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For roughly half of all seniors living in nursing homes, or other long-term care (LTC) facilities, Medicaid is their only hope for assistance with the high cost of that care. Qualifying for Medicaid can be problematic for an applicant who failed to plan ahead. Once an applicant is approved for Medicaid they no longer have to worry about paying for their long-term care, right? Not exactly. Many Medicaid recipients remain responsible for a portion of their LTC expenses, known as their “share of cost.”
Nursing Home Costs – Why Many Seniors Turn to Medicaid
Although people realize nursing home care is costly, they don’t realize exactly how costly. Nationwide, the average cost of a year in a LTC facility is over $80,000 and the average length of stay is 2.5 years. That puts the overall average LTC bill at $200,000. While the cost of LTC is staggering, the real problem is that many seniors are faced with paying those costs out of pocket unless they can qualify for Medicaid. Many seniors count on Medicare to cover the majority of their medical expenses. However, Medicare will only pay for LTC expenses following a qualifying hospital stay, and even then, Medicare won’t cover more than 100 days of LTC expenses. Private healthcare insurance is also unlikely to help unless you purchased a separate LTC policy or rider at an additional premium.
Patient Share of Cost
Nursing home patients who are approved for Medicaid, or who have applied for benefits, are usually under the impression that once approved, Medicaid will cover their entire LTC bill each month. Unfortunately, this is not always the case. For many patients, they will remain responsible for a portion of their LTC costs each month. This applies to patients in a nursing home or LTC facility. The share of cost is determined by their Medicaid caseworker and is based on the patient’s income after deductions. Each patient is entitled to a personal needs allowance of typically $30 to $40 per month, depending upon the state or area. In addition, deductions may be allowed for a spouse, insurance premiums, and other medical expenses, such as co-payments or past medical bills. After all allowable deductions have been taken, the remaining income is potentially subject to be paid as a share of cost. Such share of cost often comes as a surprise to nursing home patients who are eligible for Medicaid.
Let’s look at two examples. In the first example, Bob, age 72, is single and has Social Security income of $800 per month. He pays $100 per month in Medicare premiums. This amount comes right out of his Social Security check, so he actually receives a check of $700 per month. In his area, the personal needs allowance is $35 per month. His share of cost is his income of $800, less the $100 Medicare premium, and less the $35 personal needs allowance, for a balance of $665 per month. Bob’s nursing home bill is $8,000 per month. Medicaid will reimburse Bob’s nursing home $7,335 each month. Bob will have a share of cost of $665 which he will pay directly to the facility.
In the next example, Bob has the same income of $800 per month in Social Security. His facility still charges $8,000 per month. However, Bob is married to Meg, who is not in a facility, but lives at home. Meg has her own income of $2,000 per month Social Security and $600 of other income for a total of $2,600 per month. Meg pays a Medicare premium of $100 monthly, which is taken out of her Social Security check. So, her net income is $2,500 per month. In their area, a non-institutionalized or “community” spouse has a deemed need of $3,000 per month. This is the Minimum Monthly Maintenance Needs Allowance (MMMNA). Meg only has $2,500 per month and the MMMNA is $3,000, so the couple can take $500 of Bob’s income each month and move it over to Meg to get her to her $3,000. This reduces Bob’s income to $300 per month, which is further reduced by the $100 he pays to Medicare and the $35 personal needs allowance. This results in a share of cost of $165 per month. So, in this example, Medicaid will pay Bob’s nursing home $7,865 per month and Bob will pay the nursing home his share of cost of $165.
The Complicated Nature of Patient Share of Cost
The basic concept behind patient share of cost is simple enough – if a patient has disposable income left after all allowable deductions, the patient must use that income to help cover their LTC expenses. Assuming that nothing changes, the patient’s share of cost amount will remain the same from month-to-month; Calculating patient share of cost can become even more complicated when something does change. The very nature of needing nursing home care often means a patient will need to be transferred to a hospital, or other healthcare facility, for periods of time with some regularity. When a patient does not spend the entire month in the nursing home, calculating the patient’s share of cost for that month can become tricky. If you are the loved one of a patient, it is imperative you discuss your share of cost for the month with your caseworker to ensure it was calculated correctly.
As always, if you have additional questions about share of cost, or you believe your loved one’s liability was calculated incorrectly, consult your Elder Law attorney right away.