Why It’s Unwise to Put Off Planning
Because people are naturally reluctant to come to terms with things they want to avoid, it is easy and common for people to be in denial when it comes to potential long-term nursing home placement. A very unfortunate corollary is that many people fail, and perhaps in some cases even refuse, to plan for that eventuality, perhaps on the theory that if you carry an umbrella, you somehow increase the chance of rain.
As with umbrellas and rain, the downside to failing to plan for possible nursing home placement is much greater than the downside to having a plan and not needing it. Further, to keep from getting caught in a sudden downpour, you need to have the umbrella before it starts to rain.
The following examples, based on real life, illustrate the various ways in which putting off planning can cause major, even tragic, problems that could have been avoided.
Case No. 1: By summer of 2008, Jane’s widowed mother, Maggie, was no longer able to care for herself, and so Jane and her husband, Ed, took her into their home. Jane took “a leave of absence” from her $60,000 per year job to be able to care for her mother full-time. When she didn’t return after a year, her employer let her go. Jane periodically thought about taking Maggie to see an elder law attorney, but, alas, she was “always just too busy, you know?” Jane struggled day and night for nearly three years to take care of her mother at home, but by April 2011 she finally “gave up” because “I just can’t take it anymore. I’m so worn out, and Ed and the kids are at the end of their ropes with me, too.” She placed her mother in a nursing home.
By that time, Ed and Jane were in a bad financial situation. Without Jane’s income, they had fallen into major debt, and Ed’s work situation was uncertain. At Jane’s request, Maggie directed her, as Power of Attorney, to cash in her large CD and write her a check for $90,000 for taking care of her for three hard years. “That’s only half of what I would have made at work, so who could say that’s unfair?” Jane reasoned. Ed and Jane used most of the money to pay off credit card debts and catch up on their mortgage. They used much of the rest on buying a new car to replace Jane’s old one that was in such bad shape Jane was afraid to drive it to go visit her mother in the nursing home. The remainder went toward their children’s college tuition.
Three months later, in July 2011, when Maggie had spent down what was left of her money paying for nursing home care, she applied for Medicaid. That’s when Jane and Maggie got a major shock. The $90,000 payment was treated under Medicaid rules as a gift, and as a result, Maggie would not be eligible for Medicaid until June 2013. Jane and Ed were thus faced with the horrible dilemma of either bringing Maggie back home or selling their home to pay for Maggie’s care.
The sad fact is this: had Jane taken Maggie to see an elder law attorney back in 2008, that terrible result could have been avoided through proper planning and Maggie could have been eligible for Medicaid as soon as she entered the nursing home.
Case No. 2: Joe had a major stroke in May of 2010, and was sent to a nursing home for rehabilitation. The social worker at the hospital told his wife, Helen, that in all likelihood, Joe wouldn’t ever be able to return home. For the first year and a half, Helen just couldn’t accept that. She kept telling friends and loved ones, “Joe will be coming home soon. You’ll see.”
Near the end of 2011, Helen finally accepted what the social worker (and, by then, her family and friends) had told her, and went to see an elder law attorney for planning. With his help, Joe was able to qualify for Medicaid starting in February 2012.
Had Helen gone to the attorney when Joe first entered the nursing home, “just in case the social worker is right,” Joe could have been made eligible for Medicaid in July 2010. Instead, Joe and Helen needlessly exhausted over $90,000 of their life savings paying for Joe’s care for that first year and a half.
Case No. 3: Louise, a widow, was first diagnosed with Alzheimer’s disease in 2007. Although her only daughter, Tina, could see the gradual decline in her mother’s capacity, she kept putting off talking to her mother about power of attorney and nursing home planning. “I don’t want to upset Mom or make her think I’m trying to take over or put her in a nursing home right away,” she kept explaining. “I’m not like that!” Finally, by March 2010, Tina was finally ready to concede that something had to be done. With much sadness, she placed her mother in a good nursing home, and set up an appointment to see an elder law attorney.
By then, the Alzheimer’s had made it very hard for Louise to understand things, and worse yet, she had gotten both stubborn and suspicious. She refused to sign a power of attorney, although the “old Louise, the real Louise” would have gladly signed it. As a result, there was nothing Tina could legally do on her mother’s behalf to help protect her assets, without first initiating an expensive and time-consuming guardianship proceeding, and then hoping, with no assurance, that the Court would approve proposed planning. In frustration, Tina decided it wasn’t worth doing anything.
By the time Louise died 18 months later, she had spent all of her life savings paying for her nursing home care, and had been on Medicaid for nine months. Then Tina learned that her mother’s home would have to be sold to repay the State for the Medicaid benefits paid to the nursing home for Louise’s care. Had Tina acted sooner, Louise whose late husband was a Korean war veteran, could have been receiving VA pension benefits to help pay for care that could have enabled her to stay at home longer, and could have protected her home and most of her life savings.
Instead, by waiting, Tina unfortunately deprived her mother VA benefits for which she could have been eligible and worse yet – of the dignity of being able to leave a financial legacy to her only and greatly beloved child.