There is no free ride. Nursing home residents (and often their estates) must contribute to the cost of the care. Before Medicaid coverage kicks in, nursing home residents must use their own assets to satisfy the costs of nursing home bills. This effectively means that all of the residents income from Social Security, pensions, annuities and other sources must be used before the government will foot the bill for nursing home care.
Nursing home residents are allowed a meager monthly allowance for personal items. The amount varies by state. However, most states only allow a resident to keep approximately $30 per month to cover their personal expenses for things like haircuts and toothpaste.
If the nursing home resident has a living spouse the spend-down formula is different. A spouse living outside of the nursing home and in the general community is called a ‘community spouse’. The community spouse is allowed to keeps a minimum of $1,750 per month an the remainder goes to the nursing home. The final amount the community spouse may keep is dependent on other factors such as other dependents, heath expenses and living expenses.
It is easy for nursing homes to make sure their residents pay their bills. If the residents do not pay their bills, “[t]hey can kick you out for nonpayment,” says Gene Coffey, a staff attorney for the National Senior Citizens Law Center.
Death a does not wipe out your financial obligations to a nursing home. Medicaid is entitled to recoup some or all of the deceased nursing home expenses spent from their estate. The final decision on recovery of nursing home expenses is dependent upon the State. Some States will postpone collection from widows and dependent or disabled children or exempt them entirely.
To assure they get paid many states put liens on a nursing home residents assets. A lien is a legal right against an asset which is used to secure a loan. The lien effectively prevents any distribution of assets until the State releases their lien on the asset.
Read more about nursing home bills here.