How do I Pay for Care?
There are a variety of funding sources available to a person needing residential care or assistance with daily living tasks. Some funding sources are available only for certain types of care, such as skilled nursing, and not for others, such as assisted living. Further, there are income and asset limitations on some types of public funding such as Medicaid. By and large, almost every community resident uses a substantial amount of his or her own assets to pay for care. For non-skilled nursing communities, almost all funding must come from private sources, either the resident's or via a private long-term care insurance policy. However, advance planning can go a long way toward preserving the assets of the individual so that not all of your loved one's assets need be exhausted before he or she may take advantage of publicly funded insurance sources such as Medicaid. A competent elder law attorney or financial planner should be consulted on the issue of planning for long-term care. What follows is a brief description of the various commonly used funding sources other than the resident's own or his or her family's assets.
Medicare is a health insurance program for people 65 years of age and older, some people with disabilities under the age of 65, and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant). Medicare has two parts: Part A, hospital insurance, and Part B, medical insurance. Part A helps pay for care in hospitals, skilled nursing communities, hospice care and some home health care. Most people get Part A automatically when they turn age 65 if they paid Medicare taxes while they were working. Part B helps pay for medically necessary doctors' services, outpatient hospital care, and some other medical services that Part A does not cover. You must enroll in this program and pay a monthly premium to receive benefits. To be covered for a nursing home stay under Medicare, you must generally move from a qualifying hospital stay (at least three days) to a Medicare certified skilled nursing community.
Medicaid is a state and federal program that will pay most nursing home costs for people with limited income and assets. Who is eligible and what services are covered varies from state to state. Most often, eligibility is based on your income and personal resources. Sometimes, you must spend down your personal resources in order to qualify. However, with proper planning, there are legal and legitimate avenues that allow you to protect certain assets you would otherwise have to spend down to qualify. You should consult with a qualified elder law attorney or other elder financial planner about these options. Medicaid will pay only for nursing home care provided in a community certified by the government to provide service to Medicaid recipients.
Medicare Supplemental Insurance
Also referred to as Medigap, this is private insurance. It helps pay for gaps in Medicare coverage such as deductibles and co-insurances. Most Medigap plans will help pay for skilled nursing care, but only when that care is covered by Medicare.
Long-Term Care Insurance
Long-term care insurance is a private policy, and the benefits and costs of these plans vary widely. Some policies may cover only nursing home care, and others may include coverage for a range of services like assisted living. Long-term care insurance can be expensive, depending on your age and health status when you buy the policy and how much coverage you want. The cost of care varies widely from community to community and state to state. Make sure the policy you buy will cover the costs of care where you plan to use it. Most long-term care insurance policies offer certain tax benefits. If the policy is "tax qualified" or "TQ", you can include some or all of the premium as a medical deduction on your federal income tax return, and you do not have to pay tax on payments from such a policy.
Managed Care Plans (HMOs) will sometimes pay for nursing communities, but will not help pay for care unless the community has a contract with the plan. Some life insurance policies may be applied to nursing care, but this varies widely from plan to plan.