As an elder care attorney, a common question I am asked is “will the nursing home take my mother's Social Security?” When a parent or another older loved one moves to a nursing home, there tends to be a lot going on, so people are unsure of how the billing works and what happens to the nursing home resident's income. The short answer to the question is the nursing home resident always continues to receive their income, but the answer to whether they get to keep their income, or have to pay it to the nursing home, depends upon their status there.
When someone is in a nursing home, their Social Security and other income always continues to be paid to them as it has been before. For instance, if Betty, age 85, has a Social Security income of $1,200 per month and a pension of $500 per month, Social Security will continue to deposit the benefit into her checking account and she will continue to receive her monthly check for $500 from the pension administrator.
If Betty is in the nursing home for physical therapy and rehabilitation after a hospital stay, her nursing home bill will be paid for by Medicare, so in addition to continuing to receive all of her income, Betty will be able to keep her income. However, she may have some co-pays that will need to be paid out of her income or savings. Betty's agent under a power of attorney or family member that has access to her funds will receive a bill from the nursing home for any co-pays and will be responsible for paying the bill out of Betty's funds.
If Betty needs to stay in the nursing home after her Medicare benefits have ended (Medicare may pay for 0 to 100 days of rehabilitation in a nursing home per spell of illness), and if Betty is not eligible for Medicaid due to having assets in excess of $2,000, then Betty will be considered a private pay patient. In that case, she will be expected to pay for the full cost of her care in the nursing home each month. In 2012, the average monthly nursing home cost in Michigan is $7,032 per month, so assuming that is also Betty's nursing home cost, a bill will be issued by the nursing home each month for Betty's care, and her agent under the power of attorney will be responsible for paying the $7,032 bill out of Betty's income and savings each month. Nursing homes tend to bill in advance; for instance, a bill for October's care will be issued in September.
As such, while Betty will still be receiving her Social Security and other income into her bank account each month, she, or her agent/family member will be cutting a check to the nursing home to pay the bill.
If Betty has become eligible for Medicaid, it will be a different situation. The government will not start paying her Social Security to the nursing home, and the nursing home cannot attach her pension or other income. Rather, Betty will have a special type of co-pay for nursing home residents who are eligible for Medicaid. This co-pay is called the patient pay amount. What that means is that Betty, as a patient of a nursing home who has become eligible for Medicaid, has to pay her income to the nursing home. Betty will be able to keep $60 per month out of her income as a personal needs allowance to spend as she sees fit. If Betty has supplemental health insurance, prescription drug insurance, vision, and dental insurance, she can also continue to pay the insurance premiums out of her income. If Betty, or her agent, cancels such insurance, the income that would have been used to pay the premiums just increases her patient pay amount, so it is often better to keep the insurance.
Here is an example of how the patient pay amount is calculated. Betty has the $1,700 monthly income we identified above. She also pays $122.50 per month to Blue Cross Blue Shield for her supplemental health insurance. Betty's patient pay amount will be $1,517.50 ($1,700 income - $60 personal needs allowance - $122.50 = $1,517.50). Each month, the nursing home will bill Betty for $1,517.50 and that sum will have to be paid out of her bank account, where her income continues to be deposited each month. The nursing home will then bill Medicaid for the balance of the cost of Betty's care.
As such, you can see that even when a senior become eligible for Medicaid, they are still paying a substantial amount for their care. Note that even though Betty is allowed to own a home and qualify for Medicaid, on an ongoing basis, most of her income will be paid toward the patient pay amount, and there is not a deduction from the patient pay amount so Betty can pay her real estate taxes, utilities or maintenance on the home. If no planning has been done in advance of applying for Medicaid, those expenses will have to be paid out of the amount of $2,000 of countable assets that Betty is allowed to have while qualifying for Medicaid or by family members.
What is the patient pay amount is not paid? Then the nursing home can evict Betty.
There are some situations where there can be additional deductions from the patient pay amount, which will be the subject of my next post.