By Attorney Suzanne Sayward
 
 
With the cost of nursing homes rising each year, you're not alone if you're worried about affording long-term quality care should you need it. There's good reason to be concerned: In Massachusetts, the average monthly cost of a nursing home is around $10,000, which is a significant financial burden to most families.  
  
Knowing what resources are available to pay for nursing home care will help reduce some of that worry. For starters, it is important to understand that health insurance does not pay for or contribute to the cost of long-term care in a nursing home. The cost can be paid three different ways: you can pay with your own money, access benefits under a long-term care insurance policy, or access public Medicaid benefits, sometimes called MassHealth in Massachusetts.
  
Medicaid is a federal- and state-funded program that covers residents who are unable to pay for their own medical expenses. Here are five facts to know about long-term nursing home care costs and Medicaid:

1. Even though Medicaid is a federal program, the eligibility rules vary widely from state to state. Don't assume that because a friend with similar income and assets qualified for Medicaid benefits in Rhode Island, you will qualify for Medicaid benefits in Massachusetts.  Federal law sets certain eligibility criteria but allows states a fairly wide latitude to impose their own rules within the federal guidelines.   In addition, states may apply for a waiver from the federal government to be excused from complying with certain criteria. 
    
2. Medicaid will only pay for the cost of long-term care in a nursing home for individuals who are both medically and financially eligible.  Not everyone who is struggling to privately pay for nursing home care will qualify for Medicaid. In order to be eligible for Medicaid benefits in Massachusetts a single individual may not have more than $2,000 of so-called countable assets.  A person's countable assets include bank accounts, retirement assets, investments, deferred annuities and real estate other than a primary residence.   Non-countable assets include a home, business property and tangible personal property such as furniture and clothing.
    
3. Even though your home is a non-countable asset, this does not mean it is protected from liability for your long-term care costs.  An individual may become eligible for Medicaid to pay for the cost of long-term nursing home care even though he or she owns a home.  However, in most cases, Medicaid will place a lien against the Medicaid recipient's home and, upon that person's death, will seek re-payment for Medicaid benefits paid on behalf of the recipient during his or her lifetime.  The Medicaid recipient's children or other heirs may be forced to sell the home to pay the Medicaid lien after the recipient's death.
    
4. If you give assets away to anyone other than your spouse, you may be ineligible for Medicaid benefits.   Under the federal law that went into effect in February of 2006, a person who gives money or assets to someone other than his or her spouse during the five-year period prior to applying for long-term Medicaid benefits will be ineligible to receive benefits for a certain period of time because of the gift. The length of the ineligibility period is measured by the value of what was given away.  A gift of $50,000 will result in a longer period of ineligibility than a gift of $10,000.  However, the caveat under the 2006 law is the period of ineligibility does not begin until the person reduces countable assets to $2,000.
    
5. Even though the eligibility rules for long-term Medicaid have become more stringent in recent years, the law still allows for certain protections for the spouse of a nursing home resident.   In addition to keeping the home, a spouse of a nursing home resident may keep an additional amount of countable assets.  This amount changes each January. This year, for example, the amount is $109,560.   A spouse at home may also be entitled to receive some or all of the income payable to the nursing home spouse. 

• The Massachusetts Chapter of the National Academy of Elder Attorneys (MassNAELA)  http://www.manaela.org/ 
  
• The National Academy of Elder Attorneys (NAELA)  http://www.naela.org/
  
• Centers for Medicare and Medicaid Services
  www.cms.hhs.gov
  1-800-633-4227, Detailed information on Medicare and Medicaid, including information on initiatives, coverage and how to protect yourself from fraud
  
• MassLongTermCare.org
  1-617- 558-0202 or 1-800-CARE-FOR, a consumer-focused website developed for the people who will use or need information about the continuum of long term care services and facilities available across Massachusetts.
  
• Massachusetts Health and Human Services
  1-800-841-2900 www.mass.gov/MassHealth
  

Attorney Suzanne Sayward served as the 2009 president of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA).

 
You may be able to deduct all or part of the Long Term Care Insurance (LTCI) premiums you pay for yourself, your spouse, or a dependent, but only if the policy was purchased before January 1, 1997, and meets requirements in accordance with the state in which it was issued. If you purchased an LTCI policy after January 1, 1997, the premium is deductible only if the policy is qualified under the following IRS criteria. 

• Is guaranteed renewable
• Does not have a cash surrender value
• Does not pay for expenses reimbursable by Medicare
• Meets other consumer protection and IRS rules

The amount of your deduction can vary greatly. If you pay the premium personally, you may deduct only the amount in excess of the 7.5% adjusted gross income (AGI) and only if you itemize. Also, deductible amounts vary by age. For example, in 2009, the deductible ranged from $320 at age 40 to $3,980 at age 71.  If you pay through a business, you may be able to deduct the full amount of the premium, depending on whether you are an owner or employee and whether the business files as a Sub-Chapter C or S corporation.       
 
To learn more about whether you qualify, visit www.samuelfinancial.com and click on the Articles section.  As always, consult a qualified tax professional or financial advisor before reaching conclusions about your situation.