2000. However, there are provisions meant to protect the non-institutionalized spouse from destitution. Some of the couple’s assets are exempt from being spent down for nursing home care.

Example:

In South Dakota, for example, the spouse may keep half of the combined assets up to $119,220. Other exempt assets generally include personal possessions, one vehicle, equity up to $552,000 in the couple’s personal residence, prepaid funeral plans, and assets that are considered “inaccessible”. There are also limits on monthly income from pensions. The numbers above are for South Dakota; all of these limits vary by state so be sure to research your own state’s laws.

Assessment

Obviously, planning for long term care is vitally important, and it needs to be done well before the event that sends someone to a skilled care facility. Unfortunately, those events are often sudden and impossible to predict. The sad reality is that very few people plan ahead—even those who do financial planning in other areas. Many elders have a deep resistance to doing end-of-life planning.

That is sad, because the less planning you do, the more limited your options become. 

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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Implementation of the Healthcare Deficit Reduction Act

Signed by President Bush in 2006

By Gregory O. Ginn; PhD, MBA, CPA, MEd

By Hope Rachel Hetico; RN, MHA, CMP™

The Deficit Reduction Act (DRA), S. 1932, was signed by President Bush on February 8, 2006, and became Public Law No. 109-171.  Implementation of the act includes these provisions:

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Subtitle A – Provisions Relating to Medicare Part A

  • hospital quality improvement (section 5001);
  • improvements to Medicare-dependent hospital (MDH) programs (section 5003);
  • reduction in payments to skilled nursing facilities (SNFs; section 5004);
  • phase-in of inpatient rehabilitation facility classification criteria (section 5005);
  • development of a strategic plan regarding investment in specialty hospitals (section 5006);
  • demonstration projects to permit gain-sharing arrangements (section 5007); and
  • post-acute care payment reform demonstration programs (section 5008).

Subtitle B  Provisions Relating to Medicare Part B

  • title transfer of certain durable medical equipment (DME) to patients after 13-month rental (section 5101);
  • adjustments in payment for imaging services (section 5102);
  • limitations on payments for procedures in ambulatory surgical centers (ASCs; section 5103);
  • minimum updates for physician services (section 5104);
  • three-year extension of hold-harmless provisions for small rural hospitals and sole community hospitals (section 5105);
  • updates on composite rate components of basic care-mix adjusted prospective payment systems (PPS) for dialysis services (section 5106);
  • accelerated implementation of income-related reductions in Part B premium subsidy (section 5111);
  • Medicare coverage of ultrasound screening for abdominal aortic aneurysms; National Educational And Information Campaign (section 5112);
  • improvements to patient access and utilization of colorectal cancer screening under Medicare (section 5113);
  • delivery of services at federally qualified health centers (FQHC) (section 5114); and
  • waiver of Part B Late Enrollment Penalty for certain international volunteers (section 5115).

Subtitle C – Provisions Relating To Parts A and B

  • home health payments (section 5201);
  • revision of period for providing payment for claims that are not submitted electronically (section 5202);
  • timeframe for Part A and B payments (section 5203); and
  • Medicare Integrity Program (MIP) funding (section 5204).

Subtitle D – Provisions Relating To Part C

  • phase-out of risk adjustment budget neutrality in determining payments to Medicare Advantage organizations (section 5301); and
  • Rural PACE Provider Grant Programs (section 5302).[1]

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The goal of the act is to save nearly $40 billion over five years from mandatory spending programs through slowing the growth in spending for Medicare and Medicaid. Has it been successful to-date?

Assessment

We know from personal experience that the DRA can be implemented by all healthcare stakeholders to the benefits of the industry sector in the aggregate. But, has it been?

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

Editors Note: Gregory Ginn has been a professor in the Department of Health Care Administration at the University of Nevada, Las Vegas, since 2000. He received his doctorate, MBA, M.Ed., and undergraduate degree from the University of Texas at Austin, and is an inactive Certified Public Accountant registrant in the States of Nebraska and Texas. Before his current position at UNLV, he spent time teaching at Clarkson College, College of Saint Mary, University of Findlay, University of Central Texas, Stephen F. Austin State University, State University of New York at Buffalo, University of Houston at Victoria, University of Texas at Austin, and the Southwest Texas State University. Prior to his academic roles, he was an accountant for Touche Ross & Co., and an Internal Revenue Service Tax Auditor. Dr. Ginn has also been a reviewer for organizations such as: Health Care Management Review and the Health Care Administration Division of the Academy of Management. He is Treasurer for the Nevada Executive Health Care Forum and was a member of the Southern Nevada Wellness Council. His graduate teaching experience in healthcare administration is abundant, having taught courses in: Management of Health Services Organizations, Quantitative Methods, The U.S. Health Care System, Health Care Systems and Policy, Health Care Finance, Group Practice Management, Long-term Care, and Health Care Law.  He has been published in numerous journals, including Journal of Healthcare Management, Hospital Topics, Nursing Homes, Journal of Nursing Administration, International Electronic Journal of Health Education, and Hospital and Health Services Administration. His current and former professional memberships include: American College of Healthcare Executives, Nevada Executive Healthcare Forum, Academy of Management, Association of University Programs in Health Administration, Certified Medial Planner (Hon.) and Heartland Health Care Executives.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Source: www.ncsl.org/statefed/health/ReconDocs0206.htm

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