A hospital bed is a parked taxi with the meter running.
– Groucho Marx

Alexis Rodriguez, an unemployed doorman, expected he would get a hospital bill after his three-week hospitalization for pneumonia at New York’s Bronx-Lebanon hospital.  He almost had an asthma attack when the bill that arrived was for more than $44 million. In Mr. Rodriguez’s case, the total amount was so absurd that he realized it must be an error. He later learned that the billing company had a computer glitch and Rodriguez really owed around $300.

Hospitals and nursing homes charge you more than they charge Medicaid

Many people are surprised to find exorbitant bills in their mailbox following a trip to the emergency room, but in most cases, it is not a computer error. Hospital bills are sometimes higher than expected because they include services from out-of-network providers such as anesthesiologists. In other cases, the amount of the bill reflects the hospitals billed charge, which is on average almost four times higher than the reimbursement rate the hospital has agreed to accept from the insurance company or Medicaid and Medicare for the same service.

Nursing home costs in particular can place a tremendous financial strain on families of seniors. In a 2012 survey by MetLife, the cost of a semiprivate room in a nursing home was found to be greater than $222 a day, which works out to more than $81,000 a year. A private room cost more than $90,000 a year. The high price is especially difficult considering the length of many patients’ stays in the nursing home, which more than two years on average. It is for this reason that we recommend creating a Medicaid-based estate plan as early as possible.

The difference between nursing home charges and the Medicaid reimbursement rate

Even with proper estate planning, many families have to pay privately for nursing home care for at least the first few months until eligibility for Medicaid kicks in. They later find that the private pay rate they were charged is significantly higher than the amount paid by Medicaid. This disparity has several important ramifications, including:

  • There may be room to negotiate a better rate when paying privately, as the nursing home would still be getting paid more than it would from Medicaid.
  • Private pay patients may get preference over Medicaid patients for rooms in nursing homes filled to capacity.
  • The Medicaid regional rate used in calculating the length of the penalty period when there was a transfer of assets within the past five years is based on private pay rates. However, the actual cost of a nursing home is still more than the monthly $11,350 regional rate for New York City.

Considering the high cost of nursing home care, proper Medicaid planning is often an essential part of an estate plan. It is never too early to speak with a Staten Island Medicaid planning attorney to find out how you can benefit from a Medicaid-based estate plan.

Anthony Lamberti on G+