Mom and Medi-Cal

September 8, 2013

By GORDON MULLIN

(Editor’s note: This is the first edition of a column by San Luis Obispo financial planner Gordon Mullin called A Penny Saved)

$95,136.88

That’s the sum that my deceased mother’s estate owed to California’s Medi-Cal program. That’s the amount they paid for her long-term care (LTC) in a local nursing home, and after she passed, they wanted it back.

How we got here is an instructive tale for anyone over 50 or who has a relative beyond that. Before I begin my story, let’s first get a fundamental definition down. LTC is a condition in which we all may find ourselves some day. You will, by definition, need LTC if you are unable to do on your own one of these activities of daily living: bathing, toileting, dressing, getting out of bed, eating or walking. Or, and here’s the biggie, you’re mentally impaired. Any inability with these activities will require you to seek help from someone. There’s no getting around it — you must— and where you receive help and from whom makes all the difference in the world.

My story really begins in 1979 when my dad got Alzheimer’s, or at least we think it was Alzheimer’s. It matters not what is the cause of the dementia, it’s the effect that matters. I won’t belabor this part of my story, but over the course of two years, my father turned from my loving, independent, joking pop to a man who knew not my name, nor where he was; nor was he even aware that pajamas were not appropriate attire to wear outside of his home.

My mother became his nurse, doing all things for him, and she also became his jailer for he would walk outside when she wasn’t looking, go a block and get lost. And, oddly, he became her jailer; if she attempted to go anywhere without him he would go into a rage. For almost two years their lives were intertwined in a way neither had ever anticipated. Mom hired help sometimes, just to get a break but dad would usually chase them away. He was a big man and few would deal with his wrath when mom left.

I was living out of the country at the time and one day I telephoned her to let her know I was coming for a visit. She said, and I’ll never forget her words, “your father’s not here anymore. He’s in a nursing home. I couldn’t do it anymore.”

Thereafter I’d see my dad in the LTC facility, a.k.a. nursing home. He didn’t recognize me, but I’d try to talk to him anyway. Regretfully he usually declined to chat; maybe he couldn’t. But each time when I’d get up to leave, he’d become animated and he’d ask, “would you take me home? I want to go home” and I’d have to say “no, pop I can’t”.

Within six months he died, but during those months my mom had to pay for his care in that facility. I don’t know exactly how much it cost, but I can tell you she felt the loss.

In 1998 I moved back to my old hometown, in part because mom was 84 and I felt I couldn’t be so far away. It seemed she needed help, not a lot, just some. As time went on, I found myself at her home more and more taking care of simple events: cleaning, cooking and handling her affairs. She became progressively forgetful — leaving boiling water on the stove, forgetting how to make her own breakfast. Eventually, it just seemed easier if we lived together and I moved in.

Over the course of several years, the son became the parent and my mother became the child. Dressing and bathing were daily arguments, but I could handle that. I thought I could handle anything,everything, right up til she broke her leg. From the hospital she went to a local nursing facility.

Mom lived there for 27 months, trapped in her wheelchair, unable to do anything for herself. The dementia progressed and in the last year, she forgot not only my name but hers as well.

We eventually went through her funds paying for her care and that’s when Medi-Cal kicked in paying for the facility when she had no money left, just her home. And then she died and now Medi-Cal wants to be paid back for the payments they made. It’s the law.

And that’s how we got to here today.

The California Deptartment of Aging says that if you reach 65, the odds of being in a nursing home for more than a year is one in four. Hence, the odds of needing LTC are even higher than that since many who will need LTC may not go into a nursing home but will receive help either at home via the growing home health care industry or in the new assisted living alternatives. Note neither of which are paid for by Medi-Cal and only in limited circumstances by Medicare.

We all make choices today about the future and planning for how we will pay for LTC has become one of the most critical components of financial planning for the retired. In short, there are only four means to fund or manage the cost of LTC.

First is turning to your family to provide support. We have for centuries presumed that our kids and relatives would clothe and bath us when that time came and if you’re comfortable with that choice, and the kids agree, you’re done. However, if you don’t foresee your sons and daughters taking you into their home and providing LTC for you, you may want to consider the alternatives.

Second is paying for it yourself. If you have the funds and don’t mind spending them, you now have a plan. Consider also the ramifications if your family’s money is spent on your care, i.e. where may that leave the surviving spouse financially.

Third, turn to an insurance company and purchase an LTC policy. The premiums become higher the older you are when you apply, just like life insurance so look into buying a policy earlier rather than later. Plus, you have to qualify, medically, and I’ve seen many folks wait too late and they’re rejected by the insurance company due to pre-existing conditions.

Lastly, you can (probably) count on the government covering your LTC costs in the end, but only A) when you’re in a nursing home and B) after you’ve already spent down your assets sufficiently to ‘qualify’ for aid. And, like in my family’s circumstances, while a home may be an exempt asset while you live, after death, the state will seek recovery of their money by forcing the sale of the now not exempted assets.

The choice is yours.

Mullins can be contacted at gordon.mullin@natplan.com, or his office at (805) 592-2220 or through his website- www.gordonmullin.com.

Securities and advisory services offered through NATIONAL PLANNING CORPORATION (NPC), Member FINRA/SIPC, a Registered Investment Adviser.