November 17, 2022
Spouse in Nursing Home Raises Poverty Risk
When nursing home care uses up a widow’s savings, the federal Medicaid program will kick in and cover her bills for care. But it’s more complicated for couples.
If one spouse moves into a nursing home and the bills start piling up, the person who is still living in their home can face serious financial hardship and even poverty.
This is a significant risk facing the one in three married people in their early 70s whose spouse will eventually wind up in a nursing home, researchers at RAND found in a study on the financial impact on couples rather than individuals.
It’s not unusual to pay roughly $90,000 for a year for a semi-private in a nursing home, though many people have relatively short stays. A common misconception about Medicare is that it covers all nursing home bills. It does not. The program pays for just 100 days of care in a skilled nursing facility and only after someone has been in the hospital and needs more time for recovery or rehabilitation.
High-income retirees pay directly for care that doesn’t follow a hospital stay, because in most states Medicaid kicks in only after couples deplete all but about $3,000 in savings to cover the cost of the nursing home. There is one significant protection for couples under Medicaid’s eligibility rules: their home does not count as an asset as long as a spouse continues to live there.
But if an unlucky couple has high out-of-pocket spending due to a long stay in a nursing home, the researchers found that it increases the chances they will run through virtually all of their savings and become impoverished. While poverty is far less likely for higher-income couples, they are not immune.
The researchers followed nearly 2,000 older couples over two decades through a survey that asks individuals to report if they or a spouse is in a long-term care facility and how much it costs.
The average for the couples experiencing a nursing home stay was nine months, which racked up about $20,000 in out-of-pocket costs, according to the study. Not surprisingly, stays lasting more than 100 days – and past the period when Medicare might pay the bills – doubled the couple’s previous levels of out-of-pocket spending on medical care and greatly heightened the risk of falling into poverty.
Many things about retirement are impossible to predict, such as how long someone will live or whether they’ll need expensive cancer care. It’s also important for retired couples to remember that a costly nursing home stay may be in their future.
To read this study, authored by Péter Hudomiet, Michael Hurd, and Susann Rohwedder, see “The Lifetime Risk of Spousal Nursing Home Use and its Economic Impact on the Community-dwelling Spouse.”
The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College. Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.
We as a nation need to do better by our vulnerable population. More availability of home care to keep elders out of nursing homes longer is critical. More home-like facilities are needed. There are models in Europe.
I’ve always been able to pay my bills, it is scary to think I may not have enough money for simple things! I’m trying right now to find a place, and money is a big issue!
This is the reason that Qualified State LTCi Partnership policies were created. These partnership-qualified LTCi policies protect personal financial assets – up to an amount that is roughly equivalent to the coverage provided by the policy – providing “dollar-for-dollar asset disregard” or “spend down protection” while still allowing the policy owner to qualify for Medicaid if/when the LTCi policy runs out.
What about Medicaid annuities?
Medicare does not automatically pay for 100 days in a skilled nursing facility. There are requirements to meet the definition of skilled nursing care. I would say average Medicare covered stay is closer to 2-3 weeks in most cases.
How can this situation be avoided?
We are a couple just retiring (60-57). We did purchase a LTC policy, and the cost is very high – fortunately for us right now it’s affordable, but the price can change. We’ll have to pay this huge premium until we need it, otherwise there is no value if we miss a payment (there are some rules for this). Anyway we followed our adviser to purchase this policy between the ages of 55-65. If you have more than 2 million is assets, you may be able to finance your own LTC needs?
My parents are going through this scenario as I write this. My father has been paying a skilled nursing home and rehab facility since my mother had a stroke following a heart valve procedure in Feb. 2020. They have some assets, own their home and property and my father also gets a pension plus social security. My mother was a homemaker for most of her life and only worked a few years here and there. My father was forced to hire an attorney for advice as to how to protect himself. After Medicare ran out, he has been paying between $7,000 to $8,000 for my Mothers care. They live in rural Ohio, are both 87 and the nursing home is fifteen miles from their home near the Indiana border. My father has the property and the house to take care of plus two adult dogs. I am afraid he will die before my mother does. He has lost half of his body weight and refuses to give up his independence even for the smallest things. Life is not now what they had envisioned and I am glad they traveled and had 15 years of fun before all of this occurred. Nursing home care is understaffed and once a patient is on Medicaid they are often not given the attention they got when the nursing home collected the bill in full. My mother is in a lovely facility, but the staff has their limits, and my father is afraid of what the future holds.
A friend was recently admitted to the memory-care unit of new assisted living facility here in SC. Monthly fee is $5500. His spouse is living in their home and visits him daily and even brings home his laundry. Both of them are in their early 80’s. They have no LTCI and not on Medicaid. She is using up assets and retirement savings to manage the expense.