Nursing home costs a likely expense
The cost of nursing home care is staggering. According to a 2015 Cost of Care survey by Genworth Financial Inc., the median daily cost of a room in a nursing home in North Carolina is $225, with a minimum cost of $108 and a maximum cost of $630. Bear in mind that this cost is growing at over twice the rate of inflation, and, according to a 2015 report for the National Bureau of Economic Research, is the primary driver of the cost of medical care for Americans in their nineties.
And odds are you’ll need to deal with nursing home costs at some point late in life. Anyone turning 65 years old now stands about a 70 percent chance of needing some sort of long-term care services before they die. In the case of nursing homes, there is a 35 percent chance that someone turning 65 years old will need to spend time in a nursing facility. On average, men need these services for 2.2 years, whereas women need them for 3.7 years.
Meeting the costs
There are basically three ways to meet these costs — use your own money, use long-term care insurance, or use Medicaid. If you don’t have enough money to cover three years in a nursing home, there are basically two ways.
Only about 20 percent of the public owns long-term care insurance, and only 14 companies are still selling it. It’s also quite expensive — some long-term care insurance policies cost over $7,000 a year. And many people don’t buy it until they are staring old age in the face, by which time they are much less likely to get it. In 2014, 45 percent of applicants age 70 or more were denied coverage.
This is why most people eventually opt to use Medicaid programs, even though all of these come with income and resource restrictions. The income limit is $1,247.50 for basic care and $1,560.50 for a dementia-lockdown unit. This includes Social Security, fixed pensions and other forms of fixed income, but not include interest, dividends or payments out of an IRA or 401K.
Advice on nursing home costs from a Gastonia attorney
Many people who appear to be offering online advice on how to plan for nursing home costs are in fact trying to sell you some sort of financial product. It is a better idea to get advice from an elder law attorney, who does not make any money from his or her own recommendations. Robert C. Whitt is a Gastonia attorney, servicing the areas of Gastonia, Charlotte, Mount Holly and Gaston, Mecklenburg, Lincoln Counties and surrounding communities. He focuses on wills, trusts and other aspects of elder law. Call and make an appointment today.