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Right Idea, Wrong Conclusion

In this edition of Crisis Corner: Right Idea, Wrong Conclusion

We do a lot of consultations about Medicaid planning.  Many of them involve at least on child of the person who might need benefits.  In those consultations we will occasionally hear a child admit that they are doing the planning because they want to get something when mom and dad are gone, which is the wrong idea, but is also refreshingly honest.  More often, and usually heartfelt, we hear something along the lines of: “We don’t care about inheriting anything, it is mom’s/dad’s money and they should spend it.”  That is usually followed with calculations that range from grossly optimistic, i.e. “Mom is already 89 and has $100,000 in savings which should easily pay for her care for the rest of her life”; to “Based on the doctor’s prognosis, net income, and monthly expenditures with an expectation that care costs will increase over time, mom should have enough money to outlive her prognosis by about eighteen months.”

The problem with “letting them use their money on themselves” is that it assumes Medicaid planning is designed to save money for the sake of saving money.  It is great to reassure someone that by planning with us they will be able to leave a little something for their children or loved ones when they are gone.  Whether the kids want/need the inheritance or not, it is comforting to a parent to feel like they are helping their children.  It is the same reason that retired parents, on fixed incomes, sometimes insist on paying for meals out with their very successful, employed, children.  However, the real purpose behind Medicaid planning is to ensure the quality of life for the person receiving benefits.  It is not enough to make it to the end before you run out of money if the end comes with a low quality of life.

There are a few things that can cause a drop in quality of life when Medicaid planning is skipped in favor of spending every dime:

One of the things that we see more often than we ever imagined is a client out living the most optimistic predictions of doctors.  The most extreme case of this was a client who came to me more than 13 years after being diagnosed with four different Stage-4 cancers and given a life expectancy measured in weeks.  We have also had 94 year old clients driven to my office by their 96 year old spouse, and at least one client that came to me and got onto Medicaid just after his 101st birthday.  With the pharmaceuticals available today people are living longer and longer lives and planning your needs around the idea of dying by 90 does not work for many people.

If you outlive your life expectancy by a significant margin and you do not plan ahead to save assets or to move into a community that will eventually accept Medicaid, you could end up out of money and with no option except living in a skilled nursing facility (SNF).  Some SNFs are much nicer than others and in some situations they are the most appropriate setting from a medical stand point but, in general, living in a SNF should be the absolute last option for most people.

I started working in Medicaid planning in 2015.  At that time many adult family homes (AFHs) started in the $3,000 to $3,500 per month range and topped out around $6,000 to $7,000 per month for clients with very high care needs.  At that time there were also many AFHs and Assisted Living Facilities (ALFs) that took Medicaid with 0-12 months of private pay (the time you have to live in the community before they will accept Medicaid as a form of payment).  Today, it is hard to find an AFH that is less than $5,500-6,000 per month for low care levels and up to $9,000 or more for higher care levels.  Additionally, the most common private pay period is now 2-3 years and some communities are asking for up to 5 years.  In that same time, many of my clients have seen an increase of about $10 to $20 per month in their Social Security income.  Care communities are not the only place you will see this increase in costs.  Over the last six years I have seen the average cost of hiring in-home care rise from $10-15 per hour from an individual or $20-25 per hour for an agency to $20-25 for an individual and $30-40 for an agency.

I cannot account for the increase in charges by these communities, other than supply and demand and charging what they think the market can bear, but the lengthening private pay periods is not surprising at all.  In 2015, Medicaid would often approve $100 to $180 per day for care in a non-skilled nursing facility (nSNF) community (about $3,000 to $5,500 per month), which was lower than the private pay numbers but not significantly lower.  Today, Medicaid often approves $100 to $180 per day for care in an nSNF community.  Instead of losing 0-20% of the income they could get from private pay, they are losing up to 50% or more by accepting Medicaid. 

Increasing base costs of care, at home and in communities, are not the only unexpected costs that might spring up.  Let’s assume you find a community that has a base rate of $3,500 per month plus care costs based on need and they guarantee that the rates will not change once you move in, except with increased level of care.  Often this looks something like “Level 1 Care – $1,500; Level 2 Care – $2,000….”  Now let’s assume you are the client who very carefully calculated that mom would have 18 months of extra money left because you assumed that she would gradually move from Level 2 to Level 4 over the three years she has left.  Then six months after moving to a community she has a massive stroke that she only partially recovers from.  It does not shorten her three years but it jumps her instantly from Level 2 to Level 5, where she will remain for the next 2.5 years.  People with devastating health issues tend to develop more health issues and at a faster rate than those who are mostly healthy to start with.  I have had clients that move into a community and then have an episode that literally doubles their care cost within the first few months of living there.

Maybe the plan is for mom or dad to use their money on themselves, but as a backup they move into an ALF that will eventually take Medicaid if they run out of money.  They have a nice private room, a consistent staff of care providers that they know and get along with.  They are bathed at least every other day and have a one-on-one helper with mealtime.  Then they run out of money and apply for Medicaid.  They are approved and the ALF is now receiving $4,000 per month instead of $7,000 per month.  Mom or dad is now told that all of the ALF’s Medicaid beds are in shared rooms, so they will have to move to a new room, the same size or smaller in some cases, and share it with a total stranger.  Baths or showers may decrease to once or twice per week, and meal time might become one care provider sitting at a horseshoe table with six patients.  The staff who provide the daily care may be less experienced and or more randomly assigned, since the more experienced, long-term staff will have their pick of patients and will want to stick to the private payers.

Families can pay the ALF facility to upgrade to a private room, to provide more baths, and to have a one-on-one meal companion.  The problem is that the family has to find the money for those niceties.  With planning that protected some of the assets early on, there would be a source for those costs.  Without planning, that money is coming from the pockets of the family members or it just is not coming.

Why Plan? 

Proper planning makes it far more likely that your loved one will make it to the end of life with the highest quality of care and maybe, just maybe, a little something that they can leave for their children.  The funny thing is that most children will tell you that the quality of life is the more important piece of this and most parents will tell you that the ability to give something to their children is the most important piece.

Choosing Where to Live and Receive Care

Anyone who has ever listened to Rajiv Nagaich speak knows that about 80% of Americans would like to take their last breath at home. They also know that only about 30% of Americans succeed at that goal. We believe that part of the answer to that problem is redefining how we think of “home.” Not counting an actual hospital, there are five places that you can live out the end of your life (this is over simplified, but covers the vast majority of options). Each of them has certain advantages and disadvantages and we will describe each individually, in no particular order.

For most people this means either their home or the home of a child or loved one. It could be the home you have always lived in, a new condo or house that you downsized to, or even a home in a 55+ community that does not provide any care services, but does have amenities close by.

The biggest advantages to spending your final years at “home” are comfort and autonomy. Everything in the space is yours (or your loved ones’). It is familiar, and there is no one telling you what to do or when to do it. If it is the home you have lived in for a long time, you know every nook and cranny and, even when your memory starts to fail, you can navigate in the dark with little concern.

The downside to staying here is that, if your care needs become significant, you will need to have a good deal of money and/or family support to meet all of your needs, even if Medicaid is paying for long term care (LTC). In most cases, unless you have a specific qualifying diagnosis, Medicaid will pay for no more than 120-180 hours per month of LTC, about 4-6 hours per day. If you need more care than that, then your family needs to provide it or you need to pay for it privately at an average of $30+ per hour. Even four extra hours per day will quickly add $3,600 per month that you will struggle to find once you have reached the point of financially qualifying for Medicaid (maybe a little easier for a married couple who are able to keep more assets and use more methods to protect assets).

Skilled nursing facilities or SNFs are rarely places that anyone would call home, though we can think of at least three that are better than most for comfort and quality of care. In most cases, a SNF is a last resort for people who waited too long to get help or who chose a different path that did not work out as planned.

SNFs do have a few advantages. Married couples can keep even more assets in a SNF than any other setting (generally), facilities that accept Medicaid do not have private pay periods (described more in later options), and there are staff available 24/7 to provide care for even the highest levels of care needs. Of these, the one that ends up deciding the care location for most of my clients who move into a SNF is the lack of private pay period. If you have high care needs and wait to get help until you cannot afford care at home and cannot pay privately at any other care community that will accept you, a SNF may be the only viable option.

The downsides are a bit more obvious. This is essentially like living your final years in a hospital. In all but a few SNFs we have been in, there is a smell of urine and disinfectant that lingers for hours after you leave, and very little social interaction takes place outside of treatments.

Adult Family Home – An AFH is usually a converted private home, though some are built for the purpose. They are limited to six residents receiving care, and are frequently owned by current or former nurses or EMTs (not always, but we see this very frequently).

The biggest advantage to an AFH is the small size. With only six residents and at least one staff member always on duty, there are more opportunities for one-on-one interaction with care providers. You can get to know the whole staff and all of the residents quickly and form relationships with them.

There are several disadvantages, but the extent to which they exist varies greatly from facility to facility. The most significant is the private pay period. Most AFHs require that you pay them privately for at least 2 years before they will accept Medicaid payments. With help from a geriatric care manager you can sometimes find shorter private pay periods, but the general trend if for these periods to get longer and homes that will take shorter periods are becoming fewer and fewer. The other major disadvantage is the lack of socialization and activities. While not always true, AFHs generally have fewer organized activities and always have fewer people around to interact with. Often times at least half of the residents are effectively non-communicative and there is rarely more than 7-8 total people in the home at any given time (other than visitors). For a very social person, this can be a nightmare scenario. The final disadvantage is that most AFHs do not have a nurse on premises at all times, though there is always supposed to be one on call. This means that if there is an emergency during a time when there is not a nurse on duty, you have to wait for an ambulance or the on call nurse to arrive.

ALFs are, generally, like living in an apartment complex with staff coming in and out all the time to provide services, though some are set up more like a SNF, with a hospital-like feel to them. They tend to handle higher levels of care than most AFHs (though not always), but less than SNFs (also a generalization), and they are the most common place to find secured memory care units.

The greatest advantage that an ALF has is the opportunities for activities and socialization. Most ALFs, or at least the good ones, have staff dedicated to organizing activities from bingo to crafts to field trips. There are many more residents than in an AFH, so you are more likely to find other residents that share a similar interest or hobby and that can communicate with you on your level. The other major advantage over an AFH is that there should always be at least one nurse on duty in the building and most also have a dedicated physician that works with all of the residents and is on call as needed.

The disadvantages include private pay periods, like those at AFHs, and reduced one-on-one interactions. With so many more residents and staff, it can be harder to form close relationships with the care providers, who may be different every day of the week. Some ALFs make an effort to have the same handful of care givers assigned to each resident for consistency, but that is not always the case. If you do not like a lot of social interaction and you want to have a closer bond with care givers, then this may not be a good fit.

CCRCs are a great option for people who can afford them and who do not want to use Medicaid. They come in many flavors but most require an initial buy in that can range from $50,000.00 to over $1,000,000.00 and proof that you own enough assets to pay for a while. The most common CCRCs that past clients have chosen require about $200,000.00 for the buy in and proof of $400,000.00-600,000.00 in assets.

While not always true, the advantage to most CCRCs is that they promise you will never have to leave because you run out of money or your care needs become too great. The buy in money is treated like an insurance policy so that the CCRC has money if you can no longer pay the monthly rent and most CCRCs have independent living, assisted living, and SNF level housing all on the same campus. Once you move in, the furthest you should ever have to move again is across campus to another building or another wing of the same building.

The biggest disadvantage is the cost. Even after the buy in, you can easily pay anywhere from $2,500.00 per month for independent living to over $10,000.00 per month for SNF. Even a large estate can be drained fairly quickly at those prices. Another disadvantage is that most CCRCs have a clause in the contract that forbids making large gifts once you sign the agreement. That means that if you have a $1,000,000.00 estate and need to prove at least $400,000.00 to move in, you had better consider giving away $600,000.00 before you move in or it will all go to the CCRC, assuming you live long enough to spend it all. The final disadvantage is that it can be very difficult to spot the CCRCs that do not guarantee that you will not be kicked out if you run out of money or the ones that cannot handle every level of care needs. It is very important to have a geriatric care manager or an attorney review the contracts closely before signing up or you may find yourself paying a lot of money to the CCRC only to be kicked to a different SNF when your money is gone or your care needs are too high.

Summary – There are options out there and, with careful planning and the right team, you can make any of these setting feel like “home,” even a SNF. The earlier you start looking at options and deciding what you will or will not accept, the more likely you are to spend your final years in a place that you consider to be your home, whether it is the place you currently live or not.

I want to stay at home as long as possible…

This week in Crisis Corner, “I want to stay/keep them at home as long as possible.”

Just about everyone wants to stay at home or keep their loved one at home “for as long as possible” before moving to a care facility. In many cases, with enough planning and family support, it is possible for someone to remain in their home until they take their last breath. However, even in the best circumstances it takes a lot of effort and must be approached from the starting place of staying home for the long haul, not for as long as possible.

Staying home for as long as possible means that you have already decided that, at some point, staying home will not be an option. In most cases, if we are truly honest with ourselves, those who want to keep themselves at home as long as possible are really saying that they are afraid of making the change and those who want to keep a loved one home as long as possible are really trying to avoid feeling guilty about “putting them in a home.” If you know that staying home will not be an option, and you are willing to face the fear of the unknown or the guilt of making the hard choice; then there are many reasons to start the transition to a new place sooner than later.

First and foremost, this discussion typically starts with someone receiving a diagnosis of dementia or Alzheimer’s. Healthy people rarely talk about staying home as long as possible, they either talk about staying home or they talk about finding a retirement community. We cannot count the number of times that we have heard “I’ll keep him home until he is so confused that it does not matter where he is living” or “When she doesn’t recognize me anymore, then I’ll take her to a facility.” The problem with that line of thinking is that people with dementia and Alzheimer’s tend to have better long-term memory than short-term. They have spent years and years ingraining the layout of their house and their things in their minds. If they move to a new home early in the progression of their illness, they have more opportunity to form new memories and patterns. Moving them to a new home when they are not forming any sort of new memories and are already confused all of the time is much harder for them. They are more likely to have trips and falls, especially at night, as they try to navigate an unfamiliar room based on patterns that they walked in the old home. They are also likely to become even more confused and/or depressed. Many studies have shown that changing the place where a person with dementia or Alzheimer’s lives has a negative effect on their health and can make their condition progress even faster. The further they are into the illness, the greater this negative effect becomes.

Second, most care facilities, other than nursing homes, will not accept Medicaid without being paid privately for a period, typically 2-4 years. This means that if someone is receiving Medicaid benefits at home and then needs to move to a facility, they will likely either have to move to a nursing home or find a way to private pay and then reapply for benefits. There are a few adult family homes and assisted living facilities that will take Medicaid without a private pay period, but they are increasingly hard to find and many of them are not places that you would want to live or to have a loved one living.

Even if Medicaid is not yet involved, the cost for most care facilities increases as the needs of the resident increases. Moving yourself or your loved one into a facility early after the diagnosis rather than after a few years could mean the difference between paying $5,000 per month during the private pay period and paying $9,000 per month during the private pay period. If you have to pay privately for two or more years, then you want those to be the years when you need the lowest levels of care.

Finally, you need to consider the health of the rest of the family that is providing care. It is hard work to care for someone 24 hours per day. Even when professionals are hired to come into the home and help, it is hard for family members, especially spouse’s, to really back off and let others be the care givers. They often change from spouses to nurses and the effect is visible. Many couples come to us for help with planning for one ill spouse only to have the “healthy” one pass first because they are working themselves to death. We have seen clients lose 50 pounds, which they did not have to lose, over the course of six months working with them, not to mention the ones who have strokes or break a hip trying to assist with a transfer. In those situations, not only has the healthy spouse thrown away their own health, but they have created a situation where the ill spouse has no one available to provide care and they are forced to move to a facility on short notice with no thought or planning into where they will go.

If your plan is that you or your loved one will take their last breath at home, great; we can help make that happen. If your plan is try for as long as you can and then make the move, please read through this one more time and decide if you are making the best plan for the person who needs care or the best plan for avoiding a sense of fear or guilt for yourself. There truly are great care facilities out there and we can help you form a plan that is best for you and your loved ones.