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Paying for Long Term Care

When long term care is needed, paying for it can be confusing. For most people, there are other options besides paying out of pocket for long term care. Medicare, Medicaid, and long term care insurance are the most popular.

Medicare

Medicare is a health insurance program for:

  • people age 65 or older,
  • people under age 65 with certain disabilities, and
  • people of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant).

Medicare has:

Part Hospital Insurance - Most people don't pay a premium for Part A because they or a spouse already paid for it through their payroll taxes while working. Medicare Part A (Hospital Insurance) helps cover inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. Beneficiaries must meet certain conditions to get these benefits.

Part B Medical Insurance - Most people pay a monthly premium for Part B. Medicare Part B (Medical Insurance) helps cover doctors' services and outpatient care. It also covers some other medical services that Part A doesn't cover, such as some of the services of physical and occupational therapists, and some home health care. Part B helps pay for these covered services and supplies when they are medically necessary.

Prescription Drug Coverage - Most people will pay a monthly premium for this coverage. Starting January 1, 2006, new Medicare prescription drug coverage was made available to everyone with Medicare. Everyone with Medicare can get this coverage that may help lower prescription drug costs and help protect against higher costs in the future. Medicare Prescription Drug Coverage is insurance. Private companies provide the coverage. Beneficiaries choose the drug plan and pay a monthly premium. Like other insurance, if a beneficiary decides not to enroll in a drug plan when they are first eligible, they may pay a penalty if they choose to join later.

Long Term Care

Medicare generally doesn't pay for long-term care. Medicare also doesn't pay for help with activities of daily living or other care that most people can do themselves. Some examples of activities of daily living include eating, bathing, dressing, and using the bathroom. Medicare will help pay for skilled nursing or home health care if you meet certain conditions.

Medicare Part A will cover your stay at a nursing home if:

  • You are enrolled in Part A.
  • Three-day prior hospitalization: The individual must have been a hospital patient for at least three consecutive calendar days. The day of admission counts, however the day of discharge does not. Days spent under observation or in the emergency room do not count either.
  • 30-Day Transfer Requirement: After a three-day qualifying hospital stay, the patient must be transferred to a skilled nursing facility within 30 days of discharge.
  • You must be placed in a Medicare-certified bed.
  • You must have a physician's order for Medicare placement in a Skilled Nursing Facility.
  • You must need daily, inpatient, skilled nursing services and/or skilled rehabilitation services.
  • Medicare must be your primary payer.
  • You must have days available in the current benefit period.
  • The current benefit period begins with the first day a Medicare resident receives covered Skilled Nursing Facility services and ends when the resident has remained at a non-covered level of care in the Skilled Nursing Facility for 60 consecutive days, or has been out of the Facility and hospital for 60 consecutive days.
  • During the 60 days, the resident does not have to leave the facility or the Medicare-certified bed.
  • An inpatient 3 day qualifying hospital stay is considered a covered level of care and will trigger a new 60 day period.
  • At the end of the 60-day period, a resident is entitled to a new benefit period by meeting the qualifying eligibility criteria again.

Source: Lester, Larry "Financial Module." Wipfli, LLP. University of Wisconsin-Eau Claire. Oct 2006.

Medicaid

The Medicaid program gives medical assistance to low income people. It is administered by the federal government and implemented by each individual state. Eligibility is different in each state. Most often it depends on income and personal resources.

All states provide Long Term Care services to individuals who are Medicaid eligible and who qualify for institutional care.

To find out whether you are eligible to receive Medicaid benefits, contact your state Medicaid office. Phone numbers for each state office can be obtained through calling the Center for Medicare and Medicaid Services (CMS):

Toll Free: 877-267-2323

Or contact your local Department of Welfare or Department of Health for an application. Because Medicaid is based on financial need, you will be asked for extensive information such as residence, family composition, income, real and personal property, banking/investment transactions and medical expenses.

Source: Medicaid At A Glance by the Centers for Medicare and Medicaid Services: MedicaidAtAGlance2005.pdf

Long Term Care Insurance

Long term care insurance can protect personal assets and inheritance for the family, provide greater choice in the selection of long term care settings (nursing and assisted living facilities) and generally provide for financial security. Recently enacted federal health insurance legislation has helped make private long term care insurance a more viable option for paying for long term care costs while preserving personal savings, choice and dignity.

Source: http://www.longtermcareliving.com/