Long Term Care In America

THE HEALTH CARE SYSTEM


Introduction

 
     
  1. THE HEALTH CARE SYSTEM
 
  What health insurance (HMO, PPO, Kaiser, BlueCross, etc.), and Medicare covers.
  
 

If you have a change of health requiring medical care your health insurance and/or Medicare will cover the following.




Days 1 to 21 -- 100% of the costs are covered.

Days 21-100 -- all of the costs after a co-pay of about $110.

After day 100 (or if you stop improving) you pay your self or you apply for Medicaid (welfare health care).

The average length of a stay in a nursing home: 875 Days.


Without LTC Insurance this is your current long term care plan.

If something should happen to you are you ready to pay yourself, apply for Medicaid, or spend down your savings/assets until you qualify for Medicaid?

Medicaid can be considered the state welfare health care program. Medicaid is not an entitlement system like Medicare, it is a means tested system. If you have the means to pay, you pay, if you do not then Medicaid pays. You must prove to Medicaid that you are at the poverty level and cannot pay for your own long term care.

Most long term care is "custodial care" which is basically help with Activities of Daily Living or ADLs — like dressing and bathing. Custodial care is not covered by health insurance, Medicare, Medicare Supplement Insurance, or Medicaid.

Example Scenario:
You have a stroke and are hospitalized for 14 days. Then you are discharged to a rehab facility and at day 21 you will have to start paying the daily co-pay. If you stabilize at day 81 you may then be discharged and sent home or to a nursing home.

Your co-pay for the 60 days at rehab (81-21=60) is $6,600, and since you have stabilized (not going to improve) your insurance and Medicare can stop paying.

If you are sent to a nursing home your health insurance and Medicare may continue to provide some coverage for a limited time. At the nursing home you will either pay yourself or apply for Medicaid (welfare). To qualify for Medicaid you apply and disclose your financials to see if you qualify. If you do not qualify because of too much income/savings/assets then you must "spend down" until you do qualify. See Medicaid information below.


 If you are sent home your health insurance, Medicare, and Medicaid do not provide custodial care at home and very little medically necessary care, usually just enough to make sure you are safe in your home. If they cannot determine that you can safely stay at home they may suggest you move to a nursing home. For care at home you will have to pay out of savings, etc.

Some people offer Medicaid Planning to help protect your assets from the state. It is a federal crime to attempt to defraud Medicaid by hiding assets. Medicaid Planning is really Poverty Planning and who wants to live on welfare.

If you had long term care insurance your LTC insurance would have started as soon as you qualify for benefits (see next section). LTC insurance is designed to take over or cover what is not covered by health insurance, Medicare and Medicaid so you don't have to spend your hard earned money on long term care.

Planning for your long term care includes thinking about those you care about. Now for a moment consider the consequences your needing care will have on those around you, those you care about.


Next LTC insurance - what it covers and for how long.




Medicaid Income Limits
Living in the community
Living in a nursing home
Single elder (over 65) or disabled is $637 per month; for an elder/disabled couple it is $956 per month With any outside income you can keep $35 per month for personal needs. If no income then you can apply for SSI and receive $42 per month.
* Different states have different requirements, check with a local Medicaid office.



Medicaid Asset Limits
Exempt Property
(what you are allowed to keep)
Nonexempt Countable Property
(what you cannot keep)
A home
A car
Household goods
Business Property & Real Estate
Term Life Insurance
Mortuary Trust & Burial Plot (up to $1500)

If you have any more than this you must spend it on your long term care before Medicaid will begin to cover your costs.

 (basically anything with cash value)
Cash over $2,000
Stocks/Bonds
IRA's, Keoghs
CDs
Single premium deferred annuities
T-Bills/Notes
Savings Bonds
Investment Property
Whole Life Insurance
Vacation Homes
Second Vehicles



What about the spouse? (not receiving Medicaid)
The spouse of a Medicaid recipient is allowed to keep a low level of income and certain assets in order to avoid poverty, but must pay amounts above these levels for the institutionalized spouses care.

For 2008 the Spousal Impoverishment Limits were increased. The Community Resource Allowance allows for the at-home spouse to keep up to $104,400.00 in assets and the institutionalized spouse can keep up to a maximum of $2,000.00 in a separate account. The at-home (community) spouse can receive a maximum monthly income of $2,610.00 (MMMNA-Minimum monthly maintenance needs allowance). (Spousal Impoverishment)

Medicaid can put a lien on the house occupied by the at-home spouse for the purpose of recovering money spent on the spouse that is receiving Medicaid, this is called "estate recovery." Once both spouses are out of the house the state will want to be repaid. The best way to protect your assets is to purchase long term care insurance.

* These figures may not be current, check with Medicare and Medicaid (local welfare office) for current figures.

Medicare

Medicaid Eligibility Overview

Medicaid Local Offices Contact Information

Medicaid Gets Tough
Prepare to pay for your own long term care.
William Zatlin, of North Babylon, N.Y., may not realize it, but his bed in a Long Island nursing home costs about $11,000 a month and wiped out his cash savings in less than a year. Kiplinger Financial Article