It’s just about football season so let’s talk about penalties. Unfortunately, the beginning of football season coincides with when the HHSC completes their review of nursing home costs in Texas. The results of that review dictate the length of Medicaid penalties for everyone in Texas.
This is a big deal for me as an elder law attorney because their findings impact what I can do for you, it kind of establishes the boundaries. This is also important for families that tried to give away assets the wrong way because it determines how long their penalty is and basically how badly they screwed themselves. Hopefully that’s not you. So let’s see what we are working with as of September 1, 2017.
The New Daily Rate
The HHSC found a new average daily rate of $172.65. Some facilities charge more while some may charge less.
The previous daily rate was $162.41. This is an increase of over 6% since the previous revision.
The average monthly cost of a nursing home is now $5,251.
For one year, the average nursing home cost in Texas now exceeds $59,000! How long can your family afford to pay $59,000?
What Does This Mean?
As I said, this news has a lot to do with penalties. But how?
The HHSC calculates the length of the penalty period by starting with the uncompensated value of an asset transfer. They then divide it by the average private patient cost of nursing facility care in Texas. The average cost to a private patient of nursing facility care is the “private pay rate” or the “penalty divisor.”
The penalty divisor is revised as nursing facility care costs increase. As of September 1, 2017, the HHSC set the penalty divisor at $172.65 per day. This means that the Health and Human Services Commission has calculated that the average monthly nursing facility private pay rate in Texas is $5,251 every month. The penalty divisor is different in each state.
Now that you know how this variable fits into the puzzle, let’s dig deeper.
Calculate Your New Penalty
This is how you use this new number to figure out your penalty for trying to protect assets the wrong way. Every $172.65 that your parent transferred now equals 1 day of no Medicaid benefits. If you carry that out to a month, then that means they lose one month of benefits for every $5,251 they gave away.
If you think that is not so bad, remember the big gotcha with Medicaid penalties is not just the duration but when they begin. A penalty of a few months is a much bigger deal when you already have no assets left (spoiler alter: that’s when the penalties begin to run).
As you can see, the HHSC rules can be complex. If your parent is considering making gifts or other transfers of assets they should consult with an experienced elder law attorney in The Woodlands, TX before completing the transaction. You don’t want surprises when it comes to Medicaid because surprises are usually very expensive.
Your New Opportunity
There is a silver lining for rising nursing home costs. The higher costs actually allows me to protect more assets from nursing homes for my clients. It may sound counter-intuitive but that is how the calculations work out.
So for example, before this change I would have been able to protect $169,789 in a case I am working on right now. But, with this new number I can now protect $173,500. It’s not winning the lottery, but it is still an additional $3,700 in proven, legal asset protection for this client’s children.