THE COST OF CARE

In the past several months, I have had a number of clients ask me how nursing homes and assisted living residences receive payment. The most common misconception that a client has is that a resident of a long-term care facility must simply turn over all of his assets upon entering the facility. “I don’t want to turn my house over to the nursing home,” the client will tell me. And, quite literally, the client believes that he will have to give the nursing home his house.

The truth of the matter is, my practice is fueled by misconceptions. And, the good news for me is, no matter how many times I tell people the truth about a situation, they continue to believe the misconception that they originally harbored.

Here’s the truth, the nursing home or assisted living residence doesn’t want your home. They want cold, hard cash. A house, while a nice asset, is also a potential liability.

For instance, to a small extent, my practice involves representing sellers in real estate transactions. My clients, who are mostly elderly, are typically selling their houses – because they entered a long-term care facility – so I agree to represent them in their closings. I’d say about 5% of the real estate closings that I handle have some issue with oil contaminated soil from a leaky underground storage tank.

To date, the cost of remediating the contaminated soil in these cases has not eclipsed the sales price of the house; however, the cost of such a clean up could outstrip the sales price of the house, making the house a net lose.

Oftentimes, homeowner’s insurance policies or the state of New Jersey will cover or assist with the cost of clean up, but the clean up process itself can take years.

Now, if you were a business providing a service – such as a nursing home or assisted living residence – would you want cash or a house, one in twenty of which has the potential liability? My guess is, you’d want the cash, not the house.

Nursing homes don’t take your house. Nursing homes receive payment on a day-to-day basis. In other words, if you were in a nursing home for twenty days, you’d pay for twenty days of care.

In the Monmouth County area, nursing homes cost anywhere from $150 to $240 per day, plus incidentals. So, the cost can be exorbitant, but you pay daily. You don’t simply hand over your assets and wait to die.

With assisted living residences, you pay on a month-to-month basis, just like an apartment. Assisted living residences in this area cost anywhere from $3,000 to $6,000 per month.

The cost of a nursing home or an assisted living residence could drain most people’s finances over time. Those facilities do not, however, drain your assets instantaneously. So, while you do not have to turn over all of your assets to a long-term care facility, literally, you may, in the end, pay the entirety of your assets to such a facility.

As I always tell my readers, plan early. But if you don’t plan early, plan later. It’s never too late to plan unless you’ve spent all of your money. Once your assets are gone, you can’t plan to save those assets.