Long Term Care Insurance

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The Government Will Pay For My Long Term Care Expenses

Medicare Payments For Long Term Care

Medicare may be one of the most misunderstood government programs in defining what is actually covered for long-term care services.

Medicare is a Federal health insurance program for people who are 65 and older, certain people under the age of 65 with certain disabilities and for people of all ages with End Stage Renal Disease (ESRD) and ALS.

Many people believe their health insurance will pay for long term care, but when they actually review the coverage, they find that it does not.

Who Pays For Nursing Home Care?

Medicare pie chartAccording to this pie chart, Medicare pays only 20.4% of the nation's nursing home bills. Most of this is short term in scope.

There are two parts to Medicare, Part A and Part B. As it relates to long term care, Medicare Part A can pay for skilled nursing care, home health care (very limited in scope) and hospice (if you qualify).

Visit our Medicaid information section for more information. Source: US Department of Health and Human Services Administration on Aging, 2008 and Health Policy Institute Georgetown University..


Medicare Skilled Nursing Facilities

Medicare does cover some expenses from time in a skilled nursing facilityMedicare is not an adequate solution for paying for long term care expenses, because it only has the potential to pay for a maximum of 100 days in a skilled nursing facility. Medicare is designed for recuperation and rehabilitation following surgery, an accident or an illness.

Medicare requires that you have a 72 hour hospital stay prior to entering the nursing home. You then need to be receiving skilled care on a daily basis at least five days a week. You must also show daily improvement. There are additional criteria as well.

Medicare will pay for the first 20 days in full. There is a co-pay for the next 80 days. Most Medicare Supplements will cover your co-pay for these 80 days. The most Medicare will pay is 100 days per benefit period. Medicare Advantage plans vary greatly in their coverage of a skilled nursing facility. Many of the plans require you to pay a co-pay for a majority of the 100 days.

Medicare Home Health Care Benefits

Many people mistakenly think that Medicare will pay for home care. Medicare does not pay for full-time long-term home care. Medicare will only pay for home care if you meet ALL of the following conditions.

  • You doctor decides you need care at home and makes a home care plan for you.
  • You must need at least one of the following: intermittent skilled nursing care, physical therapy, speech-language therapy or occupational therapy.
  • You must be home bound or normally unable to leave home unassisted. To be home bound means that leaving home takes considerable and taxing effort.
  • The home health agency must be approved by the Medicare program (Medicare-certified).

There are limits on the number of hours per day and days per week that you can get home care paid for by Medicare. The services are covered on an "intermittent" basis only. Medicare defines "intermittent" as care that is needed or given on fewer than 7 days each week or less than 8 hours each day over a period of 21 days or less. In general, Medicare provides health insurance and limited short term skilled nursing care.


Medicaid Payments For Long Term Care

Medicaid is a joint federal and state program that pays for medical care for individuals who cannot afford to pay for their own medical care. To qualify for Medicaid, an individual must have limited income and few assets.

Medicaid eligibility rules are complicated and different states apply different rules. Each state operates its own Medicaid program. Medicaid pays for a majority of our nation's nursing home costs. Unlike Medicare, Medicaid will pay for both skilled and custodial care, but in most cases is limited to care in a nursing home.

The disadvantage to relying on Medicaid is that you will be very limited in your choice of nursing homes. There are only a limited number of Medicaid beds available in a nursing home, provided they take Medicaid at all. Many facilities fill those beds with current residents who run out of their own funds.

Income Limited

The income of a Medicaid nursing home patient must generally be used to pay the costs of long-term care. You are income eligible if your income is at or below the state determined rate or the nursing facility's private pay rate. You may be required to pay part of the cost of your care.

Generally speaking, if you have enough income to pay for our own care, you will not qualify for Medicaid even if you meet the asset requirements. If a couple has enough income to provide the at-home spouse (community spouse) with the minimum income requirement and pay for the nursing home spouse's long-term care, they will not qualify for Medicaid even if they meet the asset requirements.


Transferring Your Assets to Qualify for Medicaid

The rules have changed regarding asset transfers to qualify for Medicaid.The Deficit Reduction Act (DRA) of 2005 made significant changes to Medicaid law. It makes it harder to qualify for Medicaid. Medicaid was designed to provide the truly poor healthcare services. There are seven important things to know about the Deficit Reduction Act of 2005.

1. Change in the start of the penalty period. The start of the penalty period for someone who has transferred assets changed from the date the transfer was made to the date a person applies for Medicaid.

2. Increasing the look-back period. The look-back period for all asset transfers is extended from three to five years. This change affects only transfers made after February 8, 2006. Also, multiple transfers can be treated, at the State's discretion, as a single transfer and begin the penalty period on the earliest date that would apply to the transfers. This applies to the transfer of assets at less than fair market value (i.e. to children or others or to a trust). We would like to add that one thing to think about is that if you transfer your assets into your child's name, that asset is no longer under your control. If your child is involved in a law suit, divorce or needs care him/herself; it is considered her/her asset. You have lost control over the disposition of the asset.

3. Annuities. The applicant and spouse must disclose any interest they have in annuities and provide a statement as to the remainder beneficiary status. Annuities will need to name the State as primary beneficiary for the amount of Medicaid assistance the State provided to the annuitant.

4. Law Mandates the Income First Rule. The spouse at home can keep either the spouse's monthly income or set aside assets to generate the difference between his or her monthly income and the federal minimum. This is the income first rule and requires the community spouse (one at home) to spend down assets before the other spouse could qualify for Medicaid assistance.

5. Home Equity. Before DRA 2005, the value of the individual's home equity was not considered. Now if the individual has home equity above $500,000 they will not be eligible for Medicaid coverage. (States have the option to raise the limit to $750,000). Beginning in 2011, these amounts will be indexed for inflation. The maximum amount does not apply if the home is occupied by the applicant's spouse or by a child under age 21 or who is blind or permanently disabled.

6. Hardship Waivers. States are required to put together rules that will waive any of the new provisions should they pose an undue hardship.

7. Long term care Partnership Program. The Partnership Program previously in place in only four states (NY, CT, IN and CA) has been extended to any state choosing to implement it. A key feature of this plan is that assets equal to the amount of long term care insurance benefits may be disregarded for Medicaid eligibility purposes.

At Imagine Insurance Advisors, we have received specialized training in the Partnership Programs and how they work. We can help you understand what it means to you, particularly if you reside in Kentucky or Indiana. We fully support the implementation of Partnership Plans in all states.

The main message you should get from this section is that you need to provide for your own care as the government is making it more difficult to qualify for government assistance. This makes it more important for you to meet with a long term care specialist to see if long term care insurance makes sense for you.