The Broken Healthcare System

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Sechler Law Firm, LLC

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Posted on

Jul 22, 2022

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Pennsylvania - Greater Pittsburgh Area

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The Plight Of Nursing Homes

A few weeks ago, an article about a financial crisis in the Nursing Home Industry ran in the Post Gazette. Recently, I discussed this crisis on my radio show.  The article exposed a serious financial shortfall in dollars from the state subsidies for Nursing Home Medicaid patients. Nursing Home owners and administrators were interviewed about the financial difficulties they are facing due to the costs of care being greater than the state’s contributions. Some owners were concerned about being forced to shut down. Legislators responded by putting provisions in the budget to increase the state contribution for Medicaid patients. While the provisions may help to alleviate the financial loss, the system remains fragile if not broken. 

Currently, around 65% of nursing home residents in Pennsylvania are on Medicaid, because Medicare doesn’t pay for custodial long-term care in a nursing home. Given the statistics that one in three seniors is going to die with dementia, it means they will likely need care that is provided in a nursing home. The average cost of a skilled nursing facility in Pennsylvania is almost $15,000 a month. Long-term care in a skilled nursing facility is probably the single biggest medical expense that seniors will have, and a significant percentage of the population cannot afford that.

Paying For Long Term Care

There are four different ways to pay for skilled care.

  • One way is to pay privately.
  • Second, if it is only a short-term stay for a few weeks, Medicare may pay.
  • The third option is using long-term care insurance, which is costly.
  • The fourth option is to go broke in order to become eligible for Medicaid to pay for care. With so many nursing home residents being on Medicaid, the financial crisis facing nursing homes is understandable. 
Medicare Only Pays For Acute Care

It hardly seems fair that a senior who has a heart attack and receives open heart surgery to save him will be provided with Medicare benefits. Medicare pays for this acute care including surgery and hospitalization for the heart attack patient. He may go on to live another 20 years at home, and he won’t need to pay for his care. However, if a senior has a severe stroke, he still goes to the hospital and is taken care of, but he will need long-term care in the nursing home for the rest of his life. The stroke patient’s care in the hospital is also going to cost Medicare $400,000, as it did for the heart attack patient. Unfortunately, Medicare, which seniors rely on for healthcare in their retirement, only pays for 20 days of rehabilitation in a nursing home. Medicare may pay up to 100 days with heavy co-payments, after which the senior has to pay $460 per day, for as long as he lives, or until he runs out of money. Once he runs out of money, Medicaid starts paying for the nursing home.

The Cause Of The Financial Crunch

This problem is largely attributable to the Covid crisis, with increased deaths of the elderly and the staff who worked in nursing homes contracting Covid. Costs associated with covid care and protective equipment became costly over time.  Many healthcare workers did not return to the industry after Covid, causing a staffing shortage and overwhelmed facilities.  Caregivers who stayed are seeking higher compensation in light of the change in work conditions. 

If you consider the wave of baby boomers who are now seniors, many of them are needing long-term care. With 65% of them on Medicaid, it is a crisis that needs to be resolved. If financially struggling nursing homes are forced to close, who will care for the increased aging population that will soon be nursing homebound? Finding adequate facilities might become a challenge. 

A Big Plus

Fortunately, this plight has been recognized, and $515 million has been offered to long-term care facilities. This money will go towards alleviating this financial crunch. The nursing homes are receiving $1000 more per month, in reimbursement for each senior who is on Medicaid. This rate is probably not as much as the private paying rate, but it is a significant increase in revenue. This increase will help the nursing homes cover costs and provide care, and allow the nursing homes to hire and train good people to take care of the seniors.

Unresolved

This increase is a great boost for long-term care facilities, but the issue of seniors going broke to be eligible for Medicaid, has not been resolved. Additionally, the amount of money seniors are allowed to keep has not been increased. 

If a single person, Joe, goes into a nursing home, he is only allowed to keep $8000. If Joe has a house and $200 000 in savings, he has to spend that money down. He would have to write checks every month for $15,000 to the nursing home. Joe needs to do this until he is left with about $8,000, and only then he is eligible for Medicaid to pay for his care. However, all of Joe’s income must go to the nursing home every month. This means he can only keep $45 per month. Joe’s allocation of money is not being increased, despite the rising costs for basic provisions. Having only $1.50 per day for his personal needs is not much at all to enjoy retirement. 

Nobody Wants To Go Broke In A Nursing Home

While Joe still owns a house, he would not be able to afford the maintenance costs for the house for very long. Having only $8,000 is not enough to cover these costs. If Joe sells his house it would yield $150,000 cash. Given Joe’s $8,000 allowance, he cannot keep $150,000 cash, because he risks losing his Medicaid benefits. He would have to spend that money down to once again becomes eligible for Medicaid. He can only keep $8,000. Essentially Joe would lose the house and his savings to long-term care costs, which is a great shame. Joe didn’t want to go broke in a nursing home. Sadly, this is an issue many seniors face, and it must be resolved.

You Can Protect Assets

Fortunately, there are ways to protect assets. The law allows you to take legal steps with trusts and different techniques to protect assets. Long-term care costs are the biggest issue facing middle-class Americans in retirement. Find out more when you come to one of our Estate Planning and Elder Law asset protection workshops. Register for a workshop call 724-564-6615.

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Local Services By This Author

Sechler Law Firm, LLC

Elder Law 20206 State Rte 19 Ste 300, Cranberry Township, Pennsylvania, 16066

At Sechler Law Firm, LLC, our mission is to help families make great plans. A great estate plan is more than just a set of documents. It is a comprehensive and well thought out written strategy on how to deal with lifes unfortunate twists and turns. Our process first provides you with the education necessary to make informed decisions with regard to your planning. Then we put the proper documents and legal framework in place to respond to lifes unfortunate changes.Our Estate Planning law office is headquartered in Cranberry, PA. From this office, we happily serve the residents of Cranberry, Mars, Wexford, Pittsburgh, Butler and the residents of surrounding communities. As one of the regions only Certified Elder Law Attorneys, Tim Sechler and his team often assist families from across Western Pennsylvania.We understand that the pursuit of health, wealth and happiness is the goal of most families. We want you to be able to pursue these goals, or whatever goals you may have, knowing that you have a back up plan if life throws you a curveball like a death, disability or nursing home need. With education as our foundation, we will work with you to make decisions to Shield What Matters Most to you.Practice AreasEstate PlanningCustomized planning doesnt have to be difficult for you. We strive to make the process easy. The first step is to identify your concerns so that we can make suggestions regarding your plan.Elder Law Crisis PlanningA significant percentage of our practice is dedicated to helping families navigate the long term care maze. We help with Asset Protection and eligibility for Medicaid and Veterans Benefits.Trust And Estate AdministrationIf you have lost a loved one, we can help you take the necessary steps to help handle their affairs.Tims estate planning practice is focused on guiding clients through the complicated maze of balancing transfer strategies, wealth preservation, and family values in the planning process.Tim is a Combat Veteran, having served in Afghanistan as a member of the West Virginia Air National Guard. Prior to leaving the military, Tim had attained the rank of Staff Sergeant. His experiences in the military have led him to thoroughly enjoy working with Veterans and their families.Tim received his law degree from Duquesne University School of Law, and his Master of Business Administration from the Duquesne University Donahue Graduate School of Business. He received his Bachelor of Science in Business Administration from West Virginia University, majoring in Finance. Tim is licensed to practice Law in Pennsylvania and West Virginia.Recently, Tim has been seen frequently as a guest on KDKAs Pittsburgh Today Live, and has been quoted in several local print publications. For the last several years, he has been honored to be chosen as a Super Lawyers Rising Star, an award given to less than 2.5% of Tims peers. Tim enjoys educating the public about Elder Law and Estate Planning. He has spoken to thousands of people regarding estate planning and has averaged more than 50 speaking events per year.Tim became a Certified Elder Law Attorney* in 2017. A CELA is more than just an attorney who specializes in the field of elder law. CELAs are committed, through certification, to maintaining and improving their proficiency with continual practice and continuing legal education. Becoming certified in elder law validates a lawyers specialty to handle issues that affect senior citizens.Tim and his wife, Robyn, are raising three beautiful children in their home in Mars, PA.*Certified as an Elder Law Attorney by the National Elder Law Foundation.