Paying for Nursing Homes in New Jersey

by Matthew D. Rasmussen, Esq.

“How does anyone pay for nursing homes in New Jersey?” is a common question we hear. It could just as easily apply to Assisted Living or at-home caretakers.    And there is a good reason that paying for nursing home in New Jersey is getting more and more difficult.

Paying for a nursing home

In an annual study of the cost of care, New Jersey’s 2015 costs were as follows:

  • Homemaker Services
    • Daily Average: $160
    • Yearly Average: $46,332
  • Home Health Aide Services
    • Daily Average: $16
    • Yearly Average: $48,506
  • Adult Day Care
    • Daily Average: $85
    • Yearly Average: $22,165
  • Assisted Living
    • Daily Average: $190
    • Yearly Average: $68,700
  • Nursing Home
    • Daily Average: $320
    • Yearly Average: $116,800

We then sit down and come up with a comprehensive strategy to ensure that Mom or Dad are taken care of forever. For most families, this means keeping Medicaid in mind as very few of us have an extra $150,000 just lying around to pay for care (and often when given the choice of spending this money or not, we’d rather not!).

How Medicaid Works

grandparens huggingFor many in New Jersey’s middle class, paying for nursing home care also means a lesson in Medicaid laws. For those that qualify, Medicaid will pay the entire bill. This makes it an attractive alternative to shelling out the family’s wealth to pay for long term care.

Unfortunately, unless you’ve done advanced planning through an attorney’s office, you will likely be forced to use Medicaid as the “payor of last resort.” That’s because Medicaid will only pay for long term care if the applicant has less than $2000 in assets(among other qualifiers). Practically speaking, that means that the middle class family loses out.

It doesn’t have to be that way, however. With proper planning, we can save the family assets AND have Medicaid pay for nursing home facilities. There is a lot to this process, so I can’t cover it all here. At its essence, it looks like this: a little over five years before we think nursing home care will be needed, the individual will transfer most of their assets into a trust. (A trust is an entity like a corporation. It can hold the assets for the benefit of another person, usually in this case another family member, such as the children or grandchildren.) Then, after five years, those assets are unavailable to the individual applying for Medicaid AND they are unavailable to nursing homes or the government. The result? The applicant spends down any remaining assets to the $2000 mark after which Medicaid begins paying the nursing home bills. The money that gets put into the trust will pass on to the applicant’s children or grandchildren free and clear.

Obviously this type of planning is advanced and I am speaking in broad strokes here, but I think this covers the general idea. It is certainly one idea on how to pay for nursing home care that saves New Jersey’s middle class. If you think you or a loved one is a candidate for this type of planning, be sure to call Rasmussen Law at 732-595-1591 so that we can look at the details of your specific case and give you our opinion.

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