Denise Thomas climbs into her SUV after work. She checks the folder of papers in her lap and heads to her lawyer’s.
She has spent her tears. She is exhausting her emotions.
But in her struggle to make one of the most difficult decisions of her life — how, when or even whether to turn care of her husband, Randy, suffering dementia, over to a nursing facility — she knows little of it matters without addressing a monumental issue:
Money, the $6,000 a month it costs to house and care for a loved one in a skilled nursing facility.
“I never had any idea what people went through when trying to place someone,” she said, heading east along Interstate 435. “It’s very confusing. It’s such a complex system.”
So it is for millions of families each year who, faced with similar decisions, find themselves maneuvering through what Denise can already see is a vast and bewildering labyrinth of financial and legal information.
Six hours each day she mans a telephone for little more than $15 an hour to cope with questions and crises at an insurance call center. Nearly every other waking minute is spent caring for her husband, only 63, whose mind, memory and speech have grown ever more distant and childlike.
Meantime, her own thoughts have become consumed with details regarding Medicaid and private savings, which government agency pays for what and how much, money markets and IRAs, laws in Kansas as opposed to Missouri, division of assets, “spend downs,” “five-year look-backs,” Social Security and — no small concern — whether she actually will be able to get by financially if Randy suddenly needs to be placed.
“It’s scary,” says Denise, 61, of Olathe. “Once Randy goes in, all of his Social Security money will go to the nursing home. I’ll be living on what I make, which isn’t a lot.”
Shortly after 4 p.m., she parks in front of a two-story law office in Overland Park.
“How are you, Denise?” attorney Karen Weber says with a large smile, greeting Denise at the door.
At 45, Weber is petite and friendly, an elder-care attorney at her own firm who possesses the kind of professional calm and measured demeanor that one imagines settles clients’ jittery nerves. When she speaks, it invariably is slow, careful and simple in the way a grade school teacher might explain two-digit math.
This is Denise’s second appointment with Weber in six months and even at $250 an hour, she feels fortunate to have a lawyer she trusts. Before finding Weber, Denise went to a different attorney for what was supposed to be a consultation. He wanted $5,000 up front before he’d do anything. Although such a demand is neither unusual nor illegal, it seemed mercenary and cold to her.
“I left and never returned,” Denise remembers.
Now, seated at a polished table, a file folder open in front of her, she finds herself emotionally and cognitively conflicted.
For more than 35 years, she built her life as half of a committed couple: Randy and Denise, husband and wife. They built their home together. They had their boys, Justin and Jordan. Until nine years ago, when Randy’s dementia began altering his personality, then robbed him of his language, she always imagined that they would enter their dotage as one of those loving and connected pairs who stroll together as they age.
But now she is discovering that to afford to care for her husband as best she can, part of that connection, the financial part that bound them for decades, must be severed. She knows in her head that it is the right and practical thing to do.
“I’m just having trouble with the heart side of it,” Denise says.
She shows Weber paperwork on a small mutual fund account.
“I bet you have your sweet husband as the primary beneficiary on that,” Weber says. “We will want you to change that.”
Denise contacted a lawyer early because she wanted to be prepared.
Many years ago, when Denise was 20, her mother, Roberta Easley Perrine, was diagnosed with leukemia. She was 45 and, despite going in and out of the hospital for blood transfusions, she never told her three daughters how dire the illness was.
“She protected us,” Denise says. “She never said a word.”
Then one day at work, Denise received a call from the old St. Mary’s Hospital to come quickly. It had been barely six months since the diagnosis. Her mother died that day. Although Denise and her sisters remain extremely close, neither their father nor the family was ever quite the same.
“It’s sad still after all these years,” says Denise.
The decisions regarding Randy will be hard. But she doesn’t want to be in the dark.
Weber had already confirmed what most people quickly discover:
Unless Denise was significantly wealthy, she would have no prayer of paying the $72,000 a year it would cost on average for Randy’s nursing care. Decent long-term care insurance could have helped a great deal, but Randy was only 54 when his personality began to change. By the time a neurologist diagnosed him properly more than four years later, in 2009, the disease had set in so deeply he wasn’t insurable.
Weber often must disabuse clients of misconceptions about long-term care. Chief among them, she and others say, is the notion that Medicare, the government insurance program for the elderly, is set up to pay the lion’s share of the costs of care. In fact, for all intents and purposes, it pays nothing.
There are limited exceptions. If an ill or injured patient is being transferred to a nursing facility from a hospital for short-term rehabilitation, Medicare will pay for up to about 100 days of care in a nursing facility. After that, it’s done.
“Many people are shocked that Medicare doesn’t cover long-term care,” said Michelle Niedens, director of education, programs and public policy for the Heart of America Chapter of the Alzheimer’s Association.
For those not covered by long-term care insurance, that leaves two prime options: Self-pay or Medicaid, the government insurance program for the poor and disabled. Veterans can get care partially paid for through the U.S. Department of Veterans Affairs Aid Attendance benefits program, but Randy isn’t a veteran.
Self-pay is exactly what it says: Families, spouses, children using their personal resources to pay for the care of their loved ones. Some will do so — exhausting their savings, their retirement funds, even mortgaging or selling their homes — out of a moral sense of duty. Others struggle to do so because they hold strong beliefs about not relying on the government or think the government should not be forced to provide what they can provide themselves, even if it takes their last pennies.
For a select few families of significant financial means, $6,000 or more per month is affordable. But Weber says that in her experience, it often doesn’t take long before even wealthy families look for alternatives.
“On average?” Weber says. “Two years.”
Denise and Randy aren’t wealthy or poor.
“Oh, no, very middle class,” Denise says.
So are her sons. Jordan, at 28, works as an aide at a nursing home while he’s applying to nursing school and planning on getting married. He already has significant loans of his own and, in the recent past, went through very hard times with work layoffs and a battle against testicular cancer.
Justin, at 32, has a young family and a relatively new job with Winchester Ammunition in St. Louis that he took, too, after a layoff that created debt.
The two sons feel terrible that they can’t help more. When Justin’s new job required him to move to St. Louis, the decision to leave tore him up.
“I still feel guilty,” he says.
The brothers and others in the family are divided on what’s best for their father and mother, who is the prime caregiver. Justin would like to see his dad cared for longer at home. Funds through Medicaid, the federal Older Americans Act and other sources are available to make that possible. But Jordan, along with Denise’s two sisters, wonder if it’s smart to put off the inevitable:
Pretty much everyone with Randy’s form of frontotemporal dementia eventually requires 24-hour care before they die of the disorder, typically about eight years after diagnosis.
In front of Weber sits a list of the couple’s modest incomes and assets.
When Randy fell ill, it was Denise who had to dissolve his concrete business, pay off creditors and rummage through storage lockers to sell his Bobcat and other equipment.
As the list shows, they don’t have a lot.
Denise currently makes just over $1,800 a month; Randy gets $2,198 in Social Security.
Their home’s value is $146,800, but they still owe more than $100,000 because of a second mortgage. Denise already knows she’ll have to start working full time again just to pay the bills.
One 2004 Mercury Mountaineer worth about $5,500; one 1987 Bayliner boat with trailer, $600.
Two IRAs in Denise’s name totaling $14,000.
Five other money market, IRA and other accounts totaling $70,000.
For Medicaid to pay for Randy’s care, he must be virtually destitute, with personal assets totaling no more than $2,000 under Kansas law, or $1,000 if he lived in Missouri.
In harsher days, the law required that both husband and wife, seen as a single economic unit, exhaust nearly all joint assets before Medicaid would pay for nursing care for one spouse. The result, sad but predictable: Thousands of elderly lifelong mates divorced so that one could be deemed poor and receive nursing care.
For couples who didn’t divorce, one destitute partner got care and the other was left with nothing.
But that changed in 1988 when Congress passed the Medicare Catastrophic Coverage Act, allowing married couples to participate in a legal division of assets so one partner could receive long-term care under Medicaid while the at-home “community spouse” could hold on to some money and the home.
“I know I’m not the only one going through this,” Denise says. “It’s horrible navigating all this. But I don’t want to be caught unaware. I’ve started all this to be a little pro-active. What if one day he (Randy) suddenly can’t feed himself or is incontinent? Who wants to be doing all this under duress?”
It’s hard enough as it is, she says, even with Weber now providing a financial compass.
By federal law,Weber tells Denise, five prime items are exempt from the tally of assets. Each year, some of the federal dollar figures change, but for 2013 they’re set.
First, she can keep the house, as long as it has an equity value of $536,000 or less. Second, one car per household. Third, all household goods and their belongings. Fourth, the cost of all irrevocable funeral plans are exempt as is the cost of a service up to $7,000. Fifth, term life insurance plans are exempt and so are whole-life plans as long as the cash value is less than $1,500.
In Kansas, but not in Missouri, Medicaid law also allows her to keep any money she has in IRAs that are in her name only. That’s $14,000.
All totaled, that means Denise will be required to split only the $70,000 they share in the five other accounts. Denise will get to keep half, $35,000.
If Randy goes to a nursing facility, it will use the $2,198 he gets each month in Social Security to pay for part of his care. Before Medicaid jumps in to pay the rest, the couple will have to “spend down” his $35,000 to no more than the $2,000 cutoff.
There are tons of other financial rules and matters to consider.
If Denise and Randy were far richer people and, for example, had $800,000 to divide between them, Medicaid technically wouldn’t pay out until Randy spent down $400,000. That would hardly leave Denise in the clear. Medicaid pays out only if the community spouse gets $115,920 of the divided assets or less. That would mean Denise would also have to spend down her $400,000 to that limit.
People with significant means can choose to pay their own way. But if they anticipate nursing care in the future and want to secure their assets, they need to begin planning early, Weber says. They need to look at protective tools, such as renaming beneficiaries or putting funds into irrevocable trusts.
How Denise chooses to spend down Randy’s $35,000 largely is up to her.
Odds are, Weber says, if Denise places Randy she should count on paying the cost of the first month’s care herself as it often takes that long to file the paperwork and receive Medicaid approval.
In fact, before Randy is approved, the state will do a “five-year look-back,” meaning it will look back that far into the couple’s finances to make sure they are truly financially eligible. The look-back is simply the state’s way to assure, for example, that families aren’t shifting assets in any improper way, or giving family members significant amounts of money that could have been used for care, just to qualify for Medicaid.
“The state doesn’t like seeing big gifts,” Weber says.
In cases in which the state does find that money has been shifted or given away, as a penalty it can choose not to authorize Medicaid to pay for care for anywhere from a few weeks to five years, meaning people must foot the bills themselves for that period.
But as far as Randy’s half of the divided assets go, Weber says, Denise will be allowed to spend that down for almost any “fair market transaction.”
She can buy a newer car, make repairs to the house, buy those prepaid funerals, pay down a bit of the mortgage or credit cards. Weber frequently makes one suggestion that few ever take.
“Some people have been exhausting themselves caring for their spouses for 10 or 20 years,” Weber says. She estimates that about 15 percent of the care-giving clients who come to her die before the person they are caring for.
“I often encourage my clients to take that long-overdue vacation,” Weber says. “The guilt is great. Not a lot of people do it. But I still encourage them to grab your son, grab your daughter, call that best friend. It is a fair market transaction. You can take that cruise to Europe you never got to go on as part of the spend-down.”
The emotions, the guilt, the finances: Many nights Denise’s mind spins with it all.
“I pray for strength,” she says.
Before leaving, Denise has one more issue to raise. It’s about Randy’s mother, Anna Blackman of Lee’s Summit, who is 83 and widowed.
Randy is her only biological child. She thinks placing him in a nursing home will kill him sooner. She also owns a significant amount of real estate that, upon her death, is to go to Randy and, by extension, to Denise.
Weber is immediately concerned.
“In a nutshell, she needs to get that out of Randy’s name and into the boys’ names,” she says, meaning Justin and Jordan.
The reason is simple. If Anna should pass away before Randy and he receives an inheritance, he will lose his Medicaid eligibility. Medicaid will no longer pay for his nursing care. Should the inheritance flow to Denise alone, Medicaid will not touch it or any of Denise’s other assets, such as her house or car or bank accounts, while she is still alive, even after Randy passes.
But Medicaid doesn’t offer a free ride.
If, after both Randy and Denise die, she continues to have assets in her name, the state’s Estate Recovery Unit will definitely and quickly come looking to recoup any money it spent on Randy’s nursing care.
If Denise has a house worth something, the state will make a claim on it, see it sold, and make sure it gets what it spent. Not a penny more, but also not a cent less if it’s there to be had.
It won’t matter if Denise, say, leaves her house or any money to Justin or Jordan in her will. If the state ends up paying $100,000 for Randy’s care and the house will bring $150,000 at sale, the state will take what it is owed and the boys will get what remains.
So, as soon as possible, Denise will talk to her mother-in-law about removing Randy and herself from any inheritance.
“If this is in the boys’ names, we’re as good as gold,” Weber says.
Denise knows how her mother-in-law feels about the nursing home.
“She’s dead set against it,” Denise says.
It always seems there’s one more thing to do.
Tuesday: Although the final decision will fall to Denise, this is a family matter and the family is divided.