LONG TERM CARE – WHO WILL PAY?

While my father continues to live with me, I have still begun the process of looking into assisted living facilities and nursing care homes so that I’ll be prepared if or when the time comes that I’ll no longer be able to care for him at home.  Here in Idaho, assisted living costs between $3500.00 and $5000.00 per month depending upon the degree of “assistance” a resident might require.  In California, it runs $ 7000.00 and up. 

Nursing homes are even more expensive, with a price tag of $7000.00 per month in Idaho.  Let it be known that this is a daily worry for me.  What if my father falls and breaks a hip?  What if he has a stroke.  Let’s look at the options.

There are basically 4 ways to pay for long term care:
1. Private funds 
2.  Insurances
     a. Medicare
     b. Supplemental Policies
     c. Long Term Care Policies
3.  Veteran’s Administration Funds
4.  Medicaid

     Private funds are, of course, those monies that come from the individual (or individual’s family) who is being care for in assisted living or in a nursing home.  This is the method that many people are required to use once their Medicare and Insurance monies are gone and BEFORE they can qualify for Medicaid.

     Some people have long term care policies in place (which are in and of themselves, quite expensive to purchase) and may be fortunate enough to have a large portion of their long term care paid for using this method; however, many long term care policies have a long list of pre-existing conditions that will then make a person ineligible for coverage.

      Medicare (the national health care program for citizens aged 65 and over ) and its supplemental policies can help with payment somewhat but it provides only short term assistance.  For instance, at best, it will only pay for 100 days of nursing home care AFTER an approved hospitalization. (If you have a Medicare supplemental plan, this 3 day hospitalization may not be necessary.)  They will pay 100% of the first 20 days but then will assess close to a $120 per day deductible for the rest of the stay.  Once this 100 days has run out, private funds must be utilized if the patient does not qualify for Medicaid.  If the patient is discharged from a nursing home facilitiy and remains stable for 60 consecutive days, they are then eligible for another 100 days nursing home care but again AFTER an approved hospital stay.

     Unfortunately, the glitch to this scenario is that the patient must be receiving SKILLED nursing care and must continue to IMPROVE . If there is no improvement, Medicare will not continue to pay. At that point, the patient’s own funds are expected to be utilized. Also, Medicare does NOT pay for assisted living.  Most of the assisted living facilities that I’ve spoken with have asked for a 2-3 year guaranteed private fund payment and then they will accept Medicaid for coverage.  Basically, “we’ll use up all your money and for that we promise we won’t kick you to the curb”.

     Another HUGE glitch is that Medicare does not pay for care for patients with Alzheimer’s, Parkinson’s and other dementias, even though, there is medical care involved in their treatment.  I will note that some cares are being covered now that Alzheimer’s is an accepted diagnosis.

     Veteran’s Administration funds is an area which I am not knowledgeable enough to share any information other than that they play a small role in the larger health care arena.

     The 4th payment option is Medicaid. 
 
     So how does Medicaid work?
     Medicaid is a benefit program which is primarily funded by federal dollars and whose monies are administered separately by each state; therefore, the rules vary from state to state. (For specific rules, consult an attorney that specializes in elder law. And I wlll say that consulting an attorney specializing in this form of law is definitely worth the investment because they are so many rules and the planning must be put into affect at least 5 years before a patient has need of long term care.)  It is probably the payment form that is utilized the most.

     In order to be eligible for Medicaid, there must be proof of medical necessity, of course (Medicaid does provide coverage for Alzheimer’s, Parkinson’s and other dementias) AND there must be financial eligibility.
Qualifying financially for Medicaid is the difficult part (well, difficult if there is a desire to preserve any of the patient’s assets at all).

     When determining qualification for Medicaid, “exempt” and “non-exempt” (or countable) assests will be examined.  “Exempt” assets are those which Medicaid does NOT take into account when determining eligibility.  These include a primary home (with an equity of up to approximately $500,000.00 – may be different in each state) which is the principal residence, personal belongings and household goods, ONE car or truck (even if married), burial spaces and items related to burial for both applicant and spouse (there is a maximum amount that can be designated, so again, check with your own state’s rules), IRREVOCABLE prepaid funeral contract (it MUST be irrevocable or it does not qualify), a life insurance policy with a limited face value (again, check with your own state for the maximum allowable face value), and a monthly income of $2022 if single or $4044.00 if married.  Special needs trusts for survivors (for instance, if a child with cerebral palsy or other handicap needs to continue to be provided for ) are also exempt. Additionally, in some states, a home may be placed in trust for a disabled child to continue to live in after their parent dies.
Many people ask “according to the federal gift  tax law, aren’t I allowed to give away up to $12,000.00 per year without penalty?”  No, that’s only for taxes.  Medicaid will “look back” 5 years to see what was given away and it can count against your eligibility.  Sometimes, an arguement can be made that shows that the patient did not EXPECT to be needing long term care for at least 5 years after the gift was given, and an exception can be made. 
“Non-exempt” assets (or those that Medicaid will count against your qualification) are basically anything that is money, can be cashed out as money, or is extra.  This includes cash, all bank accounts, credit union accounts, CDs, IRAs, 401ks, prepaid funeral contracts which can be cancelled, additional car(s), additonal property, boats and recreational vehicles, tools, stocks, bonds, mutual funds, etc.  Even if a child’s name is on the account in addition to the patient, it is still considered non-exempt.
Fortunately, Medicaid now takes into account the surviving spouse of the patient and will not make them “spend down” into poverty before allowing the patient to become eligible for Medicaid coverage.
Additionally, there are a number of strategies that can be used to qualify a patient without using up ALL the family financial resources.  Gettingthe advice of an eldercare attorney will help to protect your loved one and family from financial ruin.  Your local Area On Aging is often a good source for attorneys specializing in eldercare (and advice is sometimes offered without a fee).  They can also recommend an appropriate private practice elderlaw attorney