Skip to Content

Payment Options for Nursing Home Care

03.24.15 written by

As we continue to live longer, the probability of entering a nursing home to live out the last months or years of our lives increases. Thus, it is important for families to know what the rules are and what options exist for paying for nursing home care.

The average cost for skilled nursing home care in Ohio is $6,023 per month. Two options exist for paying this cost: (1) private pay from assets or a long-term care policy and (2) qualifying for the Medicaid program. The simplest way is to privately pay until the individual has less than $1500 of assets remaining. At that point, the individual will apply for and be qualified for Medicaid assistance. However, not all assets need to be spent on the monthly nursing home costs in order to qualify for Medicaid. This is especially true for married couples where one spouse is in a nursing home and the other spouse is living at home.

Four components must be examined and all four satisfied in order to qualify for Medicaid. Those components are the medical component, the income component, the resource component, and penalty period component. 

In order for an individual to be eligible for Medicaid from a medical standpoint, the care must be medically necessary. Medical eligibility for nursing facility services is determined based on a comprehensive needs assessment which demonstrates that the recipient requires nursing home services. Nursing home residents are dependent on others in several activities of daily living such as walking and standing by oneself, feeding oneself, dressing oneself, bathing oneself, toileting, and continence. Each separate activity of daily living may be classified as either independent, requiring some assistance, or being totally dependent. In order to qualify under the medical portion of the Medicaid test, an individual must need hands-on assistance with 2 out of 6 of the activities of daily living.

With regards to the income test, if countable monthly income is less than the monthly nursing home costs, the nursing home patient would meet the income test. 

For the asset portion of the test, as a general rule, Medicaid will not begin to pay nursing home bills until the assets of the nursing home resident are below $1,500. However, certain assets are excluded for purposes of determining Medicaid eligibility. The exempt assets for a single individual include an irrevocable prepaid burial contract, one automobile, and household and personal effects. For married individuals, these exempt assets also include an individual’s home if the nursing home resident’s spouse is residing in that home. All other assets are non-exempt assets. A nursing home resident’s spouse may keep one-half of all non-exempt assets up to a maximum of $113,640 and a minimum of at least $22,728. This amount is determined by adding up the value of all non-exempt assets on the first day one spouse is institutionalized for a period of 30 consecutive days and dividing by two. It does not matter which spouse owns the asset. All assets are included in this calculation. 

There is a 60-month lookback period for all transfers. If on the date of application for Medicaid benefits, any transfers have been made within the previous 60 months, a penalty period will be imposed even if the applicant would otherwise qualify for Medicaid benefits. This penalty period begins when the person enters a nursing home, a Medicaid application has been filed, and the person would otherwise be eligible for Medicaid benefits.

The Medicaid qualification process can be very confusing. I have seen numerous situations where married couples have spent their entire life savings, including the proceeds from the sale of their residence, because they were not aware that certain assets are exempt or that a community spouse can generally keep one-half of the non-exempt assets. 

The best option is to develop a plan before an individual needs nursing home care. If that is not done in advance, then contact a qualified elder law attorney to assist you when it appears that a loved one may need to be placed into a nursing home or even after the placement is made. This individual will be able to explain the various rules and regulations regarding Medicaid qualification and develop an asset protection plan which may potentially save a significant portion of the family’s assets and still obtain Medicaid qualification for the nursing home resident.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

James F. Contini II, Esq.
Certified Specialist in Estate Planning, Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 N. Broadway
New Philadelphia, Ohio 44663
Phone: 330-364-3472
Fax: 330-602-3187