Nellie and John.

Nellie Alford faced an agonizing decision last fall.

The 81-year-old Snellville woman’s 84-year-old husband, John, had been diagnosed with dementia, and her doctors told her his needs were too great for her to continue taking care of him at home.

As if deciding whether to place her husband of 43 years into a long-term care facility wasn’t a gut-wrenching enough decision emotionally, finances also played into it.

A program called estate recovery was looming at the time. Under estate recovery, any money the state spends through the Medicaid program on long-term care must be repaid by the elderly patient’s estate after they die.

“I was told that if you do go on Medicaid and your spouse dies, you have to pay that money back when your property is sold,” she said. “I didn’t want (our children) to have to go through that.” With help from an estate planner, Alford found a way out of her dilemma. Instead of signing up for Medicaid, she is using her husband’s veterans benefits to help cover the costs of a nearby assisted-living facility, a steep $2,200 a month.

But other citizens weren’t so fortunate. As the estate recovery initiative was about to take effect in their state at the beginning of last month, more than 100 families took their elderly mother or father out of nursing homes rather than continue receiving Medicaid benefits and, thus, become subject to estate recovery, said Ann Williams, legislative chairman for the Council on Aging.

Another 300 elderly folks withdrew from the state’s community care services program, Williams said.

“They’re looking at other ways to do these things because they don’t want estate recovery,” she said.

A Long Lead Time

While those families were caught unprepared, the state Department of Community Health had been laying the groundwork for estate recovery for two years.

The program dates back to 1993, when Congress passed legislation requiring states to develop estate recovery plans as a way to cut spending on Medicaid, the joint state/federal health care program for the poor and disabled.

Their state became the 49th state to comply with the mandate when its estate recovery initiative took effect on May 1.

But a great deal of uncertainty surrounded the advent of the program, complicating the options facing families with relatives in long-term care.

Alarmed by the implications of estate recovery for families, members of the State General Assembly passed a bill in March aimed at lessening the burden. The measure exempts from recovery the first $100,000 of the value of an estate and prohibits the state from enforcing estate recovery retroactively.

Board members did not expect the feds to approve the $100,000 cap. The state appears to have a better shot at gaining an OK not to make the program retroactive.

Exploring options

In the meantime, families with elderly parents are exploring ways to get them the long-term care they may need, but also keep them off Medicaid. An option that is drawing more interest is long-term care insurance. LTCi has been around for years but tends to be expensive and is impossible to get once one’s health suggests that one might need care.

Estimates are that fewer than 5 percent of people over 65 have long-term care insurance, and only 2 percent of people entering nursing homes have the policies.

“When I speak to senior groups now, they always bring it up,” he said. “But by the time a person enters a nursing home, they’re usually in their 80s. That’s a little late to start. … That’s why we’re really pushing for people who are still healthy to go ahead and get long-term care insurance.”

One development that is increasing interest in long-term care insurance is a provision in the Deficit Reduction Act recently passed by Congress that allows people to shield some of their assets from estate recovery if they have long-term care insurance.

“It’s expensive,” it was said. “But hopefully, when there is more volume, the premiums will go down.”

Mark Lloyd, an estate planner who helped Alford apply for John’s veterans’ benefits to help cover her husband’s long-term care costs, said various forms of assets, including certificates of deposit, can be used to pay nursing home bills.

Home equity also could become an option.

Congressmen are planning to introduce legislation allowing people to use reverse mortgages for long-term care costs.

“Keeping the savings protected, the estate protected and the home protected, that’s their thinking,” Lloyd said. “They don’t want to see it all go away and let their family down, yet these care costs won’t simply disappear, and must be covered somehow.”

Alford said she was lucky that the veterans’ policy provided enough money to put her husband in a good assisted-living facility. She said she visited several that were less expensive but found them unacceptable.

“I didn’t like them,” she said. “I couldn’t think about putting him in a cheaper one.”