According to the U.S. government, over 70 percent of us will need long term care assistance. On average, people require 2.8 years of care costing over $240,000. Can you afford to pay almost a quarter of a million dollars out of pocket? And what about your spouse’s needs? Obviously, health insurance helps to cover these costs, but many people are still a little confused about how Medicare and Medicaid work during a long term health care event.
First, let’s differentiate the two:
Medicare is the government assisted health care plan for those over 65 years of age, those under 65 who have certain disabilities, and those with end-stage renal disease (permanent kidney failure). It becomes your primary health insurance after you turn 65. It is designed to take care of short-term medical conditions and does not cover long term care events.
If a Medicare covered individual requires healthcare, Medicare Part A will cover 100% of the costs for the first 20 days of care. Then from day 21- 100, the patient pays the first $140 per day with Medicare covering the rest. From day 101 and beyond, the patient pays 100% of their costs. If at any time the physician determines that the patient has moved from acute care to long-term care, the claim will end immediately (even prior to the 20 days).
In order to qualify for coverage under these restrictions, you need to already be under the care of a physician and have a regularly reviewed care plan. Your doctor must evaluate your needs and approve that you need one or more of the services covered by Medicare.
During this short period of coverage, Medicare provides several different options for rehabilitation and care. This includes:
- Nursing facility
- Part-time nursing care
- Physical, occupational, and speech-language therapy.
- Social services to help you to cope with the social, psychological, environmental, and cultural issues related to your illness.
- Follow-up care which is designed to help you learn more about your illness.
- Medical equipment like wheelchairs, oxygen, and hospital beds.
- Hospice care if you are not expected to live more than 6 months. This also includes the medications needed to control the illness and pain. Hospice care can be done at your home, in a nursing home, or other hospice facility.
Keep in mind that for each of these services, you must go through a Medicare-approved provider. Be sure to contact the care center in order to understand those services that will be covered. If certain items are not covered, have the agency explain to you personally and in writing how much you will be expected to pay.
As long as your physician continually requests one or more of these services every 60 days for you, there is no limit to how long you can benefit from them.
You may be thinking, “But if I purchase a Medigap policy to supplement my Medicare coverage, then surely I won’t have to worry about long-term care costs.” Unfortunately, you would be wrong. Medigap can be a helpful supplement. It is a plan offered by private insurance companies to help pay for these extra costs. And you don’t need to cancel your original Medicare plan to have Medigap. There are ten Medigap plans available, that help pay for everything from deductibles, coinsurance, and excess charges. However, long-term care is excluded.
Medicare is designed to cover short-term illnesses and conditions. You may need to find a long-term care plan within the private insurance market in order to receive payments for nursing home stays over 101 days, or if you prefer 24 hour home care, meals delivered to your home, and personal and homemaker services.
Medicaid is the government assisted health care plan for those with low-incomes. It also covers non-elderly disabled people, low-income seniors, and low-income caretakers. It does cover long term health care costs, but only for qualifying low-income individuals over the age of 21.
In order to qualify for Medicaid, you must meet the eligibility requirements outlined by your state. Each states has a slightly different Medicaid program. Once you have received approval, the state will then determine if you qualify for long-term care services such as personal care, nursing home stays, and community-based services.
For example, in Minnesota, to qualify for Medicaid (which is called Medical Assistance) the patient must have spent their assets down to only $3000. Assets that are counted are cash, bank accounts, investments, non-homestead real estate, etc. Assets not counted are clothing, one vehicle, personal jewelry, household goods and some specific others. Income over $908/month must be used for the medical costs. The patient may keep a home provided it qualifies under the plan (the most common allowance is for a spouse still residing in it).
Many people try to “give away their assets” to qualify for Medicaid. The government has caught on to this maneuver and it no long works. The Medical Assistance program can “look back” at all gifts made over the last 5 years and include that in the “current assets” number. This means the gifts need to be “paid back” to provide for care costs before you are eligible for Medical Assistance.
Below is a list of some of the services available to those on Medicaid:
- Nursing home stays
- In-home care
- Personal care services, like bathing and dressing
- Case management
- Assistance with cleaning and laundry
Do no expect Medicaid to help you to pay for the general costs of living, like food, rent, and utilities.
The Partnership Program is a newer program that many states have adopted. This is a state-by-state program that allows a person to shield their assets from the spend-down requirements of Medical Assistance. It is a joint initiative to encourage Americans to purchase private long-term care insurance.
“Long Term Care Insurance (LTCI) Partnership plans provide asset protection in the unlikely event that the insured’s LTCI plan benefits are completely paid out. For example, if the insured purchased a five year benefit period and ended up needing care beyond that, the state will disregard your assets, dollar for dollar, the amount your Long Term Care Insurance policy spent on your care during the five years. This figure could literally be millions of dollars, and while not a magic bullet, does provide asset protection to owners of these policies.”
The program differs from state to state. For example, in Minnesota, the there is no minimum lifetime or daily maximum. You qualify based on your taxes, consumer protection requirement, and residency.
In order to explain how the Partnership Program works, refer to the scenario below:
If I have a partnership qualifying policy, I might have a $250/day benefit with a 3-year pool of money. This means the total value of my pool is $273,750 (365 days X $250/day X 3 years). If I add the $3000 asset cap to this number, Instead of qualify for MA by spending down my net worth to $3000, I qualify be spending it down to $276,750 ($3000 + $273,750) thereby preserving much more asset for my healthy spouse and not leaving him or her destitute in their twilight years. Your policy MUST be listed as a participating policy in the Partnership Program for this to work.
Visit www.longtermcare.gov and consult with a trusted Financial Advisor for help in finding a plan that is right for you.
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