Medicare may be of the most misunderstood government programs in defining what is actually covered for long-term care services.
Medicare is a federal program that is available to most people at age 65 or those with end stage renal disease.
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?
Source: Centers for Medicare and Medicaid Services. Office of the Actuary. 2003 Projected Expenditures. Data released January 2002.
According to this pie chart, Medicare pays only 10.8% of the nation's nursing home bill. Most long-term care is not skilled care and that's what Medicare primarily pays for.
There are two parts to Medicare, Part A and Part B. As it relates to long-term care, Medicare Part A will pay for skilled nursing care, home health care (very limited in scope), and hospice.
Medicare skilled nursing facilities
Medicare is not an adequate solution for long term care, because it only has the potential to pay for up to a maximum of 100 days in a skilled nursing facility.
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. There are additional criteria as well.
Medicare will pay for the first 20 days in full, and will pay for all costs except a copay in 2004 of $109.50 per day for the next 80 days. Some cover your copay cost for those 80 days.
It is important to point out that if you only needed custodial care, you would not receive any Medicare benefits, as Medicare pays primarily for skilled care only.
Recent studies indicate that close to 80% of all long-term care patients simply need help with the activities of daily living rather than medical treatment.
Fitch, "Long-Term Care: An Industry in Transition," January 18, 2002 Medicare home health care benefits
Many people mistakenly think that Medicare will pay for an unlimited amount of home care. Medicare does not pay for full-time long-term care. Medicare will only pay for a limited number of visits.
In general, Medicare does not adequately cover long-term care expenses. Typically Medicare requires that you are getting better or showing improvement.
 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 it's 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.
Income Limits
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 $1,656 a month in Kentucky, or $1,273 in Indiana, 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 your own care, you will not qualify for Medicaid even if you meet the asset requirements below. If a couple has enough income to provide the at-home spouse with the minimum income requirements and pay for the nursing home spouse's long-term care, they will not qualify for Medicaid even if they meet the asset requirements. Asset Limits
Before a Medicaid applicant can qualify for Medicaid they must "spend down" their assets, such as cash, stocks, and most other items with cash value, until only $2,000 remains. If there is an at-home spouse, any assets above the state determined limit would have to be "spent down" as well. This does not include the house and car and a few other assets. A couple is allowed to keep at least the minimum asset allowance in their state. The division of assets for a couple can become complicated and you should seek the advice of a professional. Transferring your assets to qualify for medicaid
Many people think a solution to qualify for Medicaid is to give their assets away. The 1993 budget bill (OBRA '93) changed the transfer of asset guidelines to qualify for Medicaid's nursing home benefit dramatically. There is a "look back" period for the transfer of assets at less than fair market value (i.e. to children or others) or to an irrevocable trust. One thing to think about is that if you transfer your assets into your child's name for example, 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 his/her asset. You have lost control over the disposition of the asset. Estate recovery for Medicaid benefits
Federal Law requires every state to recover what was spent for the care of the first spouse at the death of the second spouse. State rules and practices for estate recovery vary significantly. Some states are stricter that others. In some states, placing a lien on your home is part of the Estate Recovery Act.
Veteran's health care benefits include medically necessary hospital and nursing home care and some outpatient care. The VA prioritizes veterans that qualify for care according to several categories.
Any veteran who has a service-connected disability rated at 70% or more qualifies for nursing home care. Care will be provided in a VA nursing home or contracted nursing home. The VA may provide nursing home care for other veterans if space and resources are available. Veterans who have a service connected disability are given first priority for nursing home care. Non-service connected disabled veterans requiring nursing home care must complete an income and asset assessment to determine whether they will be billed for nursing home care. The VA will pay for care only in contracted nursing homes. It will not pay for a private nursing home.
At AM Warner Insurance, we know how complicated this seems!
 Allison Warner, President of AM Warner Insurance understands all these issues and requirements. She has the unique talent of taking the complicated government and state requirements and revealing the programs in easy to understand language.
Contact Allison today and of the process in your home or office. She can help you to understand the guidelines and criteria and offer solutions tailored to your personal needs.
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