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Nursing homes deserve the fees that would-be heirs often want

Eric Bergeson portrait
Eric Bergeson

FERTILE, Minn. — According to some in the business, Minnesota's nursing-home system is in financial trouble in large part because people seem to think that no matter what their net worth, when it comes time for long-term care, they have a right to go on the dole. 

"Well," they say as they set up a way to hide their assets, "if we don't do something, it'll all just go to the nursing home!" 

Since when is it unfair to expect a person to use their assets to pay for their own care? 

Yet, when faced with a $3,000 per month bill, people who spent their lives looking down their noses at people who live on welfare suddenly think they're entitled to it themselves. 

Potential heirs

Sometimes it is offspring salivating over their parents' wealth who become the most infuriated at the cost of nursing-home care. 

"Ma and Pa's money's going to be gone before I get my hands on any of it!" the moochers lament.

The vultures forget that they don't have any right to any of Ma and Pa's money in the first place. Ma and Pa's money is for the benefit of Ma and Pa alone. 

Greedy relatives who are offended at the cost of nursing-home care should consider caring for their elderly relatives themselves and see how they like that. 

The assumption seems to be that the nursing home doesn't provide any benefit in return for what it charges. In fact, nursing homes provide a tremendous service at the lowest rate possible. 

Underpaid workers, important work

Nursing homes are staffed by underpaid workers who do some of the most important and sometimes unpleasant work in town. 

In addition to providing medical care, nursing-home staff are often the only "family" elderly people have. 

Nobody's making big money. Few nursing homes even make a profit. After recent state and federal cuts, most facilities in Minnesota are skidding along just below break even. 

At the present rate of funding, the system will bleed to death.

A great system, worth paying for

We have a great nursing-home system in rural Minnesota. Unlike other parts of this country and the world, we take good care of our old folks. 

But it takes money to provide humane and competent 24-hour care. That money has to come from somewhere. 

Some people can afford to pay their way, others cannot. Some can afford to pay for a while before having to go on assistance. That's how it was supposed to work. 

Gaming the system

The system was not designed to handle people who have plenty of land or money who think they have a right to go on public assistance rather than pay their own way. When these people lawyer up to "protect" their assets, they do little more than game the system. They are bankrupting it in the process. 

The only beneficiaries are usually ungrateful children.

Inheritance is not a right. In fact, it is downright evil. Inheritance creates hard feelings between generations. It makes some people wish others dead. 

Of course, the law has loopholes that permit people to pass their assets on while they go on welfare. There are lawyers who do nothing but find perfectly legal ways to do this exact wrong thing. 

But because of  these loopholes and those who exploit them, we are eventually going to have to raise taxes on people in their productive years to keep our elder-care system afloat. There is simply no other way to preserve a decent system of elder care that is about to be overwhelmed by an age wave. 

An ingenious alternative

One Minnesota legislator has come up with an ingenious solution. 

As tax law stands now, you stop paying Social Security taxes on income over $110,000. Above $110,000, your effective tax rate actually goes down. 

Minnesota could simply apply the tax rate of those who make just under $110,000 to income above that by replacing the Social Security tax with a state tax devoted to elder care.

Such a tax could raise $1 billion in revenue annually. 

It would place Minnesota's elder-care system on a solid footing for decades to come. 

Probably little chance

It would also be the largest tax increase in Minnesota history. For that reason, I doubt the idea stands a chance – at least until old people start getting thrown out on the street. 

In the meantime, however, we should have no sympathy for people who scurry to find a way to keep their money away from the nursing home so they can give it to their kids. 

The kids don't deserve it. Ever. 

The nursing home does. 

Eric Bergeson, of Fertile, Minn., is studying rural long-term care under a two-year fellowship from the Bush Foundation.

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Comments (4)

Part right, all offensive

Yes, greedy relatives do not have the right to mooch off the system because they're too immoral to pay for the care of their parents/grandparent/other relatives. But...there's a difference between assets and liquid assets. This is particularly true in rural areas where farmers may be "worth" a great deal, but have very little money. The inheritance of land does not equate to the ability to pay anything. Often, in those cases, where a parent ends up in long term care, it's not really a matter of selling "their" land to pay for it. Often, the child/children are already working that land and/or acting as landlord for leased land. So, yeah, they probably do deserve "their cut." Plus, the value of the land is often less than the money that it earns when sold, as it's actually an entire career that's being sold. In other words, the problems with long term care in rural areas is much more complex than simply greedy kids.

As for providing for the long term care of those that were perfectly comfortable before they got old or ill? It's pretty interesting that the children will often wail about the cost of long term care and then rage about the shoddy care their parents sometimes get. Uh, well, you get what you pay for. For estates that aren't tied to agriculture or directly to some other business that may be inherited, the loopholes that protect those estates from long-term care givers should be sewn tightly shut. And for those that game the system, really, it's a version of elder abuse.

Finally, we're living longer and longer. Often beyond a point where we really want to. I know that the term "end of life care" has been somehow translated (twisted) into "death panels," but, at some point we have to wonder whether long term care should really be end of life care. Doctors having candid conversations with their patients about their patients' wishes regarding old age and terminal diseases could result in an overall reduced cost of long term care.

A "Great system"?

If Mr. Bergeson thinks we have a "great system" going with our nursing home system, he's entitled to his opinion. Having seen a number of older individuals close to me go thru the system unto death I would have to disagree. To my eye, it looks like every effort is made to get as much as possible from the patient/insurance and, if timing is good, death comes at the exhausting of assets. Granted, there are individual humans who care a great deal, and who collectively are responsible for all of the "care" in the system. They are at the bedsides, not in the administrative offices. Putting the aged in nursing "homes" is part of our lifestyle of convenience, considered the "normal" thing to do. And it is necessary, I suppose, if one's life is not to be interrupted. Visits can fit into a schedule that works with our oh so busy lifestyle. I can't say how many times I found loved ones parked by the tele and medicated to the gills. No bedpan in the room, one nurse for two floors and one aide (yes, illegal but it does happen). Perhaps once, when the concept of "nursing home" was originated, it was a "great" idea. Today, in our capitalized nation, it's just another industry with a bottom line, and "clients" are being hung on that line.

Ingenious solution, perhaps. Unfair, definitely.

So, those with individual earnings in excess of $110,000 and subject to social security taxes would pay for long term care for all? Sounds like a dumb idea to me. Is that the individual's share or would businesses be taxed for their contribution as well?

Quality of care issues aside, financing extended care facilities is a major problem, greatly exacerbated by efforts to shield assets from the reach of the state. At present, that's a five year window, which primarily affects those who don't consider the issue until the reality of their need is upon them. Can we push it back even further? Perhaps, but we'll need to consider the impact of reducing the transfer of wealth from one generation to another on such things as financing post-secondary education, purchasing homes, etc.

As for inheritance rights: I've always been a believer in "last breath, last dime". If people are concerned about the transfer of family businesses, including farms, there are any number of ways to accomplish this so long as the five year window is honored. One thing few seem to consider, in my experience, is long term care insurance. While not inexpensive, its cost seems reasonable when one considers the value of the assets that may be at issue for those who want to pass along a family business or simply leave something for their offspring.

Then again, we can always enact assisted suicide laws for those of us who prefer not to spend our final days, months or years warehoused.

long-term care insurance

The State of Minnesota was so thrilled several years ago to know that I had, since 2000, a long-term care insurance policy, complete with the annual 5% compounding of all coverage levels, that it sent me a letter telling me that they would let me keep the monetary value of my home if ever I ran out of that insurance coverage and had to reduce my net worth to go on Medicaid for care. They appreciated my foresight and knew that I would end up supporting the costs of others not so careful.

Fascinating, though, was the fact that I'd never heard of the passage of that law! Nobody knows about it. Nobody has been encouraged to think of long-term care insurance when it's cheap, like when one is still in one's 40s. There are no seminars held by employers, no state emphasis on foresight.

Family greed, though, is the saddest part of what happens when the old get older and nearer death. I guess that can't be legislated against or taught out of existence through seminars.