Who Pays for Montana Nursing Home Care When Medicaid Won’t?

No future planning is perfect. There are unforeseen illnesses, injuries, and economic downturns that can sink any plan. Nevertheless, care planning is essential for the future well-being of yourself and your loved ones.

The challenges you may confront in long-term care planning depend on various factors, including your financial situation and where you live. Montana, for example, is primarily a rural state, and most of its small towns don’t have nursing homes. So if a parent is unable to take care of themselves and neither can their children, they are taken to a hospital and placed in a long-term care services.

“We have about 44 critical access hospitals and eight larger city facilities. Primarily, a patient based in this state is served by hospitals that have 25 beds or less or even swing bed hospitals. A good portion of swing bed facilities’ use are long-term care patients,” says health care attorney Daniel J. Auerbach.

Inheritances and Restrictions on What Medicaid Pays

Quite a few Montana residents are farmers or ranchers, and often assets are transferred from parent to heirs before placement in the hospital. This can have impacts on what Medicaid may or may not pay. To qualify for the Medicaid program, a patient must be low-income and have limited assets. If someone gifts or sells assets below market value within five years of applying for coverage, they can be penalized or denied coverage entirely.

“In the cases I have seen, generally, the families will violate the Medicaid five-year look-back provision,” says Auerbach. “As a result, the patient becomes ineligible for Medicaid coverage, and the hospital is providing $8,000 per month in long-term care, with no ability to recover.”

What responsibility do family members have to financially care for parents, especially if they are the recipients of inheritance while the parent is alive? “The gaping hole in the law is you can’t go after the family member who received the benefit of that wrongful gift to get money to pay for long-term care,” says Auerbach

If assets are transferred to a child, which precludes the possibility of the parent receiving Medicaid, this is the only means of payment for an elderly patient. However, as of 2018, there is no legal responsibility to avail one’s assets to pay parents’ long-term care bills—even if those assets were gifted very recently.

“There needs to be a legal avenue for hospitals to be reimbursed when this situation arises,” Auerbach says.

Financial Impacts of Medicaid Ineligibility on Montana Assisted Living Facilities

“The issue that I have come across is that patients who cannot or do not pay accrue $50,000 to $300,000 in long-term care bills over the course of treatment. These bills aren’t recovered and must be written off as bad debt. For a $20 million facility in Spokane or Seattle, that’s a drop in the bucket, but for a $5 million critical access facility in rural Montana, that’s a critical blow to their budget,” explains Auerbach.

“Most of these facilities run at a 2 percent margin, so if you take away $300,000, it will take away their entire operating margin. This leads to closures. Every three to five years, we have a critical access facility close permanently or temporarily due to bad debt. These closures are multifaceted, but they are generally due to bad debt, and this issue is a large portion of that bad debt.”

Medicaid and Medicare are in place to prevent families from using their own funds and being financially burdened. But should the family be able to avoid using inherited assets to pay for their end-of-life care? Why is the hospital, government, and community left holding the bill?

“In many countries, there is an ethical rule that we take care of our parents as they age, and we as a country have not adopted that philosophy outright as other places in the world have,” Auerbach says. But perhaps we can.

Find an Experienced Estate Planning Attorney for Help with Medicaid Planning

With advance care planning and a detailed estate plan drafted by an experienced and reputable attorney, many problems around the costs of long-term care facilities can be avoided.